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October 21, 2016

Part 5, Democratic Network Money: Commons Money that Works for Us, Instead of Us Working for It

By Paul Krumm

Natural capital and human capital are not directly a part of the money system, but they are a significant part of what money is used to value, so they need to be considered in the discussion of money.


Natural capital and human capital

All about what money does,but nothing about what money is.
All about what money does,but nothing about what money is.
(Image by 401(K) 2013)
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Natural capital and human capital are not directly a part of the money system, but they are a significant part of what money is used to value, so they need to be considered in the discussion of money.

Lets discuss natural capital first. The earth and its assets, natural capital, were here before we came on the scene. In 'primitive' societies, these assets were not privatized, as we have done in Western culture. The earth was a commons. Much of this commons has been privatized/enclosed. Privatization was not a democratic process. Steve Roth has clearly demonstrated that ownership is dependent on violence, and as practiced in our present culture,the violence of the state. The idea of absolute private ownership was locked into the land tenure system (as well as the built environment) by authorities that wanted control, not democracy. The habit has continued even as we attempted to become democratic, politically.

We justify the fact that benefits derived from natural capital logically go to the individual or group that has gained ownership because we ignore the rights/responsibility equation. We need to question the logic of absolute ownership.

In a democracy, what right do we have to privatize and use earth assets for personal gain? Better said, how do we rightly assign the rights and responsibilities of being stewards of particular pieces of the earth? These are questions that we must allow ourselves to be challenged by at all scales, from local communities to the community of all people in the world, utilizing the criterion of justice in the use and care of the earth.

A serious argument can be made that the built environment becomes also a part of the commons. As explained earlier in this series, the claim on commitment used to construct the built environment was the result of privatizing and controlling the commitment of the citizens of the community where it was built.

The claim on commitment by authorities was acquired through the ability to create fiat money without acknowledging the corresponding commitment on the part of the users of the money they created. This corruption of the money system made possible the use of raw power and profit.

What is legitimate to privatize? The natural environment was here before we came on the scene. The built environment was funded by the populace; much of both are rightfully kept as commons.

We have to learn to distinguish between ownership, and rights and responsibilities of management. The homes we live in and personal tools we use, may be considered appropriate for private ownership. Other than that possibility, little else is legitimately privately owned in a democracy. Everything else is part of the commons to be managed by humans as stewards. Decisions on how to manage the commons must be made at the community level, democratically.

Related to physical assets is the question of knowledge; intellectual assets that are created by people, human intellectual capital. Copyrights and patents now give their owners the right to control intellectual property, making it possible for them to receive a private tax by charging more than their effort, and worse yet, preventing the general production of, and innovation on, new technology. We must ask whether these rights are valid in a democracy.

The drive for profit as the primary directive of the present money system is a major motivation for militarism, bullying, promotion of fear and anger in the population, terrorism, the idea of "take care of number one" without consideration of others, and many other ills. Creative human capital is capital that provides for the provisioning of goods and services useful to its users, not fear and bullying.

The present system creates nefarious human capital as well as unwanted debt. Cancellation of debt is not even considered by most economists. An exception is Michael Hudson. However write down/cancellation of the debt created by our present money rules is going to have to be a part of the move to a democratic money system and economy.

Both production for use, and innovation need to be considered in terms of their value to society and how much the producer or innovator will rightfully claim for their time and effort. Copyleft and Copyfair are attempts to open this discussion. Open source, democratic, not for profit people created money supports this paradigm. In removing the profit motive from the structure of money, the motivation for trade becomes the act of provisioning, rather than profit.

So if we want a world that is sustainable, resilient, and promotes justice for all, it is imperative that we change the way we do money. The present system, with its requirements for growth and continually increasing the divide between rich and poor is inconsistent with these goals.

Georgist thought is relevant to this issue. What Georgists call land rent is an example of the unearned portion of profit, in this case derived from ownership of land. Implied in the Georgist land tax is a responsibility to the greater good of the local and the larger community of humans and nature that comes with the right to be the steward of that land.

The work of Elinor Ostrom is also relevant to our discussion.

Ostrom's first four principles describe the values that guide the appropriate use of the commons: "1. Define clear group boundaries. 2. Match rules governing use of commons goods to local needs and conditions. 3. Ensure that those affected by the rules can participate in modifying the rules. 4. Make sure the rule-making rights of community members are respected by outside authorities."

Her fifth through seventh rules discuss the values that are involved in enforcement: "5. Develop a system, carried out by community members for monitoring members' behavior. 6. Use graduated sanction for rule violators. 7. Provide accessible, low-cost means for dispute resolutions."

Ostrom's eighth principle for managing commons describes the nesting of scale "Build responsibility for governing the common resources in nested tiers from the lowest level up to the entire interconnected system."

Ostrom's principles are impossible to initiate in the context of the values built into our current money system. Removing the unearned portion of profit from the structure of money is a necessary step in the process of change. Simple money does so, and follows all of Ostrom's principles in its organization.

Trust in the present money/financial system is waning. Its need for exponential growth is not consistent with a finite economy, so it is not long for this world. We need to be creating an alternative that is viable, and consistent with democratic values.

Simple money can do this. Centering the power of money creation locally in a nested system, and structuring it to promote provisioning instead of profit, makes localization of other institutions and habits that don't happen in the context of the present money system much more viable. Communities can more easily come together to support their needs.

At the same time we have to realize that we are all enmeshed in the present system, which makes it difficult to see it as it is. Because those of us who are not on the edge also benefit, through investments and interest income, its structure is justified in our minds.

Finding ways to deal with or replace the income received by small savers, and redistribute or cancel that of those who have gained much wealth as a result of their operation and manipulation of the current money system, are issues before us. Some of this will simply happen as the present system collapses and is replaced by a sustainable and resilient money regime .

In our final article we will discuss the mechanics of getting started on the road to a real democratic money system.

Submitters Bio:

I am a semi-retired self employed business owner who designs and builds instruments and machines. Obtained a BS in Sociology (with minors in Physics and Math) in the 1960's and became interested in studying the structural violence built into our social, political and economic systems as an avocation.

I live off grid with my wife in an earth sheltered home I built in rural central Kansas.