Follow by Email

Wednesday, October 7, 2020

Ecological Economy

 Reconsidering The System,

   Anything that will successfully develop as alternative finance will need to stand on its own within the current financial structure..
 A transition to Community Banking, as Ellen Brown advocates, with postal banks or city credit unions, would be a workable transition.

  It is necessary to keep the wealth local. When money goes in and is taken out of a community, it is an extractive solvent. There is not actual "investment", just resource-extraction. That process is very far along in financial capitalism. All the productive systems are sickened by it, and many will soon collapse.
  Lending at interest, with all risks born by the borrower, is the imbalance that extracts. 
It extracts if the borrowing enterprise survives, and it extracts all of the assets if the borrowing enterprise fails, after it has been extracting wealth for a while already.

  The alternative model is that of Islamic Finance. There needs to be a sharing of risk and benefit between lender and borrower, "skin in the game" for the lender. If the enterprise fails, the lender needs to also take losses, so the lender is inherently interested in the success of the enterprise of the borrower. To that end, there is not "lending at interest" as we know it, in Islamic Banking, but a sharing in costs and rewards of each enterprise. This is like buying stock in a company and getting quarterly dividends, the way stock-investing used to be. It is "Equity Investing".

  The return of equity investing to western finance is the necessary first step. It will stop the transfer of wealth to the few elites, who do not manage it in the interests of the economy, or community or ecosystem.

  At the point where the town is the banker, as the state is the banker in North Dakota, then real wisdom in investment can take place. The whole town has an interest in investments with local enterprise doing well, and doubly so. The community benefits by thriving and also by profiting-from-thriving. There is not extraction of life-blood to distant investors.

  When a community bank or credit union is the commons, contributing to the community government coffers, then there can be local control and oversight. People will inherently want good investments to be made, and will be diligent in judging who is reliable to borrow, and who is not.

  Money as a store of value is another category from money as currency. I think they have to be different in most cases, though everybody will accept gold as currency, always. Gold is a store of value, but it is dangerous to hold.

  I don't see the necessity of creating local currencies, which has been done in history, as long as local banking, with equity investing prevents extraction of value from the local economy, and nurtures local enterprise, citizens, and economy.

  There is the issue of taxes to fund higher levels of organization than the town or city. This is currently done by spending money which is created by bonded debt, then paid back at interest from tax collections. 
This is extractive of the local economy. It concentrates wealth in the hands of those who already have wealth to lend at interest.
It is not necessary, of course. Both the Continental Congress and Abraham Lincoln printed money and spent it into circulation.
The amount of money in circulation is generally controlled through spending it into the economy and taxing it out of the economy, whether there is a parasitic skim of wealth by financiers, or not.
  All benefits should remain with the commons, whether town, county, state or nation. All costs are inherently born by the commons, through economic linkages at the real-economy level.

   A synthesis of Community Banking, Islamic (equity investing) finance and Modern Monetary Theory, which eliminates a parasitic class of financiers is something which is obtainable by modifying the current economic structure. It would be able to intelligently invest and diversify locally and at each higher stage of organization. 
  The essential factor is to avoid creating a class advantage, which would amplify over time, to control all wealth, which is what we now have.

Debt Collectors Have Made a Fortune This Year. Now They’re Coming for More. 
After a pause for the pandemic, debt buyers are back in the courts, suing debtors by the thousands.  
(Ugh! It's a huge opportunity to profit.)

  Concentration and deployment of wealth is a prerequisite to formation of "the state", but does it remain essential after society is well formed?
  Whether in ancient China, in the Netherlands, in the fens of England, in the Pontine Marshes finally subdued by Mussolini, or in the remaining southern Iraq marshes drained by Saddam Hussein, the state has endeavored to turn ungovernable wetlands into taxable grain fields by reengineering the landscape.
  A last and more speculative reason for the obscurity of wetland societies is that they were, and remained, environmentally resistant to centralization and control from above. They were based on what are now called “common property resources”—free-living plants, animals, and aquatic creatures to which the entire community had access. There was no single dominant resource that could be monopolized or controlled from the center, let alone easily taxed. Subsistence in these zones was so diverse, variable, and dependent on such a multitude of tempos as to defy any simple central accounting.
  A culture might well develop in such areas, but the likelihood was small that such an intricate web of relatively egalitarian settlements would throw up great chiefs or kingdoms, let alone dynasties. A state—even a small proto-state—requires a subsistence environment that is far simpler than the wetland ecologies we have examined.

  The domestication of plants and animals made possible a degree of sedentism that did form the basis of the earliest civilizations and states and their cultural achievements. It rested, however, on an extremely slender and fragile genetic foundation: a handful of crops, a few species of livestock, and a radically simplified landscape that had to be constantly defended against a reconquest by excluded nature.
 Despite general ill health and high infant and maternal mortality compared to hunters and gatherers, it turns out that sedentary agriculturalists also had unprecedentedly high rates of reproduction—enough to more than compensate for the also unprecedentedly high rates of mortality.    
Humans stayed in one place a long time before plants and animals were domesticated at least four millennia before agricultural villages appeared.                                                                                                                                                                                                       Sedentism and the first appearance of towns were typically seen to be the effect of irrigation and of states. It turns out that both are, instead, usually the product of wetland abundance. We thought that sedentism and cultivation led directly to state formation, yet states pop up only long after fixed-field agriculture appears. Agriculture, it was assumed, was a great step forward in human well-being, nutrition, and leisure. Something like the opposite was initially the case.                                                                                                                                                                Whether the grain in question is wheat, barley, rice, or maize—the four crops that account, even today, for more than half of the world’s caloric consumption—the patterns display a family resemblance. The early state strives to create a legible, measured, and fairly uniform landscape of taxable grain crops and to hold on this land a large population available for corvée labor, conscription, and, of course, grain production. For dozens of reasons, ecological, epidemiological, and political, the state often fails to achieve this aim, but this is, as it were, the steady glint in its eye...

 "Auntie-Grandma" remains well on pre-symptomatic treatment for novel-coronavirus, slightly better than President Trump, and for cheap..

Beating The System


  1. excellent post. I can highly recommend any and all books by James C. Scott. I haven't read all of them but I have read a few, Against the Grain among them which the link to is a review of. The review by the way is also highly worth reading.
    the review among other things talks about the role of wetlands in the development of sedentary cultures even before the development of agriculture. Just coincidentally, I happened to look up the term cienaga on wikipedia just yesterday. As it turned out, the American southwest and northern Mexico had its own pre columbian and pre=agricultural wetland cultures based on cienagas, Probably quite similar to what went on in the middle east, though possibly later and then cut short by Spanish conquest.
    My own suspicion is that the collapse of industrial societies will not necessarily stop at some sort of 19th century agrarian culture, but could potentially revert to much earlier modes of human organization in areas that are not suitable for agriculture.
    The other reason for not wanting to collapse back to 1800 style civilization is of course the fact that a good portion of the human population of the time was engaged in forced labor. If we have a chance to set the wayback machine to whatever age we want, let's go back a little farther to a time when a larger portion of the population was allowed to run free.

    1. Thanks Wolfgang. I'd like to go back to about 1976 in th first round of regression. That will be hard enough for a generation. We'll have to let the kids be free-range and solve a lot of problems and do chores outside for a generation before we can move back to 1958, if tht is possible. It's not, really, is it?

  2. re the auntie grandma, is failure of our medical system to do early treatment of Covid with cheap and readily available resources a matter of bureaucratic inertia or willful malevolence? Seems that person over at automatic earth was giving you some heavy and in my opinion unfounded flack for suggesting malevolence. Or perhaps I read you wrong.

    1. I didn't see any comment that was picking on me. Once comment seemed to think that witholding treatment from so many people was vast medical malpractice. I pretty much agree. It seems politically motivated, as western elites are in a power struggle, and need for us to all be scared and defensive about some distraction. COVID has worked as that, but only with everybody self isolating and hiding from each other, and pretending there is no effective treatment. I'm pretty thoroughly disgusted. I seek insights into other ways for society to change direction to something gradually more sustainable, something actually "progressive". Short term selfish interests still rule us and own us for now.