Sacred Economics: Money, Gift, and Society in the Age of Transition (35 page)

No, it would not. Negative economic growth doesn’t entail a decline in wealth at all, nor a decline in the availability of what we call “goods and services.” Remember, goods and services at present are defined as
things that are exchanged for money
. If they are provided through some other, nonmonetary, mechanism, then the statistical “economy” can shrink even as the real economy—what people make and do for each other—grows richer.

I will not mince words: in this book I am calling for economic degrowth, a shrinking of the economy, a recession that will last decades or centuries. Obviously, the word “recession” has negative connotations today, though it really just means a time of receding. I am most emphatically
not
saying that we must make some sacrifices to our quality of life for the good of the planet. Rather, we need but reduce the role of money. If our future includes a diversification in the modes of human sharing, then economic growth no longer has the same meaning it has today. We don’t need to become more
altruistic and self-sacrificing, forgoing our own benefit for the good of others. How tightly we hold to the equation of money and self-interest! But it shall be so no longer. Let me illustrate by way of some examples how we can all become richer through the shrinkage of the money realm.

Today already there is a vast software industry that operates using very little money. I wrote this book on OpenOffice, a software package available for a voluntary donation that was written mostly by a community of unpaid programmers. One might say that those programmers are “paid” not in money, but in the esteem of their fellows, a kind of social currency. I prefer to see their productivity as a gift economy, which naturally generates respect and gratitude among community members. Either way, this mode of production does not show up in GDP statistics. We could easily have a shrinking “economy” that offers more and more, better and better, products like these. And the more there are, the less we need money; the less we need money, the more leisure time we have; the more leisure time we have, the more we can afford to make our own offerings to the gift economy.

For many categories of goods, marginal costs of production are now practically zero. This is true of nearly all digital products, such as software, music, movies, and so forth. Considerable costs may be involved in the production of the first unit, but after that, the cost per unit is essentially zero. The industry has tried therefore to create an artificial scarcity through copyright protection, digital rights management schemes, and so forth. It is quite irrational that the only way we have of rewarding the creators of digital content is to give it to fewer people than could benefit from it. Every person could have access to every movie, song, and software program in existence, and it would cost the producers no more than it does today. Nonscarce
goods should not be subject to payment in scarce currency. Indeed, many producers of nonscarce goods have given up trying to maintain their artificial scarcity and try to make money instead by asking for voluntary payments, selling advertising, or charging for technical support, training, or in the case of music, live concerts. Time, attention, space in a concert venue, and so on are all scarce resources, and they fit much more easily into the money realm. Nonetheless, the net result is economic degrowth: as one writer puts it,

If this trend continues (and it appears to be spreading as more and more traditional media move online), we will indeed see a perfect example of greater wealth accompanied by a smaller (money) economy.

Digital goods are an extreme example of a more general phenomenon. Many other products are trending toward near-zero marginal costs. The actual marginal production cost of most pharmaceutical medicines is but pennies per pill. Even bulk industrial
commodities such as screws cost much less than in the past, not only in terms of money and human labor but even, sometimes, in terms of energy input. This is because of the accumulation of decades or centuries of innovation. It is another aspect of our divine bequest—in this case of culture rather than nature—from which all human beings equally deserve to benefit.

The evolution toward sacred economy is of a whole with a more general civilizational transformation. Parallel changes are happening in medicine, education, agriculture, government, science, and every other institution of our culture. Changes in each realm reinforce changes in the rest. So it is with the economic effects of the shift toward natural medicine. A mere century or two ago, only a very few people paid for medical care, which was provided through an informal network of folk healers, herbal doctors, and, for most common maladies, grandmothers and neighbors. Herbal knowledge was widely dispersed and usually applied without payment. Even if it were fully professionalized, the profit potential of herbal medicine (and most other forms of natural medicine) is far lower than that of high-tech medicine. Compared to the complex, high-tech processes that go into pharmaceutical medicine, herbal medicine is cheap to produce. Many of the best medicinal plants are near-ubiquitous weeds. A shift toward herbal medicine, homeopathic medicine, and the myriad mind-body modalities blossoming today promises economic degrowth, yet it entails no reduction in our quality of life.
⁴

Another area for economic degrowth is architecture and urban design. In addition to disconnecting us from community, nature, and place, the expansive, alienating suburbs of the last two generations demand enormous consumption of resources. Now, though, planners and builders are rediscovering the virtues of high-density urban design, smaller dwellings, mass-transit-friendly layouts, and multiuse developments that don’t require so much driving. All of these changes cause economic shrinkage: fewer “goods” such as roads, gasoline, lumber, and so on are needed. With more vibrant public spaces, people also have less need to live in huge private spaces. People living in community depend less on externally produced entertainment and have more occasion to share and assist each other. All of that means a decrease in money-mediated activity.

Another source of economic shrinkage is the disintermediation that the internet has made possible.
Disintermediation
refers to the elimination of intermediaries: agents, brokers, middlemen, and so forth. Consider the example of Craigslist, which according to one estimate has destroyed $10 billion of annual revenue from classified ads, replacing it with only $100 million of its own revenues.
⁵
Google has also made advertising more efficient (cheaper), not only seizing ad revenue from existing media but also reducing total industrywide advertising expenditures. (Total “adspend” across all media fell by 9 percent in 2009.) Of course, as advertising has become cheaper, it has also become more ubiquitous; even so, the total size
of the ad industry has peaked. Yes, we are passing through the time of “peak advertising” as the commons of the public attention has been saturated. I hope you aren’t too sad about the end of growth in advertising, which has been a major contributor to GDP growth. Meanwhile, many of the traditional functions of advertising and marketing which were once paid services are now being met for free through social networking. Similarly, the blogosphere has taken over many of the functions of traditional news distribution, but again at much less cost. The same is true of travel agency, stock brokerage, and many other industries where brokers and agents are no longer necessary. All of these factors contribute to economic deflation.

Disintermediation and open source software are both part of a more general phenomenon: the peer-to-peer (P2P) revolution. The older hierarchical and centralized structures of distribution, circulation, and production required a lot of money and human effort to administer. Moreover, their very nature isolated people from each other within narrow specialties, making gift exchange impossible.

Disintermediation is even affecting the credit system and subverting banks’ traditional role as financial intermediaries connecting investors and borrowers. Corporations bypass banks by obtaining financing directly from money markets, while new P2P lending websites such as LendingClub and
Prosper.com
now allow individuals to borrow directly from each other. Commercial credit-clearing rings, mutual factoring systems, and commercial barter networks, which I will discuss later, are other ways that information technology is reducing the role of centralized intermediary institutions. All of these developments will reduce GDP by lowering spending on “financial services.”

Because these ever-cheaper “information economy” services are a factor of production in nearly every other sector, degrowth here
is contagious. This is true even in industries that we think of as growth industries. In 2000, for example, $371 billion was spent on PC hardware, including printers, servicing, and data storage. By 2009, this had shrunk to $326 billion. Obviously, this drop is not because we are buying fewer computers; it is because costs have fallen dramatically.

The commonest profit model on the internet is to run ads, essentially limiting the size of the entire digital economy to what level of advertising the physical economy can support. But the internet cannibalizes even itself: websites that offer free product reviews and price comparison searches render the very advertising that supports them obsolete.

What is happening is that the business model that has worked for all human history (find something people do for themselves or each other in a gift economy, take it away from them, and then sell it back) is being reversed. The internet is allowing people once again to do things for themselves and each other without paying for it. Eric Reasons comments,

The internet is a participatory gift economy, a P2P network in which there is no consistent distinction between a producer and a consumer. When we share news, product recommendations, songs,
and so forth with our online networks, we do not charge anyone for our “information services.” It is a gift economy. The content of most websites is free as well. Reasons concludes,

While a redirection toward a participatory gift economy is new, the threat of overcapacity and underemployment has bedeviled capitalism for centuries, indicating that we don’t need to work as hard as we do to support human life. Indeed, the imminent advent of an age of leisure has been before us ever since the first industrial machines came into use, machines that could “do the work of a thousand men.” Yet the implied promise, that soon we would all have to work only one-thousandth as hard, shows no signs of manifesting. And here I am promising it again. Will this vision likewise prove to be a mirage? No. The key difference is that we won’t rely on technological improvements in efficiency alone to enable greater leisure. The key is degrowth, not efficiency. It seems very counterintuitive: that degrowth—economic recession—will be what ushers in true affluence for the many.

In a growth economy, the labor that could be freed up through technological progress is devoted instead to producing more and
more stuff. If in 1870 it took ten labor-hours to produce the necessities of life for a household, and today it takes one labor-hour to produce the same quantity of things, then our system conspires to make us consume as much as ten households did in 1870. We hear talk about the American consumer, the engine of global economic growth. Implicit is a vision of wealth identified with endlessly accelerating consumption. A new computer every month, a new car every year, a bigger house every five years—new, more, bigger, better. It seems insane, but it is economically necessary in our present system because deflation dynamics lurk close at hand, awaiting the day when consumption lags behind productivity growth.

I do not foresee an abrupt transition to the economy I describe. Let us indulge our gentle disposition and allow that the habits of slavery are of long standing and may need some time to unwind. I foresee a degrowth rate of around 2 percent, so that our use of raw materials, our pollution of the air and water, and our time spent working for money not love falls by about half with each generation, until eventually the pace of degrowth slows as the economy approaches an equilibrium relationship with the planet a couple hundred years from now.

The system I have described offers an alternative to this future of bigger, better, and more followed by catastrophic collapse. Negative interest allows productive investment to continue, and money to circulate, even when the marginal return on capital is zero or less, while a commons-backed currency frees work to go toward nonconsumptive purposes. Next I will describe a third thread in the tapestry: the social dividend, which frees the purchasing power of workers from the need for full employment in the money economy.