The services will come not from those profiting from inequality and deficiency however from relocalizing “cash” and production to develop degrowth neighborhood economies.
We think we comprehend “money”– we don’t. We think the existing variations of “money” are the final versions– they aren’t.
Comprehending “cash” requires some heavy-lifting, however it is essential, so let’s dig in.
The most precise description of “cash” (in quotes because it’s not what we think it is) is Art Berman’s shorthand:
Energy is the economy.
Cash is a contact energy, the capacity to do work.
Debt is a lien on future energy.
We think that developing more “money” can resolve all problems. It can’t. Developing more “money” just adds another crisis to the basic crisis, a scarcity of affordsable energy and resources.
In my new book, International Crisis, National Renewal: A (Revolutionary) Grand Method for the United States, I identify the 2 issues neither nation-states nor global markets can fix:
1) Soaring inequality brought on by the concentration of capital, power and company in the hands of the few and the resulting decapitalization and powerlessness of the numerous.
2) Scarcity of the essential resources that are the structure of the globalized commercial economy.
The primacy of “cash” (financing) is evidenced by the proposed solutions to inequality and deficiency, all of which are financial in nature: Universal Basic Income (UBI)/ Modern Monetary Theory (MMT) and other schemes of producing “money” out of thin air and dispersing it to those whom the system has actually failed, i.e. the bottom 90%, to ward off social unrest.
New Financing’s menu of decentralized finance (DiFi), blockchain, cryptocurrencies and Web3 is likewise totally financial: the core development is a new method of developing and tracking “money.”
The problems that need to be resolved are:
1) the reasonable circulation of essential resources, capital and firm.
2) safeguarding the systemic sources of vibrant stability: transparency, competition, responsibility, variability and dissent.
3) decentralize and relocalize production, political agency and capital to institutionalize fast adaptation/ analytical to radically minimize reliance on fragile international supply chains, radically enhance performance and effectiveness and replace the “waste is growth” Landfill Economy with a degrowth economy.
The secret to these services is the productive community economy, a localized economy with its own production, capital and firm, i.e. the control of production, capital and the circulation of resources.
Neither standard money-printing nor the blockchain/defi/crypto menu basically alter the power structure of who controls resources, power and capital. Just like all financialized “options,” these presume that financing can repair whatever since it’s the master resource.
Both also presume that developing “cash” out of thin air and dispersing it within a market structure will solve all issues. Both presumptions are incorrect: energy is the master resource and “cash” is just a service if it connects labor to regional productivity.
All the development of “cash” out of thin air accomplishes is to maintain the status quo that favors 1) the already-rich who own the large majority of possessions and who can trade one possession class for another at will 2) those closest to the sources of this recently provided “cash”– in the case of cryptocurrencies, 3) early adopters who become the New Aristocracy by virtue of their dominant ownership/ control of the currencies, platforms, etc.
The vital component of every issuance of “money” is: how is the “money” dispersed? Who gets the new money? Consider the case of bitcoin, which is decentralized in the sense that anybody with enough computing power can mine bitcoin, i.e. be released bitcoin for keeping the currency’s blockchain.
Regardless of this decentralized circulation, the reality is the mining and the ownership of bitcoin is highly concentrated, just like all other wealth: 0.01% of Bitcoin holders control 27% of all bitcoins in circulation.
There are two dynamics at work: 1) early adopters were able to generate large numbers of bitcoins for really modest sums, and 2) the rich couple of with access to the “cash” spigots of reserve banks and fractional reserve private banking can borrow fiat currency at near-zero rates and utilize this “cash” to purchase bitcoin.
There may be limitations on the number of bitcoins are released however there is no limit on just how much fiat currencies can be provided, so those closest to the fiat currency spigots have the ways to accumulate all other assets, including bitcoin/ cryptocurrencies.
The net outcome is that decentralized financing that distributes new currency to miners (those preserving the blockchain) or similar distribution structures are just decentralized in name; in practice, these currencies are simply another property class that can be bought up by those with access to fiat “cash”.
The same is naturally true of any property (for example, debt such as home loans) created by decentralized financing: the vast majority of every supposedly decentralized property winds up being owned by the same super-wealthy class who owns the vast majority of all properties.
Given that cryptocurrency mining is really capital-intensive, those with capital can dominate the process of building up bitcoin via their basically unlimited lines of inexpensive credit. This is how an in theory decentralized system is centralized by the wealthy who own the majority of the properties and who have access to low-priced credit.
Simply put, the proposed “options”– traditional or allegedly decentralized– leave the structures that generate inequality unblemished.
Genuine solutions must straight address the sources of inequality: how “cash”/ capital are distributed.
The only systemic option is to provide new currency entirely as payment to labor for producing necessary products and services in manner ins which enhance effectiveness, reduce consumption and boost performance– doing more with less energy, resources, friction and labor.
When currency can only be issued to labor performing high-utility operate in a neighborhood economy, the whole structure of “cash” changes. Rather than being closest to the “money” spigot, the super-wealthy are farthest from the spigot and those doing helpful work are the only recipients of brand-new “cash.” Given that this labor-only currency can not be obtained into presence by means of private fractional reserve banking, there is no chance for anybody to outbid everybody with endless affordable credit since there is no endless low-cost credit.
In a neighborhood economy, those doing helpful work can receive not just a wage for their labor however a share of what they have actually created with their work.
This procedure of turning labor into capital is the core mechanism required to create and sustain a middle class which has a stake in the system– ownership of income-producing assets.
In the existing financial system, conventional or allegedly decentralized, the only methods readily available to those doing helpful work to gain a significant ownership stake (i.e. income-producing assets) is to end up being a high-risk speculator in one or more asset bubbles. This is not a steady foundation for a middle class, an opportunity-based economy or a dynamically stable society. It is a dish for skyrocketing instability and collapse.
Returning to the 3 issues listed above— fair circulation of resources, capital and firm, securing transparency, competitors, accountability, variability and dissent, and decentralizing and relocalizing production, political agency and capital–only a neighborhood economy can solve these issues in a sustainable, degrowth fashion, and the neighborhood economy can just do so if its cash is managed by those in the community doing the beneficial work.
This system of “money” is a labor-backed currency as it is just provided to labor which has demonstrably performed work that is of high energy to the community. This labor-backed currency also makes it possible for the transformation of labor into capital owned by individuals and the community at large.
A supposedly community-based economy that is completely depending on “cash” accumulated by the super-wealthy and corporations is absolutely nothing more than a fiefdom of central financialization. An apparently community-based economy that has no power over the cash, credit, resources and agency within its neighborhood is absolutely nothing but a simulacrum of a truly neighborhood economy.
To put it simply, if the super-wealthy collecting freshly issued “money” (either borrowed-into-existence fiat or bitcoin released to rich miners) can be found in and purchase up all the properties of your community, it isn’t a neighborhood economy, it’s just another fiefdom in the financialization empire that benefits the few at the expenditure of the numerous.
A really community economy need to have its own “cash” that can only be issued to those doing work deemed helpful by the community rather than by a remote concentration of capital and political power.
A genuinely neighborhood economy must have locally owned properties and capital that can not be bought or transferred to distant owners. The secret to a neighborhood economy is to own local productive assets vital to well-being and not permit these possessions to be controlled by self-interested, profiteering owners who aren’t members of the community.
This needs not just securing possessions from outside capital but also an entirely localized approach of evaluating value and profit. As I describe in the book, much of the real-world expenses of worldwide production are not even factored into cost, environmental damage being a prime example.
In the current quasi-religion that worships revenue and development, worth is determined by rate and earnings: the lower the price, the greater the worth of the good or service, and the greater the profit, the greater the worth of the possession.
In a neighborhood economy, worth is based upon how essential the good, service or asset is to the wellness, sustainability and versatility of the community, and on how well it serves the community and the objectives of degrowth.
The value of a possession or goods and services being produced by the neighborhood can not be minimized to the false metrics of profit. Locally produced food is not rewarding or profitless, it is invaluable since it creates an irreplaceable source of worth: self-reliance from fragile worldwide supply chains and centralized production that is owned by the super-wealthy.
Simply put, local production of fundamentals such as food and energy are valuable, as there is no replacement at any price. To be reliant is to be helpless.
Whether regional production pays by the leave-out-all-costs standard of international corporations and banks is meaningless; the one real source of value– and therefore the greatest kind of profit– is independent, locally owned production of important products and services which both sustain the community and can be traded with other neighborhood economies.
Waiting on the shore, dependent, decapitalized and helpless, hoping the main state and profit-maximizing worldwide market will provide solutions to inequality and shortage is to wait on ships that will never come, for the state and market are the sources of inequality and scarcity.
The solutions will come not from those making money from inequality and shortage however from relocalizing “money” and production to develop degrowth community economies that are nodes in a global network, sharing currency, credit, analytical and the fundamentals of sustainability and wellness.
There is much more in the book on these subjects. I welcome you to check out the first chapter (PDF) and the Intro— they’re totally free.
My brand-new book is now readily available at a 10 % discount this month: Global Crisis, National Renewal: A(Revolutionary)Grand Method for the United States(Kindle$8.95, print$20)If you found value in this material, please join me in seeking options by becoming a$1/month client of my work by means of patreon.com. Current Videos/Podcasts: Charles Hugh Smith on The Great Awakening Vision (Part II, 36 minutes, with Richard Bonugli)
Charles Hugh Smith on The Terrific Reset Program( Part I, 42 minutes, with Richard Bonugli)My recent books: International Crisis, National Renewal: A(Revolutionary)Grand Technique for the United States (Kindle$ 9.95, print$25
, audiobook)Check Out Chapter One for
17.46)Read the very first area totally free(PDF ). Will You Be Richer or Poorer?: Revenue, Power, and AI in
a Distressed World(Kindle
$5, print$10, audiobook) Check out the very first area for free(PDF). Pathfinding our Destiny: Preventing the Last Fall of Our Democratic Republic($5 Kindle,$10 print,(audiobook): Read the first area free of charge (PDF). The Adventures of the Consulting Theorist: The Disappearance of Drake$1.29 Kindle,$8.95 print); read the very first chapters free of charge(PDF)Money and Work Unchained$6.95 Kindle,$15 print)Check out the very first section for free Become a$1/month customer of my work by means of patreon.com. KEEP IN MIND: Contributions/subscriptions are acknowledged in the order got. Your name and email stay private and will not be provided to any other private, company or firm.
Thank you, Paul C.($ 300 ), for your beyond-outrageously generous contribution to this site– I am significantly honored by your steadfast assistance and readership. Thank you, John K.($150), for your beyond-outrageously generous contribution to this site– I amgreatly honored by your steadfast support and readership. Thank you, Thomas H.($50), for your enormously generous contribution to this website– I am greatly honored by your assistance and readership. Thank you, Daniel M.($5/month), for your marvelously generous pledge to this website– I am significantly honored by your steadfast assistance and readership.