Thursday, December 31, 2009

Proutist Economics

This chapter presents the basic economic principles required to move from a profit-based to a consumption-based economy. A consumption-based economy is premised on the belief that the opportunity to meet one’s basic needs should be guaranteed to all the members of a society.

Section One:
Production for Human Needs and Maximum Utilization

The capitalist socio-economic system is based on the motivation of the individual for financial profit. In the pursuit of profit, human beings are treated as capital input, equal to land and equipment. According to PROUT, such a system is the exact opposite of what a socio-economy should be. We hold that meeting the needs of human beings is the reason that economies exist.

Treating people as just another form of capital has allowed for great social injustice and exploitation. Today many hard working people face the loss of their jobs as companies under pressure to increase profit margins look towards downsizing as an easy way to cut costs. Many more people remain chronically unemployed and underemployed due to lack of jobs. For the majority of jobs, related purchasing capacity continues to decrease.

In the capitalist system, production, distribution, and regulation take place through the so-called "free market" mechanism. Consumers are free to purchase or not to purchase goods, and the ensuing
competition between uncoordinated manufacturers allegedly ensures high quality goods and low prices. Those goods which do not serve the perceived needs of the society are not bought and since the manufacturer cannot make a profit on them, production of such goods ceases. In effect, this is seen as the consumer directing the manufacturer as to which goods to produce and which not to. However, this is not the whole story. The endless quest for higher profits has led to the creation of psychologically sophisticated methods for the creation of artificial markets for unnecessary or even harmful goods and services. Through the sheer force of advertisement campaigns, markets are created and sustained for items such as cigarettes, junk foods, superficial entertainment, and a million and one superfluous items and brand names. As long as profits are the basis for production, businesses will always devise new methods for increasing the demand for products. Even if the products are environmentally or socially harmful, this will not matter, so long as it remains profitable to produce them.

Though advocates of capitalism may stress that the existing economy is neither centralized nor planned, in reality the high concentration of economic power in the hands of a few big corporations, individuals, and banks - and they truly are few in number - leads to a centralization which, though less overt than in the communist nations, is virtually absolute. Only a handful of corporations control all major industries, including military technology, energy, real estate, banking, food, and health care. Even political leaders must have their campaigns paid for by the corporate elite.

Highly sophisticated financial control mechanisms have been put in place in today's "free market" economy to increase profits and wealth for the few, while diminishing living standards and destroying self-reliance and local ownership of resources. This is witnessed in the great imbalance of consumption. Today only 20% of the population consumes 80% of the goods and services, leaving only crumbs for 80% of humanity. So too, the concentration of wealth within the fortunate 20% has been dramatically increasing while the purchasing power of the middle class and lower class has generally deteriorated. It is estimated that close to 50% of the wealth in the United States is owned by less than 1% of the population.

In the northern industrialized nations, there remains some semblance of economic self-determination and a few restrictions upon multinational corporate activity, but the poverty and disparity of wealth in the developing nations is truly pitiful.

Today the corporate elite, through institutions like the World Trade Organization, the OECD, the World Bank, and by direct interventions of multinational corporations, seek to bring all local economies under their control. They want to make it illegal for governments to control their activity in the interest of local people. In essence, they want to bind local people to a global economy that exploits their labor and local resources and makes them subservient to the decisions of distant economic masters. Fast Track and NAFTA in the United States, and the Multilateral Agreement on Investments (MAI) promoted by the OECD are geared to accomplish this end.

The primary economic goal of PROUT is to maximally utilize and rationally distribute the resources of the world. Maximum utilization means that the resources of the world should be harnessed in an efficient and progressive manner, with the sole motivation of meeting the needs of all human beings within the carrying capacity of the planetary eco-systems. This requires that local people plan their own economies and control their own resources. This is the only way to prevent economic exploitation and ensure environmental sustainability.

In this effort, PROUT does not take a technologically phobic attitude, rather it encourages constant scientific endeavor made in the spirit of general welfare and local self-reliance.

Section Two:
Rational Distribution: Guaranteed Minimum Necessities And Maximum Amenities

The most fundamental feature of the Proutist economic system is that the minimum necessities of life are to be guaranteed for all. In this age of rapid scientific advancement, it is irrational that some human beings should be deprived of their existential necessities while others amass great hoards of wealth. The determination of minimum necessities should be done in a progressive way; i.e. there must be continual adjustment of the definition of basic requirements depending upon the resources and scientific standard of the time and place. The minimum requirements are not to be handed out by the central government in a way similar to the current welfare system of liberal democratic countries. Rather, local planning should guarantee sufficient jobs to enable one to earn the required purchasing power. The guarantee of employment that provides sufficient earning power is essential to PROUT.
Only as a special contingency, or for those who are deemed mentally or physically disabled, could there be something resembling the welfare system of the liberal democratic countries.

In a Proutist framework, the people's purchasing capacity will be taken as the measure of economic advancement. In order to continually increase purchasing capacity, a number of factors are required. These include the guaranteed availability of basic goods and services, stable prices, progressive and periodic wage increases, and increasing collective wealth and productivity.

PROUT recognizes five minimum necessities of life. These are food, clothing, housing, medical care, and education. Supplemental requirements are the guaranteed availability of energy, transportation and water.

Presently, in the capitalistic countries, there is neither a guarantee of the basic requirements of life, nor is there a limit put on the wealth that an individual or corporate entity may accumulate. Insofar as physical resources are finite in nature, this creates an increasing divide between the haves and the have-nots.

Under a Proutist system the basic necessities are guaranteed to all. This is the bottom line of a Proutist economy. To accomplish this, PROUT recommends that there be a cap on the amount of earnings by an individual or corporate entity. Some have suggested that the ratio between the highest and the lowest paid members of a society be 10:1. By tying these two incomes together, society will work to raise the living standards of its poorest members, and guarantee them more of life's amenities as the collective wealth of society increases.

PROUT holds that the more meritorious, skillful, or service-oriented people ought to receive greater remuneration than the average worker. This will encourage people to do better and develop themselves and their skills. Meritorious people will earn more than common people, and this earning will include their maximum amenities. Amenities include goods and services which increase one's living standard and quality of life.

Common people should also be provided with more and more natural amenities to make their lives easier. While there will always be a gap between the maximum amenities of the common people and the maximum amenities of the meritorious, there should nonetheless be a constant effort to reduce this gap. If the maximum amenities of meritorious people become excessively high, then the minimum requirements of common people should be immediately increased. For example, if a person with special qualities has a motor bike and an ordinary person has a bicycle, there is a balanced adjustment. But if the person with special qualities has a car, then we should immediately try to provide the common people with motor bikes.

What constitutes both the minimum requirements and the maximum amenities should be ever increasing so long as the needs of the environment are also accounted for. As the need for the minimum requirements is fulfilled and the supply of the maximum amenities increases, the struggle for daily subsistence will gradually decrease and people's lives will become easier and more enjoyable. For this reason PROUT guarantees the minimum requirements and the maximum amenities to all.

In the physical and psychic realms movement toward the satisfaction of human wants and needs should be never ending. But, insofar as everything in these realms is limited, the hunger of human beings will remain unsatisfied and we will always want more. This longing for more can only be completely satisfied in the spiritual realm. Only at the point of merger with the Absolute is human hunger fully satisfied. Thus, while the purpose of PROUT is to satisfy human hunger in the physical and psychic realms, we must remember that true progress lies in the movement from imperfection to perfection. To go beyond this psycho-physical world is to go beyond the realm of PROUT and to enter the world of intuitional or spiritual science.

Section Three:
Economic Democracy

In most of the world today people have come to think of democracy as being the best system of government. But what exactly do we mean by democracy? Generally, people think of democracy as meaning the enfranchisement of the masses. It means a political system that allows all of its citizens the right to elect political representatives who look after their interests. True democracy encompasses much more than this however. In order to have genuine self-determination and economic security, the concept of democracy must be expanded to include "economic democracy."

Certainly it is true that political democracy has given people the right to vote. But what is the practical use of this right? In some democratic countries, such as the United States, many voters have become so disillusioned with the choices offered to them that they do not even bother to vote. Many who choose to vote, do not study the issues involved but base their vote on a candidate’s political affiliation, the effectiveness of their advertising, or other issues which ought to be peripheral to the selection of the best candidate. Due to financial and political interests, the media is often ineffective in its portrayal of issues that have the greatest impact on people. Thus, in most instances, political democracy creates the illusion in people that they do indeed have a say in their own future, while the real power continues to lie with the wealthy and powerful, who have a vested interest in seeing that their interests are served at the expense of the great majority. The choice Americans typically make between the two main political parties is a choice between two parties serving the same masters. Having put one or the other party in power, people then sit back in dismay as they watch decisions which affect them and their livelihood made against their best interests. Or if some action is taken on behalf of the majority, the allocation of funds is never enough to change conditions or alter the distribution of wealth.

The underlying idea of economic democracy is that humans should not be exploited by those who are in control of capital. On the political level, democracy may mean a certain degree of choice and freedom; but on the economic level little has changed since the days of feudalism. Workers are still forced by necessity to provide their labor to those controlling capital resources. Their only right is to quit. Although they do the work, they have little or no say in managerial affairs and rarely receive a share of profit. Those with capital are able to compel others into a sort of bondage by force of circumstances - and this is accepted as natural. Allegedly the controlling mechanism is again the free market system, which is supposed to guarantee sufficient competition between employers that they are compelled to make jobs appealing. The reality for many workers is quite different, as they are increasingly compelled to work on others' terms - if at all - even in the industrialized nations.

According to PROUT, one has an intrinsic right to the fruit of one’s labor, and an intrinsic right in managing the products of his or her actions. To accomplish this, PROUT recognizes the need for a decentralized economy based upon cooperative management as far as is possible and practical. These concepts will be further discussed in subsequent sections and chapters.

Economic democracy entails the planning of economic development in a particular region by the people of that region. This type of democracy represents a truer freedom than the high sounding but ultimately ineffectual and incomplete political democracy. Political democracy without economic democracy becomes less meaningful as purchasing power is drained from working people to fill the already overflowing coffers of those few with capital.

For economic democracy to come about, four requirements must be fulfilled. The economic ideas of PROUT are geared toward meeting these requirements.

The first of these is that there must be a guarantee that the minimum requirements of a certain time and place are available to everyone, as discussed in the previous section. This will increase the all-round welfare of a society by removing existential fear.

Secondly, people must have increasing capacity to purchase goods and services. Their incomes must be constantly rising. In order to achieve this in an economic democracy, the raw materials and other assets of a particular region ought to stay in that region for purposes of refinement and manufacturing. As improvements in production occur and new, more efficient uses for resources are developed, the benefits should accrue to the local inhabitants rather than to outsiders. Such advances will increase the standard of living rather than making select individuals wealthy. Such a system will help to bring about full employment and raise the standard of living in a region.

The third requirement for the establishment of economic democracy is that local people must have the right to make all decisions in regards to the local economy (that is, the creation of a decentralized economy as discussed in the next section).

Finally, the fourth criteria is that all outsiders must be prevented from interfering in the business of the local economy. Ideally there will not be outside ownership. Such a restriction will serve to stem the outflow of local capital, so that those living near a source of raw materials will be the rightful beneficiaries and also the rightful stewards of that wealth.

Section Four:
Economic Decentralization and Socio-Economic Units

For accomplishing its economic ideals, PROUT advocates an economic system based on decentralization. In a capitalistic system, the quest for profit directs the economic activity. In PROUT, the meeting of human needs is the underlying goal. Production based on this goal is best accomplished in a decentralized manner. Decentralization is the direct expression of economic democracy, insofar as local control of resources allows the best means to achieve maximum utilization and rational distribution of those resources. Conversely, centralization is the direct expression of capitalism because it allows maximum control of local resources by the capitalists.

Decentralization is also required for sustainability, because in this system the local people become responsible for the stewardship of resources. This is completely different from the current system, wherein profits are often made at the cost of social and environmental degradation. Under PROUT, resources are protected and enhanced because the standard of living of the local people is directly dependent upon it.

In order to accomplish decentralization, PROUT seeks to formulate "units of economic self-sufficiency," or socio-economic units. The formation of such a unit would be the decision of local people. Such a decision would be based upon such factors as common economic and social problems, common geographic potentialities and problems, common cultural legacy and language etc. Cultural and ethnic factors are quite relative, and they may or may not be helpful in establishing economic divisions. More to the point is that there should be a sentiment for cooperation among the local people to meet the common goal of economic self-reliance. Local people are those who have merged their economic interests in a particular region. Anyone may settle in any socio-economic unit. Current political bodies (countries, federations, states, etc.) may contain one or several socio-economic units.

For planning purposes, each socio-economic unit is further divided into "blocks," based upon economic, geographic and population considerations. The goal of a decentralized economy is to make each block (perhaps one to two hundred thousand people) self-reliant.

One of the major defects of capitalism is the drainage of capital from local areas and its concentration into few hands outside the control of local government. A company owned in New York may have a parasitic relationship with the economy of the Haitian countryside, thwarting the economic progress of the locals. Resources taken from under-developed areas are extracted at low cost and used to benefit capitalists elsewhere. Centralized economies also lead to high industrial and urban concentration. In a decentralized economy, there is no such problem of industrial concentration and excessive urban growth, or the problem of a growing migrant labor population. There is local control of resources and capital, and opportunity for every locality to develop its socio-economic potential. Each area strives for self-sufficiency and maximum development in all sectors of the economy with due regard for protecting the natural environment. Each is free to develop its own economic plan and methods of implementation.

Guiding Principles of Economic Decentralization

PROUT proposes five guiding principles for economic decentralization. These are:

1) There should be local control of resources. This is especially necessary for those resources that are involved in the production of the basic necessities. Raw materials must be utilized as close to their source as possible for maximum efficiency, sustainability and benefit to the local people.

2) Production is need-based, driven by consumption rather than profit. Commodities should be produced primarily for the local market to prevent the outflow of capital. The socio-economic unit should be of sufficient size to create stability in the local markets and economy in general.

3) Production and distribution should be organized mainly through cooperatives. Cooperatives are largely incapable of competing in a centralized, capitalist environment. With a decentralized economy, however, the cooperative system will provide the means to ensure that everyone at the local level has employment and decision making power in the economy. This is a critical component of economic democracy.

4) There should be local employment in local economic enterprises. This is contingent upon strong local education so that skilled people are available in all fields. Cooperatives can play a role in this process by providing on-going educational opportunities for their members as well as opportunities for implementing this knowledge. This also ensures that very talented people can be properly utilized and will not succumb to "brain drain," moving to more developed and affluent areas as is happening all over the world today. Many of the most skilled and talented move from rural areas to urban ones, and from the developing nations to the developed.

5) As far as possible, commodities pertaining to the basic necessities which are not locally produced, should be removed from the local markets. It is essential to the development of local production that this rule be applied. Initially, people may have to accept lower quality goods, higher prices, or less availability, but with proper development in accordance with the desires of a population, good results can be achieved by retaining capital within an economic unit. If there is enthusiasm and pride in locally produced goods, this process will proceed very well.

Section Five:

Under PROUT, the issue of trade must be carefully considered. Guidelines should exist so that trade is beneficial to all parties concerned and to the economy as a whole. In an economic democracy, resources are considered the property of the people of that socio-economic unit. Furthermore, one of the maxims of economic decentralization is that refinement and manufacturing should take place as close to the source of raw materials as possible. Hence, the export of raw materials is considered inappropriate in such an economic framework. An exporting socio-economic unit would lose valuable opportunities for the creation of new jobs and economic vitality. Often, economies which depend upon the export of raw materials are economically underdeveloped and have a low standard of living. Depending upon the nature of the raw materials, the importing socio-economic unit might run the risk of overemphasis on industry; or if food is involved, it may harm the socio-economic unit's ability to become agriculturally self-sufficient. Generally, such kind of trade is not conducive to economic decentralization or to a balanced economy (see next section).

However, when a socio-economic unit has insufficient raw materials to meet the minimum requirements of its populace, the importation of raw materials may be allowed. It should be carefully verified that the imported raw materials are indeed surplus to the socio-economic unit of origin.

Once a local economy is able to meet the basic needs of its people, finished goods which are not and cannot easily be produced should be allowed to enter an economic unit. Care should be taken, however, that they do not undermine the market for local goods. It is good if such kind of trade takes place through barter.

As an infrastructure develops for the exchange of manufactured goods, the free trade of surplus, finished goods between fully self-sufficient socio-economic units should be encouraged. This will help to facilitate prosperity and socio-economic parity amongst units. As this occurs, socio-economic units may begin to merge. This is a positive development if decentralized production and economic democracy are not jeopardized. One final and important point should be made in this matter. In order to avoid the emergence of a class of rich traders and middlemen, transactions between socio-economic units should be conducted only through producer and consumer cooperatives.

It should be clear how this approach differs from the capitalistic notion of freedom of trade. In quest of higher profit margins, capitalists seek cheap raw materials and cheap labor while targeting markets for finished goods which can give high returns. This is beneficial neither to the people living near the raw materials (who do not reap the benefits of ownership and may simply be employed in low wage mining, agricultural, or other jobs) nor to the populace of the more affluent market, for employment opportunities decrease as industry moves to cheap labor areas. And it is only marginally better for the areas which provide the labor for manufacturing because labor conditions, wages, and benefits will be as low as the capitalists can get away with. It may or may not stimulate much local economic growth or raise the standard of living. Furthermore, tremendous energy is wasted in shipping goods and raw materials between the sites of origin, sites of manufacturing, and the final markets.

Section Six:
Balanced Economy

In PROUT, the need to have a balance between the agricultural and industrial sectors of the economy is emphasized. Each and every country needs to have a steady and reliable source of food, yet too often, especially in Western society, the agricultural sector tends to be overlooked in favor of the industrial. Over industrialization and urbanization have resulted in many social and environmental problems.

The idea of a balanced economy can be defined by the percentage of people employed in certain industries. PROUT suggests that the following percentages can serve as a guideline for a balanced economy: about 30 to 40 percent of the population should be employed in agriculture (this also includes extraction of natural resources); 20 percent in agrico-industry (i.e., pre-harvest industries serving agriculture such as the manufacture of farming tools and fertilizers); 20 percent in agro-industries (i.e., post harvest industries such as food processing, flour and cloth mills, paper mills, etc.); 10 percent in general trade and commerce; and 10 percent in intellectual and white collar jobs. Those involved in industry should be 20 to 30 percent, drawn from the agricultural sectors. The veracity of these general figures can only be determined by practical experience but they are based upon the following considerations.

If more than forty percent of the population depend directly on agriculture, there is a high probability of excess pressure on the land, and this generally indicates the existence of subsistence farming. It is unlikely that sophisticated farming methods will be used, and many farmers will not be able to earn adequate wages for subsistence. In general, the living standard will be low and such an economic unit will not be able to become highly developed. On the other hand, if too great a percentage of a unit’s population is employed in industry, that country becomes over-industrialized. Besides the social and environmental effects of over-industrialization, these countries will need to seek raw materials from underdeveloped areas in order to fuel their industries. A parasitic relationship develops and becomes necessary to maintain. The quest for cheap raw materials was largely responsible for the colonial expansion of the last centuries. This underlying arrangement continues to exist although its present form has changed.

Section Seven:
Three-Tiered Ownership

In accordance with the principles of economic democracy, it was mentioned in previous sections that cooperatives will be the mainstay of a Proutist system. In a decentralized economy, all industries, agriculture and services can be effectively managed in a cooperative way. This does not mean, however, that the cooperatives will own the local resources. Rather the public sector will have to control raw materials as well as certain key industries (industries upon which other industries are built) on behalf of the people as a whole. An example of a key industry is a public utility, an iron and steel mill, a mining operation etc.

Another area where cooperatives may not be efficient is in the small-scale private sector. In some instances, individual private initiatives may better foster economic efficiency and productivity. Family run restaurants or small retail shops, artistic or entrepreneurial ventures, independent research etc., are some examples.

Therefore, according to PROUT there is a three-tiered economic structure. It is composed of key industries controlled by the local government; cooperatives for industry, agriculture and service (including finance) and thirdly, small privately-owned and run enterprises.

Section Eight:
Planning and Development

Planning is essential for decentralized economic development. It is required to ensure the coordination of the production and distribution of goods and services, particularly, the basic necessities. Proutistic planning differs from communistic planning in several respects. In communism, central planning takes top priority, while local planning is only a reflection of the central planning. In PROUT, decentralized, block-level planning is the basis of the economy. This is called intra-block planning. Blocks (of approximately one or two hundred-thousand people) are divisions of socio-economic units. Planning will certainly occur on district, state, national and global levels, but bottom-up planning is the foundation. Each higher level of planning will involve the coordination of various blocks, districts, etc., rather than making decisions for the lower levels.

Since there are problems that traverse block boundaries and cannot be solved by one block alone (examples are flood control, river valley projects, communication systems, higher educational institutions, afforestation projects, the environmental impact of development, the establishment of key industries, soil erosion, water supply, power generation, the establishment of an organized market system, etc.), cooperation among blocks is necessary. Planning among blocks is called inter-block planning. Inter-block planning is an economic venture into selected fields to organize and harmonize socio-economic development in a few adjoining blocks through mutual coordination and cooperation.

In order to ensure a balance in economic planning, the following factors should be considered:

· The present demand and the demand of the near future.
· The present supply and that of the near future.
· Availability of the factors of production.
· Ensuring basic necessities of life through the application of the principles of PROUT.

As per PROUT, there are also four fundamental principles to ensure efficiency in planning

· The cost of production
· The productive potential of the economic unit
· The purchasing capacity of the unit
· The collective necessity.

Other considerations include natural resources, geographical features, climate, river systems, transportation, industrial potentialities, cultural heritage and social conditions.

Planning should be consistent with the overall goals of PROUT to achieve maximum utilization and rational distribution. Planning must be short term, keeping in mind long term goals and considerations. PROUT suggests six months as the ideal for short term and three years as the ideal of long term planning and projection. If planning reaches far into the future it will become impractical and will fail to adjust with scientific advancement and other unpredictable factors. But, if planning does not keep long term objectives in mind then it will be difficult to fulfill the economic necessities of an area.

Section Nine:
Quadri-Dimensional Economics

According to PROUT, there are four distinct parts to a developed economy, and hence four branches of the science of economics. This four-fold division of the economy is a feature unique to PROUT. The divisions are: 1) People’s economy, 2) Psycho-economy, 3) Commercial economy, and 4) General economy.

Of these, the people’s economy is given the most emphasis. This field of economics analyzes the lives of individuals in relation to the economy as a whole, including their living standard, purchasing capacity, and economic problems. The most important aspect of the people’s economy is ensuring the guarantee of minimum requirements for everyone. Aspects included under this heading are most aspects of the production, distribution, storage, marketing, pricing, etc., of consumable goods. Hence, the people’s economy deals with producing necessary goods and amenities and getting them to the people in a timely and useful fashion.

To meet the minimum requirements for all requires that everyone has a large enough purchasing capacity. Therefore, another aspect of people’s economy is ensuring employment for everyone. This includes the eradication of mass poverty, the development of rural economies, skill training and work placement programs. One further concern of people’s economy is assisting the development of both private and cooperative industries. This would include measures to help privately-owned enterprises which grow too large to develop cooperative management.

The psychic aspects of economic activity are addressed by psycho-economics and pertain to the psycho-economy. At the present time, economists pay little or no regard to this aspect of economics. Once the basic needs have been attained, the psycho-economy will take on a much more important role. This field covers the relation of psychology to economic activity.

There are two branches of study within psycho-economics. The first is the psychology of exploitation. It is concerned with the elimination of unjust and exploitative economic behaviors. This branch of economic research makes people aware of how capitalism creates demands that are ultimately dangerous to the development of human beings. The second branch of psycho-economics is concerned with nurturing the mental needs of the people and with finding creative solutions to economic problems. Production of goods which have more impact in the mental than physical sphere is also an aspect of this branch. The economics of ensuring wide distribution of, and access to, all sorts of information, entertainment, arts, and crafts is an important aspect of psycho-economics.

The last two sections of the quadri-dimensional economy are the commercial economy and the general economy. These two sectors roughly correspond to what is recognized today as the field of economics, and as such there is no need to deal with them at length here. The commercial economy looks at how to develop more efficient and scientific methods for the production of goods and their delivery into the people's hands. General economy includes the overall organization of the structure of industry and the coordination of all levels of the economy, the goal of which should be to satisfy the collective needs of the society.

Section Ten:
Economic Depressions

From the very beginning, the industrial economy has not been a smooth journey. Years of industrial expansion have consistently been followed by years of depression - the bull market by the bear market. What is at the root of this? Should it be accepted as natural and inherent in any economy, or is it related to a specific mode of production?

All phenomena, whether social or economic, undergo systaltic movement (see social movement). Hence, pause is a natural state in the economic life of a nation. However, depression is not a natural state. It results from a defective socio-economic philosophy and practice. According to PROUT, depression is the net result of suppression, oppression and repression i.e. exploitation.

First, we have to say that before the development of the modern industrial economy, there were no industrial depressions as such. The economy was, of course, much more geared to "production for subsistence" and less market-oriented. There were economic disasters but these were generally due to scarcity, famine or war. In contrast, the modern industrial economy produces depressions accompanied by surplus products. The problem here is that the working people lack the purchasing capacity to buy the produced goods because capital has become too highly concentrated in the hands of the capitalists who see no profitable opportunity to invest their money.

At the root of economic depressions is the inner contradiction of capitalism. Here industries seek to maximize profits while reducing costs, as well as maintain or increase their market share. But in order to increase their profits and decrease their costs, there is a constant pressure to increase efficiency and reduce labor costs. As the economy slows, people’s jobs are terminated. As the purchasing capacity of the workforce is undermined the consumption of goods decreases. In this way modern industry constantly cuts away at the branch on which it sits. Under such circumstances, the capitalists can only gamble on the stock market, centralize capital more through mergers and acquisitions or expand there markets in other countries. The net result of this approach is that profits do indeed rise while costs decrease. The problem is that it also results in a tremendous income gap between owners and workers. Ultimately depressions can be tracked to four causes: 1) great concentration of wealth, 2) blockages in the circulation of money, 3) curtailment in the purchasing power of people, and 4) monetary devaluation and the resulting inability of the unit of money to be the unit of economic stability.

Institutions and practices which support these factors become the instruments of exploitation and cause the death of a society.

These factors are not inevitable. They are not inherent by nature in every industrial economy. Rather we can say that the law of productivity is benign when its goal is to meet the needs of the people. Under PROUT, if efficiency increases production beyond the need, "downsizing" will mean reduced working hours at the same pay rather than layoffs. In a cooperative economy there may be no limit to increasing productivity, while maintaining full employment, so long as the carrying capacity of the resource base is not violated. This is because the goal of the economy would be a higher standard of living for all.

Wednesday, December 30, 2009

Money that Slows Down to a Healthy Pace

Note from editor: Slow Money refers to a new concept of a money that stays local where its impacts can be seen and felt, in contradistinction to money that zips around the world at lightening speed far from its impact and thus avoiding responsibility and transparency. However, it in unwise to imply that money should circulate slowly locally. Good flow of money, like blood carrying nutrients through the body, is important to the health of a community. It means people are taking care of each other and not stuffing away a security blanket that allows high levels of autonomy from one another. Some may say large individual savings are a indicator of a healthy, functional individual in this economic system. I see the need for large individual savings as a sign of an unhealthy system in which a community doesn't trust itself, lacks a sense of spiritual interconnectedness and true love, and has not set up appropriate systems of long-term, cooperative care for the community.

I am reminded of my friend who spends much time in Guinea, Africa. The first year she was there, she asked her boyfriend to hold some money for her. The next day she asked for it back. He said he had already given it away to several friends and family members. Why would anyone want to hold onto money, when others need it and can use it right away? That's a very good question that reaches deep into our souls.

From the Berkshares Newsletter:

"Lowly, unpurposeful, and random as they may appear, sidewalk contacts are
the small change from which a city's wealth of public life may grow."
--Jane Jacobs from "The Death and Life of Great American Cities."

One of the features of BerkShares, the local currency circulating in the
Southern Berkshire region of Massachusetts, is that it fosters this wealth
of sidewalk contacts (

Use of BerkShares, a paper currency, requires face to face economic
exchange. The citizen/buyer must meet the merchant/owner and enter into
conversation about the item purchased. In the course of these multiple
transactions an understanding begins to grow of the nature of the business,
how it fits in the streetscape of the town, the working conditions of its
employees, availability of locally made goods, the impact of new
regulations, the necessity to respond to the changing tastes of consumers,
the hurdles to prosperity, the many roles the merchant plays in the
community as volunteer ambulance squad member, school board official,
community theater player.
When purchasing directly from a producer with BerkShares the information
shared may be even more deeply sourced in the local landscape. You may
learn how to detect the first signs of a blighted maple tree plaguing the
maple syrup industry, or learn how heavy spring rains kept bees from
pollinating the apples blossoms, resulting in fewer apples to market.

BerkShares are a "slow money" to borrow a term coined by Woody Tasch. It
takes more time to process a transaction, time for graciousness, time for
building connection with community of place.

"Inconvenient," some will say. Yes, when compared to the hastiness and
anonymity of an internet purchase. But rich with information needed for
conducting public life. A democracy only thrives when its citizens are
informed and engaged by public issues.

Slow money is not sleepy money but awake to the flow of economic life
pulsing through a region, shaping its future, providing warning signs and
creating options for public policy and private initiative. Perhaps the
greatest task of concerned citizens in the twenty-first century is to
reclaim responsibility for the consequences of our economic
transactions--personally, institutionally, and in public spending. Slow
money is the start of this process.

The function of money is to serve as an abstraction for real economic
exchange. This is both its flaw and its almost mystical power.
If we did not have the tool of money, we would be we left with direct
barter, limited to what we could trade at a particular place and
time--carrots for cordwood. Without the carrots I could not acquire the
cordwood. Money stands for a value created at a different time, stored, and
used to exchange for goods needed in the present time. Money allows values
to be collected together and applied to an entirely new type of venture in
the future. This accumulation allows the entrepreneur to organize human
initiative and raw materials and create some before-unrealized product for
healing the sick, producing energy, transporting goods. Quite wonderful.

However this tendency in money to abstract actual exchange can rapidly
escalate unchecked, so that ultimately money begets money through sheer
movement of capital. The living consequences of the working of capital--the
conditions of laborers, the processes used in manufacturing, the effect on
eco-systems to obtain raw materials, the fossil fuels used in transportation
of goods to consumers, the pockets of accumulation--all tend to be obscured.
Our private discussion and public debate accordingly narrows to cost of
goods and return on investment--shaping personal habits of consumption and
public policy that drive a global economic system unimpeded by
environmental, social, or cultural concerns.

Slow money again makes us conscious of the impact of our economic
transactions--not just as purchasers, but as tax-payers, investors, and

Last December BerkShares, Inc. took out a full page ad in a local paper
listing the seventy-one non-profit organizations that would accept year-end
donations in BerkShares. These ranged from the volunteer fire department,
to arts groups, to social service agencies, to the plethora of environmental
organizations in the Berkshires. By accepting BerkShares, these groups were
committing to re-circulate the BerkShares back in the community by
purchasing needed goods and services locally.

A woman in the area, known for her generous support of many different
initiatives, called to ask exactly how would someone make a donation in
BerkShares. We explained that you would walk or drive to the project's
office, call staff together, look them directly in the eyes, tell them what
important work they were doing for the community, explain that you wished to
thank them for this good work, and hand them an envelope with a big stack of
BerkShares. To calculate the tax value of your gift, you would use the
BerkShares exchange rate with federal dollars--10 BerkShares equals $9.50.

Such direct acknowledgement of good work exponentially increases the value
of the gift by inspiring staff. Slower, yes. It would take more time to
deliver the BerkShares in person than to simply write a check.
Inconvenient, yes. In the short run that is, or so it seems.
I recall the wonderful scene in "The Little Prince" by Antoine de
Saint-Exupéry in which the prince encounters a salesman extolling the
benefits of a pill to quench thirst. The salesman explains that by not
having to collect water for drinking, people will have more time to do other
things. The prince responds by saying that if he had more time there is
nothing he would rather do then locate a well from which to draw water to
quench his thirst.

As residents of the Southern Berkshires shift to trade in slow money, they
are at the same time re-imagining their local economy. It is fair to say
that everyone in the Southern Berkshires knows what BerkShares are‹that they
are in fact a currency that can be spent only in the region. And it is fair
to say that at least fifty percent of the people in the Southern Berkshires
have already engaged in long conversations about BerkShares in coffee shops
and other "sidewalk contacts." BerkShares have ignited a community
discussion about local businesses and their problems, about local trade and
the reasons for it, about the economic role of non-profits, about local
currencies in general and their importance, about the role of local banks,
about establishing import-replacement business, about economic sovereignty,
about changing deeply engrained financial habits, and about a sustainable

These small/slow exchanges are balancing the abstract tendency of money by
reconnecting financial transactions with the people, culture, and landscape
of a particular place, while at the same time building the community wealth
which is the foundation for a newly imagined economic system.

As the year comes to a close, consider the staff members of your favorite
organizations and take time to acknowledge their good work.

Like other non profits, the E. F. Schumacher Society welcomes financial
support of its programs. Your tax-deductible donations in BerkShares or
federal dollars may be delivered or mailed to:

E. F. Schumacher Society
140 Jug End Road
Great Barrington, MA 01230

Or made online by credit card at:

Best wishes for the New Year,

Susan Witt, Sarah Hearn, Stefan Apse, and Kate Poole
Staff of the E. F. Schumacher Society

Board of Directors: Gar Alperovitz, Jessica Brackman, Neva Goodwin,
Hildegarde Hannum, Eric Harris-Braun, Dan Levinson, Constance Packard, Will
Raap, Gus Speth, Joseph Stanislaw, and Stewart Wallis.

Tuesday, December 29, 2009

Ithaca Hours Accepted by Local Transit System

Reposted from

This event occurred back in August of 2009, but it did not get much press. I’m reprinting the notes from the board’s approval below because I think this is a very important matter. As far as we know, this is the first time in the United States that a public transit system has accepted payment in a local nongovernment issue community currency. While the text below is kind of boring, please stop and think about what you are reading...this was a landmark event. This offers strong proof that local currencies have real value in the communities where they circulate. This even creates a precedent for other future communities. Perhaps next year we may see a partial payment for real estate tax or business licensing? After reading this, please open your email, twitter or text messaging and discuss this event with friends or associates.

TCAT, Inc (Tompkins Consolidated Area Transit, Inc.) is a not-for-profit corporation that provides public
transportation for Tompkins County New York and portions of Tioga and Schuyler Counties.
Thursday, August 27, 2009 4:00 PM TCAT Conference Room
737 Willow Avenue, Ithaca, NY
Action Items from Staff
Consider approval of Resolution {2009-09} Approval of Use of Ithaca Hours. – F. Proto presented Resolution
WHEREAS, Ithaca Hours, Inc. has asked the TCAT Board to consider acceptance of Ithaca Hours from TCAT
passengers as partial payment for TCAT bus rides, and
WHEREAS, the mission of Ithaca Hours, Inc. is to support the local economy by keeping money in the community,
WHEREAS, TCAT’s acceptance of Ithaca Hours is likely to promote increased ridership among Ithaca Hours
members and users, and
WHEREAS, the TCAT Board wishes to begin TCAT’s participation in Ithaca Hours on a limited basis, with
the TCAT Board periodically reviewing TCAT’s participation to determine if it should expand the opportunities
for passengers to use Ithaca Hours,
NOW, THEREFORE, be it RESOLVED, that the TCAT Board authorizes TCAT to become a member of
Ithaca Hours, Inc., and to accept up to one-half (1/2) of an Ithaca Hour (1/2 Ithaca Hour = $5.00) as partial
payment for a monthly bus pass, with the balance of the pass cost paid in U.S. currency.
Adopted by the TCAT Board of Directors on this the 27th day of August, 2009.
The resolution to approve the Use of Ithaca Hours was moved by K. Luz Herrera; and seconded by H. Dullea.
Discussion followed. The motion passed unanimously.

Monday, December 28, 2009

Community-currency loan stimulates flurry of economic activity

Human-services organization turns to non-U.S.-backed funds to pay employees annual bonuses, expand programs for those it serves

Submitted by:Resources For Human Development

Posted: Dec 28, 2009 – 10:36 AM EST

PHILADELPHIA, Dec. 28 /CSRwire/ - A national nonprofit that borrowed 25,000 Equal Dollars, a currency complementary to the U.S. dollar, has made its first payment on the five-year, interest-free loan, demonstrating that an adjunct economy in bills and credits other than those issued by the Federal Reserve can help corporations and families prosper when greenbacks are scarce.

Resources for Human Development (RHD) earlier this month made its first installment on the loan in the amount of 1,000 Equal Dollars, a significant milestone considering the human-services provider had to cultivate new income streams in Equal Dollars to repay in the same currency.

"This experiment is working, and it's working well," said RHD founder and CEO Robert Fishman. "And it can work for other corporations, too, as well as governments and small businesses."

RHD negotiated the loan from Equal Dollars Community Currency this summer, as it struggled to come up with a way to provide annual bonuses for its Central Office employees amid a tight budget in a lackluster economy. With the zero-interest loan, RHD paid bonuses of 100 Equal Dollars to each of its 250 headquarters workers.

But that was only the start of RHD's efforts to make good on its promises to repay the loan. Next, it had to make sure its employees had meaningful goods and services on which to spend their new Equal Dollars. And it had to ensure that it somehow developed an income stream of Equal Dollars, so that it could satisfy its debt. The Equal Dollars bank does not accept U.S. dollars.

So RHD, a sprawling nonprofit with 160 people-helping-people programs in 13 states and with stakes in several for-profit socially conscious businesses, went to work.

It asked one of its for-profit spinoffs, Brothers' Keepers Hope Improvement, which offers employment to ex-offenders, to pay rent in Equal Dollars for space it uses at RHD's headquarters building.

Then it expanded a weekly vendors' bazaar in which individuals offer everything from handmade crafts and clothing to personal hygiene items and household goods for a combination of U.S. and Equal dollars. Each of the vendors pays a fee to RHD in Equal Dollars in return for their booth and access to the consumers.

And, most significantly, RHD started a one-day-a-week produce market for the community in unused space in its basement. Stocked with fruits and vegetables donated by a large food wholesaler, the market exchanges family-pack bags of food for equal amounts of U.S. and Equal dollars, using the Federal Reserve bills to offset transportation and related costs and stockpiling the Equal Dollars to repay the debt obligation.

The produce market has become wildly popular, leading RHD to seek out other "end of commercial life" products that it can breathe a second life into and generate more Equal Dollars for corporate coffers and more savings of U.S. dollars for consumers.

"The beauty of all of these activities is that they are sustainable, that they save consumers U.S. dollars and that they serve needs that otherwise couldn't be satisfied because of the scarcity of government-issued money," said Peggy Mowatt, RHD's chief operating officer.

A natural outgrowth of RHD's efforts to generate income in Equal Dollars has been the growth of other economic activity in Equal Dollars.

For example, Brothers' Keepers president Gerald Hatten, faced with paying rent in Equal Dollars to RHD, began accepting Equal Dollars from clients engaging his firm in home-remodeling and commercial-cleaning jobs. His clients, eager to save traditional, U.S.-backed bills, scrambled to find ways to generate their own Equal Dollars to pay Brothers' Keepers.

"It's amazing how rapidly this concept can spread throughout a community," Hatten said. "One thing we didn't expect when we began accepting Equal Dollars is that it also set us apart even more from our competitors. It makes us special, and that's a leg up in this economy."

Equal Dollars is beginning to pervade other facets of RHD's operations as the organization learns how to apply the complementary currency.

Just recently, when RHD launched a newspaper in Philadelphia written by residents of its homeless shelters, it wrestled with how to offer the shelter residents a credit line to buy newspapers they would then distribute at a markup to passersby on the street. The publication's business model called for those who are homeless to pay 25 cents for each paper to offset printing costs, with the remainder of each $1 exchange to supporters going directly to the homeless distributor in an effort to offer them enough income to leave the street behind.

The problem was the shelter residents couldn't afford even the upfront 25 cents per paper.

"There just wasn't any money in the budget to advance them papers they could distribute for $1 donations on the street to reinvest in more papers," said Eddie Byrd, RHD's director of marketing and communications and a consultant on the project. "So we came up with the idea of giving each of the distributors a credit line of 10 Equal Dollars. That gives them 40 papers they can accumulate $40 from. And that's all they needed to get up and running."

Deneene Brockington, director of the Equal Dollars Community Currency, notes that even the newspaper's modest adoption of Equal Dollars will spread the reach of the alternate currency.

"If that newspaper is giving a 10 Equal Dollar advance to, say, 25 distributors, each of those 25 vendors is going to have to come up with a way to earn at least 10 more Equal Dollars so they can repay," she said. "That means more goods and services are going to be offered to more people who will also want to earn Equal Dollars so they can save on U.S. dollars. Equal Dollars is generating more economic activity every day, and it's all economic activity that wouldn't have happened if it depended on Federal Reserve currency alone."

Equal Dollars Community Currency is focused on the Philadelphia area. But its principles can be replicated anywhere.

RHD CEO Fishman believes financially strapped governments should consider embracing Equal Dollars to ease the effect of declining revenues from the recession.

"A community currency like this is more productive and sustainable than, say, one-time stimulus funding," he said. "Instead of endlessly scouring budgets for more cuts, governmental entities could be using complementary currencies to augment services to their citizens, and we would be please to get them started."

At RHD, Fishman is always thinking up new ways to fill the corporate treasury with fresh Equal Dollars that can then be used to reward employees and develop new services for those the nonprofit serves.

"Equal Dollars is an engine of growth whose power we are only beginning to enjoy," he said.

With the strong creditworthiness RHD is building at the Equal Dollars bank, expect to see more of RHD's growth from return trips to the community currency's lending window.

To learn more about Equal Dollars, contact Deneene Brockington, director of Equal Dollars, at or call at 215-951-0300, ext. 3027.

About Resources for Human Development
A national human services nonprofit founded in 1970, Resources for Human Development serves tens of thousands of people every year in 13 states. RHD delivers caring, effective and innovative programs addressing intellectual and developmental disabilities, behavioral health, homelessness, addiction recovery and more. In partnership with local governments and those we serve, RHD builds better lives, families and communities. To learn more about RHD and its more than 160 programs, visit

For more information, please contact:
Kevin Roberts Communications
Phone: 215-951-0300, ext. 3714
Deneene Brockington Director, Equal Dollars
Phone: 215-951-0300, ext. 3027
Eddie Byrd Director, Marketing & Communications
Phone: 215-951-0300, ext. 3950
Phone 2: 610-389-7266

For more from this organization:
Resources For Human Development

Bay Area Community Exchange Newsletter 12/09

Bay Area Community Exchange (BACE) is a collaborative network that supports the development of alternative means of exchange in the San Francisco Bay Area. We provide research and development support, incubation of alternative exchange projects, and education to the Bay Area community about economic issues. Through our work with currency projects, we will create an economy that is more sustainable, just, and embedded in healthy community connections.

An Update on BACE

This is BACE’s first newsletter. It has definitely been an interesting 9 months. BACE initially started with a call out to people in the Bay Area interested in starting an alternative currency of some kind. For a few months, we hosted bi-weekly discussions of various alternative currency models. In May 2009, we held a strategic planning meeting where it was decided that some group members would focus on developing an online LETS-like system, while BACE as an umbrella organization would continue functioning as a collaborative network of currency projects that would support each other.

Part of making new currencies work is getting the general public to understand them so we held several public education events this year –a screening of the “Money Fix” and discussion of alternative currencies with the director, and two presentations on alternative currencies by world expert, Miguel Hirota from Japan. We created a power point presentation on currencies for communities thinking about starting a currency project. This presentation has already been delivered to a permaculture and an ecoliteracy class, has been requested by other groups. It will eventually be part of a currency toolkit for communities through the Solidarity Economy Network and the US Social Forum. Any groups interested in hosting this free presentation for their community or group should contact mira(at)

To develop BACE as an organization and stabilize it, we formed a steering committee and got nonprofit fiscal sponsorship through the International Society for Ecology and Culture. We set up a wiki and a website, with a great introductory education section on currencies, as well as discussion listservs to share information about currency theory and practice. We were hosting 2 thinktank meetings/month which dove into the nuts and bolts practice and theory of currencies, as well as a social mixer/project roundtable which was more informal, social, and great for newcomers. We may decide to consolidate these meetings in the new year.

For 2010, BACE is planning an Ignite Currency Conference/Mixer in early March, most likely March 3 in San Francisco, along with a screening of the “Double Face of Money” and/or the “Money Fix”. We are looking for financial sponsors and a location. We have also been asked to help coordinate the currency section of the US Social Forum in June in Detroit.

Below are updates of projects that have been supported by BACE. Please contact BACE or the projects if you would like to help out. Have a great New Year and celebrate the new economy!

Timebank from Mira Luna (formerly Heather)

After many months of trying to decide on a project to initiate through BACE, some of us chose to focus on an online time exchange. We found a programmer who is developing open source time exchange platforms out of Austin, named Tom Brown. Tom developed Austin Time Exchange and Columbia Circle Exchange. Along with our timebank, Tom is tailoring his platform to these three communities needs as a volunteer. Another option was to go with Timebanks USA, but they charge for their service on an ongoing basis and you can’t tailor the platform. There are some other programs out there, but Tom’s is pretty far along and he has been great to work with.

The timebank planning committee, a group of about 6 of us, have been working on this project and using it, along with other volunteers who agreed to use it and give us feedback. Then last month, we held a site tester launch party and orientation. The attendees gave us a lot of good feedback, and we got a chance to practice our orientation before we do a public launch. We are now doing a survey of other similar systems to figure out how to make the best time exchange before we go public. Other plans for future include helping timebank members to host their own timebank potluck/swap meet/orientations and involving organizations or specific groups of people that already have identified needs and communities of trust. We are also considering drawing down on accounts to issue paper hours that can be more easily exchanged, especially for people without regular computer access.

We hope to get a physical space for people to be able to come in and use a computer when they need it and talk to a volunteer coordinator or mail their time credits/debits in. Eventually, many of are excited about the prospect of hosting a time-based store, café and community center where people can exchange time credits for food, other goods, and services, all without money. A tentative name is Time for Change. If you are interested in helping with this project, please contact mira (at)
If you are interested in helping with the timebank in general, please contact Amy Johnson at timebankinfo (at) or join the timebank as a user/tester at

Marc Armstrong on his multiple currency projects

Sonoma Farmers Market currency – Marc is developing a "Sonoma Local Currency Addendum" for the 3-4 organizations that are proposing to manage the Farmers Market to use as part of their proposal. Proposals are due end of December with decision in January. The currency system is dollar based so the currency can be exchanged in the market or at a local community bank. One unique aspect of the currency is to have 3 versions, each representing a certain local cause (environmental sustainability, music/arts, civic health & well being), so that the people behind each cause are motivated to use "their" currency. Revenues from the sale of mint proofs go towards funding nonprofits associated with each cause.

Vintage currency – Marc is still designing the system, but essentially this is currency that would be guaranteed with wine production. He’s not sure if it would be by appellation or by another type of region, nor does he know if something like this is legal because of the restrictions on alcohol advertisement /trade/consumption, but he believes there would be yearly editions of the currency and the currency would somehow be guaranteed by that year's production. Marc is currently looking for a sponsoring organization here in Sonoma County or Napa County.

TouchPoint Software – Marc is looking for a development partner to fund this software so that it may be implemented. This balance and businesses that can go either positive or negative), a marketplace similar to Craigslist, an accounting application to keep track of member transactions and balances, and a payment subsystem.

Bernal Bucks from Guillaume Le Bleu

Bernal Bucks is a San Francisco-based local money initiative supporting the neighborhood economy and non-profits. Bernal Bucks are regular 5 or 10 Dollar bills tagged with a “Bernal” sticker. The tag stickers can be obtained at the Neighborhood Center and some stores like Cole Hardware and Heartfelt. They are given as acknowledgments when people donate to local causes, like the Neighborhood Center or the Library Campaign. Since the stickers are easily removable, they are not considered an alteration of money.

Holders of Bernal Bucks essentially pledge to spend the money in the neighborhood, thus supporting the local economy. “The goal: keeping the tagged dollars circulating in the neighborhood as long as possible” explains Bernal resident Guillaume Lebleu, one of the initiators. Those who want to follow the journey of the Bernal Bucks, can use the unique identifier on each tag to log them on the website. Door signs at participating businesses, like Good Life Grocery, announce special bonuses for customers who pay with Bernal Bucks. They range from nice goodies like an apple to attractive discounts, acknowledging both the loyalty to local businesses and the donations to neighborhood causes. “Wow! I am really excited about this.” says Ken Shelf, owner of Four Star Video.

The initiative welcomes the participation of all Bernal businesses and plans to benefit more nonprofits in the community. Since Bernal Bucks is the first initiative of its kind, everybody involved is in a learning mode about how to best use the localized money. In 2010, the initiative plans to introduce Bernal Bucks for card payments. Updates:

Reciprocity Inc. from Ken Lynch

Reciprocity has launched and is continuing development of the SCCBank environmental currency project with Platform Recipro, a company sustainability rewards system. Reciprocity is a software innovation start-up, develops reward and recognition systems, and is currently focused on the Sustainable Industry. The rewards used in Platform Recipro are backed by sustainable resources, fully traceable and trackable, have monetary value, and encourage participation in corporate sustainability programs. Platform Recipro enables corporations and individuals to reward positive impact, and share those achievements with customers. Based in San Francisco, Reciprocity has grown with the help of the BACE network, and several Reciprocity people are involved in other BACE projects. We are currently recruiting Sustainability Consultants. If interested, please contact ken (at)

Oakland Acorn from Wilson Riles

Wilson Riles and Orlando Johnson of Oakland have been pursuing a local currency, called Acorns, to be attached to the City’s municipal ID program, along with a debit card function. The City of Oakland staff is reviewing the final draft of the RFP, and an outside expert attorney on banking is reviewing the RFP to protect against risk and liability associated with the City backing a debit card system. There is still some input from the City's IT department that is forthcoming. It appears it will be March before the Council has bidder responses to choose from but there are already high quality bidders that are interested in the RFP. This new interest from the City in finding "quality" bidders is an indication that the City administration has now "bought in" to the initiative even though it did not come from them. The Coalition has not yet seen the final draft of the RFP and is hoping that there is not anything put in or left out of the RFP that they would have to protest about. After more than a year and 1/2 of work on this, the Coalition has the true experts on this initiative. For more info see, or contact Wilson at wriles (at)

Get Involved!

Come be a part of a movement towards a more sustainable, cooperative and caring economy. Whatever your talent or interest, we can find a place for you in BACE or one of its projects. If you already have a currency project, we can help nurture your currency idea into fruition and provide a large, friendly network of others who are interested in or are developing currencies. You can also attend one of our monthly meetings. All meetings are listed on our calendar ( If you are not sure where to start, feel free to contact mira (at)

Support Us

BACE is an all-volunteer organization with no overhead so your donations will go a long way towards supporting our work in helping educate the public and assisting development of currency projects. To make a financial or in-kind contribution to BACE, please contact mira (at) or make a donation online on our fiscal sponsor’s website at and enter “Bay Area Community Exchange” on the designation line. All donations are tax deductible. We need volunteers and student interns to help with projects, education and outreach, grant writing, and website work; monetary donations for educational events and nonprofit project support; and funding for or in-kind offer of space for office and meetings near public transit in San Francisco, Oakland or Berkeley.

Community Currency Fights Climate Change

Helping to reach ambitious climate goals...
Kiwah is a new currency that is specially designed
to stimulate our communities to lower our CO2-
emissions. Kiwah can be used by a wide variety of
communities working on transition, climate and
poverty projects. The Kiwah is a concrete instrument
that helps us to build our communities to achieve
different societal goals, and bring project income.
We offer you Kiwah:
Our times have many challenges that need
urgent solutions. We have the challenge to
reduce our CO2 emissions with 80% in a
short period of time. We have to develop
a slim economy that is able to overcome
poverty and feed a growing population. To
accomplish this immense task, we need to
go through an intensive transformation.
Our gift will be part of the solution.
Kiwah is a new currency that is specially
designed to stimulate our communities to
lower our CO2-emissions. Kiwah can be
used by a wide variety of communities
working on transition, climate and
poverty projects. The Kiwah is a concrete
instrument that helps us to build our
communities to achieve different societal
goals, and bring project income.
Kiwah is designed by Qoin and is
launched on December 15th in a TV show
at the Klimaforum during the COP 15 in
Copenhagen. It will be further developed
in close collaboration with the Climate
Solutions Meshworks, YourClimate.
tv, and many others. All communities
over the world that focus on sustainable
development are invited to use the
6 § Communi ty Currency Magazine November-December 2009 Issue
Communi ty Currency Magazine November-Decemer 2009 Issue § 7
More info:
Ready for Action: Kiwah is set up in close cooperation
with the Climate Solutions Meshworks
Do you want to set up your own Kiwah community,
mail us at
What do we need to start?
Kiwah has been launched during the COP 15. To
develop Kiwah we need your help.
We need:
• Enthusiastic people to help us develop;
• Communities that launch Kiwah;
• Of course we need money (oddly enough), to
build the core-organization, our web presence,
adapt the transaction software, develop the start
package, get the communities going and solve
some legal issues;
• But above all: we ask a gift from everybody
owning renewable energy. We need sun, wind,
water and biomass as backing; please donate
some of the Kilowatt-hours you generate
For more info see:

Sunday, December 27, 2009

The Suppressed Ideas of Kropotkin on Evolution

Sunday, October 25, 2009
Reposted from Not an Apathist Blog
By Ronald Logan

In his book, Bully for Brontosaurus, scientific historian Stephen Jay Gould devotes a chapter to presenting Peter Kropotkin's views on biological evolution. Kropotkin is best known as a Russian revolutionary anarchist who believed in cooperative, rather than hierarchical and competitive, human relationships, and in devolving the power of the central state to local communities. It is less well known that his political views were based on a sophisticated view of evolution.

Basis for a Cooperative Economy in Russia

Kropotkin's ideas on evolution contrasted sharply with those of Victorian English intellectuals such as Thomas Huxley, who stated: ". . . the animal world is about on a level of a gladiator's show . . . whereby the strongest, the swiftest, and the cunningest live to fight another day." To the Victorian Darwinists, this view of nature gave substance to Thomas Malthus' belief in survival of the fittest, and bolstered the social Darwinist ethos of competition and unbridled private property rights.

Kropotkin could not accept Huxley's "gladiatorial" Darwinism as a valid account of evolutionary biology, believing instead that the predominant way in which species achieve success is through cooperation, not competition. (Kropotkin acknowledged the prevalence of inter-species conflict; it was intra-species conflict with which he took exception.) He also believed that nature provides guidance for human morality through its emphasis on sociability and cooperation, not unrestrained competitiveness.

Rather than adopt a view of nature which supported his political thesis, as do most social philosophers, Kropotkin's political views evolved from his scientific experience. As a young man, he spent five years as a naturalist studying the geology and zoology of eastern Russia. During this period, he observed that living things coped with the harsh Siberian environment primarily through cooperative behavior. In his book, Mutual Aid, written as a rebuttal to Huxley's essay, "The Struggle for Existence in Human Society," Kropotkin stated: "During the journeys which I made in my youth in Eastern Siberia and Northern Manchuria . . . I failed to find--although I was eagerly looking for it--that bitter struggle for the means of existence among animals belonging to the same species, which was considered by most Darwinists as the dominant characteristic of struggle for life, and the main factor of evolution."

Kropotkin abhorred the social vision of the gladiatorial evolutionists: "They conceive of the animal world as a world of perpetual struggle among half-starved individuals, thirsting for one another's blood . . . They raise the 'pitiless' struggle for personal advantages to the height of a biological principle which man must submit to as well." Countering the social Darwinists, Kropotkin asserted, "If we . . . ask Nature: 'who are the fittest: those who are continually at war with each other, or those who support one another?' we at once see that those animals which acquire habits of mutual aid are undoubtedly the fittest. They have more chances to survive, and they attain, in their respective classes, the highest development of intelligence and bodily organization." From his observation that mutual aid gives evolutionary advantage to living beings, he derived his political philosophy--a philosophy which stressed community and cooperative endeavor.

Kropotkin was not alone among Russian intellectuals in questioning British Darwinism. Rather, as Gould points out, "he represented a standard, well-developed Russian critique of Darwin, based on interesting reasons and coherent national traditions." The Russian school of evolution based its criticism of Darwin not only on their observations of natural history, but also out of political antipathy to social Darwinism. Daniel Todes, in his article "Darwin's Malthusian Metaphor and Russian Evolutionary Thought" (published in Isis, the leading history of science journal), observed that objections to the Western competitive world view were shared by Russian radicals and conservatives: "Radicals, who hoped to build a socialist society, saw Malthusianism as a reactionary current in bourgeois political economy. Conservatives, who hoped to preserve the communal virtues of tsarist Russia, saw it as an expression of the 'British national type.'"

Nineteenth-century Russian evolutionary theory had little impact on the development of biology or political theory in the Western industrial world, but the issues Kropotkin and his colleagues raised remain relevant. Now that Russia is in the process of choosing a new political and economic future, the substance of Kropotkin's vision of nature and society warrant reconsideration.

The Modern View

A century has passed since Kropotkin challenged the British evolutionists. How has a hundred years of accumulated scientific knowledge influenced the debate over fierce competition versus mutual cooperation as the primary mechanism of species survival? Relevant evidence comes mainly from two sources: biology (particularly ecology) and social psychology.

A good analysis of the biological evidence is presented in the book, The New Biology, by Robert Augros and George Stanciu, summarized in their paper, "The Biology of Aggression and Cooperation" (Noetic Sciences Review, Winter 1989). Augros and Stanciu begin their analysis by observing that Darwin relied on eighteenth-century reductionist methodology, which tries to understand the whole through analysis of its parts. "He split nature into all its separate parts, individual plants and animals, and saw that everything was trying to reproduce itself as much as it could . . . Then when he put all those isolated organisms back together, he thought it was clear that such reproduction would lead to a shortage of space, of food, and other necessities of life. There was going to be severe competition, and therefore all of nature was going to be at war." The inevitable conclusion of reductionist methodology is that nature must be ruled by conflict.

The reductionist premise is a core assumption of the Western intellectual paradigm. But this premise has come under sustained attack by a diversity of scientific disciplines, including biology (increasingly influenced by ecology, which focuses on the interactive processes in living systems). Biologists dissatisfied with reductionism are attempting to articulate a new biology, one which looks at wholes, at systems, and at synergisms (as well as at the functioning of parts). From this new biology we find, as Augros and Stanciu report, that "nature uses extraordinarily ingenious techniques to avoid conflict and competition, and that cooperation is extraordinarily widespread throughout all of nature."

Nature avoids competition in various ways: by separating species geographically into differing habitats; by sorting species into unique niches within habits; by spatial division according to gradations of environmental factors, such as oxygen content at different levels of a body of water; by territorial demarcations, as when cats mark out with their scent the space which is theirs; and by establishing dominance hierarchies within social groupings of animals.

Cooperation is fostered through a wide array of symbiotic arrangements. Many plants produce tasty fruits, which animals eat, later depositing the undigested seeds. The intestinal bacteria of grazing animals makes possible the breakdown of cellulose fibers into digestible fatty acids. Egyptian plovers get their food by cleaning parasites off the bodies of rhinoceroses. And clown fish are given protection by anemone, while serving as bait for the fish that the anemone eat. These are only examples of inter- species cooperation--intra-species cooperation is even more commonplace.

At the time Kropotkin challenged British Darwinism, the scientific study of human behavior was in its infancy: Wilhelm Wundt had just begun the first psychology laboratory in Leipzig. In the debate as to whether competition or cooperation is more characteristic of human nature, the young field of psychology was mute. Today, however, there is a vast body of social psychology literature on this question.

Alfie Kohn, author of No Contest: The Case Against Competition, spent seven years reviewing more than 400 research studies dealing with competition and cooperation. Prior to his investigation, he believed that "competition can be natural and appropriate and healthy." After reviewing research findings, he radically revised this opinion, concluding that, "The ideal amount of competition . . . in any environment, the classroom, the workplace, the family, the playing field, is none . . . . [Competition] is always destructive" (Noetic Sciences Review, Spring 1990).

According to Kohn, there are three principle consequences of competition. First, it has a negative effect on productivity and excellence. This is due to increased anxiety, inefficiency (as compared to cooperative sharing of resources and knowledge), and the undermining of inner motivation. Competition shifts the focus to victory over others, and away from intrinsic motivators such as curiosity, interest, excellence, and social interaction. Studies show that cooperative behaviour, by contrast, consistantly predicts good performance--a finding which holds true under a wide range of subject variables. Interestingly, the positive benefits of cooperation become more significant as tasks become more complex, or where greater creativity and problem-solving ability is required.

The second effect of competition is that it lowers self-esteem and hampers the development of sound, self-directed individuals. A strong sense of self is difficult to attain when self-evaluation is dependent on seeing how we measure up to others. On the other hand, those whose identity is formed in relation to how they contribute to group efforts generally possess greater self- confidence and higher self-esteem.

Finally, competition undermines human relationships. Humans are social beings; we best express our humanness in interaction with others. By creating winners and losers, competition is destructive to human unity and prevents close social feeling. In the competitive mode, people work at cross purposes, or for personal gain. Some come out ahead, some behind; some win, some lose. It becomes impossible for people to move together, as is necessary for a harmonious human society.

Biology and social psychology are not the only disciplines which support cooperation as the natural basis for human interaction. Ethnological studies indicate that virtually all indigenous cultures operate on the basis of highly cooperative relationships. Anthropologist Nancy Tanner has presented evidence to show that the predominant force driving early human evolution was cooperative social interaction, leading to the capacity of hominids to develop culture. And industrial psychology now promotes "worker participation" and team functioning because it is decisively more productive than hierarchical management.

Beyond Science

In 1910, while lying in his death bed, Leo Tolstoy dictated his last letter, a letter of advice to his son and daughter. He told them: "The views you have acquired about Darwinism, evolution, and the struggle for existence won't explain to you the meaning of your life and won't give you guidance in your actions, and a life without an explanation of its meaning and importance, and without the unfailing guidance that stems from it is a pitiful existence. Think about it. I say it, probably on the eve of my death, because I love you."

Tolstoy's concerns about the Darwinism of his time were vindicated by history. In America, social Darwinism justified the unbridled economic exploitation of the robber barons. America's first billionaire, John D. Rockefeller, ruthlessly built up his Standard Oil monopoly believing that his efforts were sanctioned by the natural order. He said: "The growth of large business is merely a survival of the fittest."

In Germany, social Darwinism supplied justification for German militarism during World War I. Vernon Kellogg, an American biologist stationed during the war at the headquarters of the German Great General Staff, later described the Darwinian views of the German military officers in his book Headquarters Nights: "The creed of the Allmact ["all might" or omnipotence] of a natural selection based on violent and competitive struggle is the gospel of the German intellectuals; all else is illusion and anathema.... That human group which is in the most advanced evolutionary stage . . . should win in the struggle for existence, and this struggle should occur precisely that the various types may be tested, and the best not only preserved, but put in position to impose its kind of social organization on the others, or, alternatively, to destroy and replace them."

We now know that the dominant evolutionary thinking of Tolstoy's day was flawed, and that the minority view of Peter Kropotkin lies closer to the truth. But does this mean that "the new biology" should now become the basis for our moral truths and our social institutions?

It would certainly be unwise to ignore or dismiss the compelling findings of biology and social psychology. The post-reductionist, holistic science of our time can supply us with deep insights into the general laws of nature--our own included. But can materialistic science, even formulated with an enlightened holistic paradigm, provide what Tolstoy wished for his children: a foundation for meaning and guidance for our lives?

The problems with materialism as a foundation for human values are twofold. First, science studies the phenomena of a dynamically changing world, and its theories and paradigms about the world are also constantly evolving. As Paul Samuelson once expressed: "funeral by funeral, theory advances." The truths of science, while often robust, are not permanent, but subject to change. Human society is also part of the changing world, and must progressively adapt to new ideas and institutions. But finding purpose in human life is a different matter. We have innate need, many believe, to find purpose in that which is eternal and infinite.

The second problem with materialism is that mind is subtler than matter. The use of knowledge about the physical universe to define value structures for directed by the mind is inherently limited, as there are realms of human experience that transcend physicality. To limit our understanding of ourselves to that which can be explained materially is to restrict the comprehensive, integrated development of the human personality.

There is a growing consensus that the post-modernist episteme will not have materialist foundations. But neither is there much sentiment for a retreat to idealism. Idealism has been expressed in Socrates' fascistic vision of society lorded over by philosopher kings, in Shankaracharya's philosophy that the world is illusion, in medieval religion's obsession with heaven and obliviousness to suffering, and in Hegel's glorification of individual sublimation to the state. Its long history of defective and detrimental philosophies has discredited idealism as a basis for human welfare. If both scientific empiricism and idealistic philosophy are inadequate, then what alternative faculty of knowing can provide us with meaning and proper moral guidance?

Tolstoy's answer was that truth can only be achieved by looking within oneself, that a transcendent reason and power flows from within us, and that our highest purpose is to do its will. Tolstoy formulated a philosophy of Christian mysticism, but his core ideas are generally consistent with what Aldous Huxley (grandson of Thomas) termed the "perennial philosophies." Huxley perceived that certain common themes have been expressed by humanity's great seers--those who derived their teachings from personal illumination, revelation or mystical experience. Though living in different times and cultures, their teachings share fundamental beliefs and values.

The American humanistic psychologist Abraham Maslow studied "peak experiences"--the kinds of experience out of which the perennial philosophies originated. He termed the cognitive state that arises during peak experiences "B-cognition," or cognition of being. He detailed his research in his book, Religions, Values and Peak Experiences, where he wrote that his "most important finding was the discovery of . . . B-values or the intrinsic values of Being." He went on to observe that "this list of the described characteristics of the world as it is perceived in our most perspicuous moments is about the same as what people through the ages have called eternal verities, or the spiritual values, or the highest values."

What do those whose values are derived from B-cognition have to say about the issue of contention between Huxley (the Darwinist) and Kropotkin? The consensus is definite: love and cooperation, not conflict and competition, are the eternal verities which should guide human relations.

Beyond Capitalism

P.R. Sarkar was a twentieth-century philosopher and spiritual teacher who was as concerned with social justice as he was with spiritual liberation. Sarkar, like others who espouse the perennial philosophy, believed that the B-cognition, or intuitional mode of knowing, is inherently synthetic. In contrast to reductionism and the rationalist approach to knowledge, which is analytical in nature, intuitional faculty of mind tends toward wholeness--its ultimate reach being a state of unitary consciousness in which individuals directly identify with the cosmic whole, rather than with a limited ego state.

Those who acquire synthetic knowledge inevitably develop a growing sense of the unity and interconnectedness of life. Based on this universal spiritual perception, Sarkar believed it possible for humanity to recognize its integrated, interdependent existence, and move collectively to achieve its material, psychic and spiritual aspirations. He termed this ideal "universalism."

Sarkar rejected competition and upheld cooperation: "In every field of collective life there should be cooperation amongst the members of society." In this respect, his thinking is not novel; it has been espoused by many people of wisdom. But he went beyond other spiritual philosophers in his use of perennial philosophy values to formulate socio-economic theory.

Sarkar insisted that collective efforts should take the form of "coordinated cooperation," not subordinated cooperation. Subordinated cooperation occurs "where people do something individually or collectively, but keep themselves under other peoples' supervision." Coordinated cooperation occurs "between free human beings, each with equal rights and mutual respect for each other, and each working for the welfare of the other." In relation to this ideal form of social relationships, he observed that none of the present socio-economic systems are based on coordinated cooperation, but on subordinated cooperation, and that this "results in the degeneration of society's moral fabric."

Sarkar formulated a spiritual perspective on wealth: "This universe is created in the imagination of the Supreme Entity, so the ownership of this universe . . . does not belong to any particular individual; everything is the patrimony of us all. Every living being can utilize their rightful share of this property. . . . [T]his whole animate world is a large joint family in which nature has not assigned any property to any particular individual."

Sarkar termed this conception of wealth "cosmic inheritance," and made clear its implications for economic theory: "According to genuine spiritual ideology, the system of individual ownership cannot be accepted as absolute and final, hence capitalism, too, cannot be supported." Cosmic ownership also undermines "state capitalism"--communism's command economy system in which there is state ownership of wealth.

Based on his premises of universalism, coordinated cooperation, and cosmic inheritence, Sarkar formulated an alternative economics which he called "cooperative economics." Cooperative economics is an aspect of his comprehensive socio-economic philosophy, called PROUT.

While Sarkar rejected the rigidities of rationalism and reductionism, he did not reject rationality and empiricism. Though he relied on spiritually derived truth to provide the premises and basic value structure of PROUT, he emphasized that fleshing out this economic theory requires close observation of human nature, and of social and economic dynamics. By insisting that social theory follow from social experience, Sarkar avoided many utopian errors.

For example, while Sarkar agreed with Kropotkin in rejecting capitalism, his economic theory takes a much different position on production incentives. Kropotkin, like Marx, advocated "from each according to their ability, to each according to their needs." In Sarkar's view, this high sounding ideal "will reap no harvest in the hard soil of the world." Without suitable motivation, productivity declines, and society as a whole suffers. In PROUT, therefore, "Meritorious people should certainly receive greater amenities"--though PROUT does not sanction material incentives beyond what is needed to promote the common welfare.

New Foundations for Russia

Cartesian reductionism formed the epistemological basis for Malthusianism and social Darwinism, which in turn provided intellectual rationale for the greed of capitalism. Dialectical materialism attempted to create an antithesis to reductionist thinking, but its materialism brought spiritual poverty. And, by promoting such utopian notions as the classless society and production without material incentive, its materialism capitulated to idealism and floundered on its inner contradictions. Both capitalism and communism have failed to adequately serve human welfare, and have eroded the moral, cultural and ecological fabric of the world. The future of humanity must lie with a new economics, erected on sounder foundations.

Economist Jaroslav Vanek, in his paper "Towards a Strategy of Democracy, Political and Economic, in Russia," points out that communal economic activity had deep roots in Russia's pre- Revolution village economies. This tradition of cooperation apparently came to the fore in 1917. According to Professor George Gurvitich, a participating witness to the October revolution, there was a brief nine month period immediately following the Russian Revolution when an embryonic economic system based on democratic cooperation prevailed. This system was supported in early Bolshevik Party congresses--until party leaders imposed political and economic centralism.

As in 1917, Russia finds itself poised at a momentous juncture, with a choice of futures spread before it. Were Russia to choose a cooperative economy to replace communism, there would be much supporting logic: consistency with the traditional values of village life; revival of the initial economic ideal chosen by the people following the downfall of Tsarist tyranny; the vindicated evolutionary views of Kropotkin; contemporary scientific understandings of human nature; and compatibility with the sentiment for social equity which socialism imbued in the Russian psyche.

But beyond the compelling logic of tradition, science, and economics, there is a more profound reason for Russia to adopt economic cooperation: cooperation is supported by spiritual truth. For those, like Tolstoy, who insist that humans need an enduring source of meaning in their lives and the guidance of proper values, cooperative economics is congruent with the eternal verities. It is the economic system Tolstoy would have wanted for his children, and for all of the children of mother Russia.

SOURCE: To the Dome