Sacred Economics: Money, Gift, and Society in the Age of Transition (32 page)

If we reject the linear equation of money and utility (i.e., “the good”), we also reject the dearly held ideology that we can maximize the common good by maximizing economic growth. We deny as well the utilitarian argument for wealth-maximizing capitalism, opening the door to ideas that emphasize equitable distribution of wealth instead. Mathematically, if money is subject to diminishing marginal utility, the optimal distribution of money is: as equitably as possible. Offering a justification for the redistribution of wealth away from the rich, Keynesian thought is, quite naturally, anathema for the ideologues of the rich.

But Keynes’s view of liquidity preference implies an even deeper challenge than that. Consider again the opposite view, exemplified by the classical economists and Austrian School advocates, that people are by nature profligate. As the nineteenth-century economist N. W. Senior put it, “to abstain from the enjoyment which is in our power, or to seek distant rather than immediate results, are among the most painful exertions of the human will.”
³⁷
Here is a more recent example, by a follower of von Mises:

Interest, then, is a reward for thrift, for self-restraint. In this view we find an echo of some of the deep, hidden ideologies underlying our civilization; for example, that human progress both spiritual and material comes through winning a war against nature: natural forces on the outside, and desire, pleasure, and the animal drives on the inside. Abstemiousness becomes a high virtue; without it, this ideology goes, we would be no better than animals. We would not
have ascended into a separate and better human realm, removed from nature. Karl Marx put it thus:

This mentality pervades our culture. You must delay gratification. You must restrain your desires with the thought of future rewards. Pain now is gain later. Do your homework for the grade. Go to work for the salary. Do the workout to be healthy. Go on a diet to be thin. Devote your life to something that pays well, even if it isn’t your passion, so that you can have an enjoyable retirement. In all of these things we apply a regime of threat and incentive designed to overcome our laziness, our selfishness. Interest becomes a motivator in the war against the self, the overcoming of our wanton improvidence.

But is this really human nature? Is it really our nature to consume and overconsume without thought for other people, other beings, or our own future? No. The ancient Greeks, not given to overly charitable views of human nature, had it right. As Aristophanes said, in all things—bread, wine, sex, and so on—there is satiety. Our needs are limited, and when we have fulfilled them, we turn to other things and are moved to generosity. “But of money, there is no satiety.” It is not the propensity to consume that bears no limit; to the contrary, limitless desire
arises with
money. After
attaining a surfeit of consumables, people covet money itself, not what it can buy, and this desire has no limit. Neoclassical economics (and the Austrian School) has it backwards, and Gesell and Keynes were right to seek to strip money of at least some of its unique features that make desire for it limitless. Keynes was aware—indeed he explicitly stated—that the dominance of liquidity preference over time preference was a foundational assumption of his theory: a “psychological law,” as he called it.

Of course, for some people—food addicts, sex addicts, alcohol addicts—there is indeed no satiety in those things Aristophanes listed. Does this prove that human beings are greedy after all? Actually, the example of addiction illuminates what is wrong with money. Addiction happens when we use something as a substitute for what we really want or need—food, for example, as a substitute for connection; sex as a substitute for emotional intimacy; and so on. Money as universal end becomes a substitute for many other things, including those very things that the money economy has destroyed: community, connection to place, connection to nature, leisure, and more.

When we speak of the “liquidity” of money, we mean simply that we can readily exchange it for anything else we want. Now in a money economy, we can actually exchange
any
commodity for any other commodity, just not so readily, via the medium of exchange (money). Why then, should we prefer money to other commodities? Excepting cases in which we have a need that must be met swiftly, which indeed justify keeping on hand modest amounts of the medium of exchange, the only reason to prefer money is that it does not suffer loss in storage. The imperishability of money makes it not only a universal means, but a universal end as well. By making money impermanent, we preserve it as means but not as end
and in so doing inspire a conception of wealth radically different from anything we have known.

The equivalent in modern economics of “universal means” and “universal end” are “medium of exchange” and “store of value.” One way to understand the effect of negative interest is that it splits these two functions. This is a profound shift. Most economists consider medium of exchange and store of value to be defining functions of money. But combining these two functions into a single object begs trouble because a medium of exchange needs to circulate to be useful, while a store of value is kept (stored) away from circulation. This contradiction has, for centuries or more, created a tension between the wealth of the individual and the wealth of society.

The tension between the wealth of the individual and the wealth of society reflects the atomistic conception of the self that has risen to dominance in our time. A money system that resolves this tension therefore promises profound consequences for human consciousness.
In
Chapter 1
I wrote, “Whereas money today embodies the principle, ‘More for me is less for you,’ in a gift economy, more for you is also more for me, because those who have give to those who need. Gifts cement the mystical realization of participation in something greater than oneself, which is yet not separate from oneself. The axioms of rational self-interest change because the self has expanded to include something of the other.” Can we imbue money with the same property as the gift?

In an economy based on free-money, wealth means something quite different from what it means today and in fact takes on much the same character that it had in primitive, gift-based societies. In hunter-gatherer societies, which were generally nomadic, possessions were a literal burden. The “carry cost” that everything except money bears today was quite real. In sedentary agricultural societies as well, possessions such as cattle and stores of grain, while sought after, did not give the same degree of security as being embedded in a rich web of social relationships of giving and receiving. Grain can rot and cattle can die, but if you have been generous with your wealth to the community, you have little to fear.

Free-money reintroduces the economic mind-set of a hunter-gatherer. In today’s system, it is much better to have a thousand dollars than it is for ten people to owe you a hundred dollars. In a negative-interest system, unless you need to spend the money right now, the opposite is true. Since money decays with time, if I have money I’m not using, I am happy to lend it to you, just as if I had more bread than I could eat. If I need some in the future, I can call in my obligations or create new ones with anyone within my network who has more money than he or she immediately needs. Similarly, when a primitive hunter killed a large animal, he or she would give away most of the meat according to kinship status, personal
affection, and need. As with decaying money, it was much better to have lots of people “owe you one” than it was to have a big pile of rotting meat, or even of dried jerky that had to be transported or secured. Why would you even want to, when your community is as generous to you as you are to it? Security came from sharing. The good luck of your neighbor was your own good luck as well. If you came across an unexpected large source of wealth, you threw a huge party. As a member of the Pirahã tribe explained it when questioned about food storage, “I store meat in the belly of my brother.”
⁴⁰
Or consider the !Kung concept of wealth explored in this exchange between anthropologist Richard Lee and a !Kung man, !Xoma:

Wealth in a free-money system evolves into something akin to the model of the Pacific Northwest or Melanesia, in which a leader “acts as a shunting station for goods flowing reciprocally between his own and other like groups of society.”
⁴²
Status was not associated
with the accumulation of money or possessions, but rather with a huge responsibility for generosity. Can you imagine a society where the greatest prestige, power, and leadership accord to those with the greatest inclination and capacity to give?

Such was the situation in archaic societies. Status came through generosity, and generosity created gratitude and obligation. To be a lord or king, you had to hold sumptuous feasts and give lavish gifts to peers and underlings. We have an especially clear example of this in the
Nibelungen
, the great German saga of the high middle ages that draws on source material from much earlier. When Kriemhild, widow of the great hero Siegfried, starts lavishly giving away the hoard she inherited from him, the king feels so threatened that he has her murdered and the treasure dumped into the Rhine (where it remains to this day!). The king’s authority was sustained by gifts, and that authority was undermined when someone else started giving greater gifts than he.

The zero-interest loans in a free-money economy are analogous to the gifts of yore. While such loans may appear to violate the gift principle that the reciprocal gift not be specified in advance, they
are
gifts: gifts not of money but of the
use
of money. In ancient times, the obligations and expectations generated by gifts were socially determined. The same is true here: the social determination takes the form of contracts, agreements, laws, and so forth. Underlying these specific forms, the dynamic is equivalent: those who have more than they need give it to others. It is just that simple, an expression of the innate generosity of the human being I described in
Chapter 1
. All that is needed is a money system that encourages, rather than deters, that generosity. No miraculous change in human nature is necessary. As I describe it in
The Ascent of Humanity
,

Sometimes people ask whether negative-interest currency, like inflation, wouldn’t stimulate even greater consumption. In economics terms, this would happen only if the demurrage rate were too high, leading to a preference of goods over money as a store of value.
⁴³
The two should be equal. But let’s investigate this issue a bit more deeply. When I describe a currency of abundance, people protest, “But we
do
live in a world of scarcity. Natural resources are finite, and we have used them nearly all up. The problem is that we have treated them as if they were unlimited.” Accordingly, one might think that an attitude and currency of abundance is the last thing we need.

In answer to this concern, consider first whether our currency of scarcity has actually limited our consumption of scarce resources. It has not. The scarcity of money has aggravated their conversion into money. It is an attitude of scarcity, not of abundance, that has led to the depletion of our natural commons. Competition and the accumulation of
more than one needs
are the natural response to a perceived scarcity of resources. The obscene overconsumption and waste of our society arise from our poverty: the deficit of being that afflicts the discrete and separate self, the scarcity of money in an interest-based system, the poverty of relationship that comes from the severance of our ties to community and to nature, the relentless pressure to do anything, anything at all, to make a living. In contrast, the natural response to an atmosphere of abundance is generosity and sharing. This includes sharing within the human realm and beyond it as well. Whence our frenetic race to convert nature into commodities that don’t even meet real needs, if not from insecurity?