Economics: Money, Gift and Society in the Age of Transition

By Charles Eisenstein; Evolver Editions, Berkeley, CA, 2011, 496 pgs.

Review by Christopher Schaefer, PhD

This is a profound and moving book, full of insight and living examples. It is a book about money and our relationship to it, and how we can restore a sacred dimension to the world and to each other. As the author notes in his introduction, the book works at four levels: it shows what has gone wrong in our economic system; “it describes a more beautiful world based on a different kind of money and economy”; it moves to those collective actions and social changes required to shift our world from that of exploitation to sustainability and mutual service; and it ends with the individual changes of attitude and behavior that will contribute to a better world.

The argument is both simple and complex. Simple in the sense that Eisenstein, like Rudolf Steiner and Silvio Gesell, sees private land ownership and the interest-bearing nature of money as responsible for the gradual erosion of our shared heritage of the commons: of land, water, air, and natural abundance, and of a natural gift-economy that most ancient cultures experienced in word and deed. Complex because money and economic processes are so embedded in our everyday consciousness and so full of taken-for-granted assumptions that even to think differently about money today requires great effort. It seems as if our present economic and money system is surrounded by a magic spell that makes it difficult to even imagine alternatives to the exploitative nature of today’s market-driven global economy.

The great virtue of this book is that it deals with the fundamentals, as did Steiner in his 'World Economy'. It goes deeper than, say, David Korten’s 'When Corporations Rule the World' or 'Agenda for a New Economy'; or the work of Gar Alperowitz; or even that of William Greider’s 'The Soul of Capitalism'. (1)

By this I mean that each of these other studies accepts traditional notions of private land ownership rather than engaging concepts like leasing land and owning buildings and equipment. They don’t question the present approach to currency creation through central banks charging interest for the money created and pumped into the economy. Instead, they tend to argue about the balance between the private economy and government or public institutions, and the role of the latter two in taming or modifying the excesses of today’s market-economy. The three central chapters of Eisenstein’s analysis of present issues are called “The Trouble with Property,” “The Corpse of the Commons,” and “The Economics of Usury.” Each is compelling in its own right, and often poetic in imagery and tone. In the chapter on property Eisenstein states, “The urge to own grows as a natural response to an alienating ideology that severs felt connections and leaves us alone in the universe. When we exclude world from self, the tiny, lonely identity that remains has a voracious need to claim as much as possible of that lost beingness for its own sake. If all the world, all of life and earth is no longer me, I can at least compensate by making it mine. Other separate selves do the same, so we live in a world of competition and omnipresent anxiety.” (2)

In “The Corpse of the Commons” Eisenstein describes how we have commodified and privatized the four forms of capital that were at the heart of the “commons” we once shared as human beings: natural capital (the land and nature); social capital (community); cultural capital( books, songs, language, poetry); and spiritual capital (our consciousness and ability to create new realities). Each is now bought and sold so that the relentless logic of growth, of increasing wealth and GNP can be met. (3)

In the chapter on the economics of usury the author gets to the heart of his case: “the problem starts with interest. Because interest-bearing debt accompanies all new money, at any given time, the amount of debt exceeds the amount of money in existence. The insufficiency of money drives us into competition with each other and consigns us to a constant, built-in state of scarcity. It is like a game of musical chairs, with never enough room for anyone to be secure. Debt-pressure is endemic to the system.” (4) In an interest-based money system, income inequalities grow, especially when the commons have been privatized, and the likelihood of financial and economic crises grows as there is not enough demand to justify ever-expanding economic growth. The global financial crisis of 2007–9 and the decade-long recession in Japan are cases in point. This insight is also central to Robert Reich and others who have argued that there will be no economic recovery absent a concerted push to equalize wealth. (5) No demand, no growth: no economic recovery and ongoing crises. While China and India as well as parts of Africa may still offer opportunities for economic expansion, developed economies are maxed out, with the result that wealthy corporations and individuals will cannibalize the economy to fulfill their expectations of financial return. Eisenstein summarizes by stating, “I think we will first experience persistent deflation, stagnation, and wealth polarization followed by social unrest, hyper-inflation, or currency collapse. At that point the alternatives we are exploring will come into their own….”. (6) I agree.

The alternatives that Eisenstein—and a century ago, Steiner and Gesell—proposes are an economic system where money is publically created and carries a negative interest charge: spend it or it loses value; and a society that provides for the local and regional ownership of the commons—of land, currency, the air, mineral rights, water, cultural goods, and spiritual capital. It will be a zero-growth economy that balances wealth and fosters a simpler local and regional sense of community. It will replace the often insane race-to-the-bottom logic of the global economy with local economic and social activity. It will follow the pattern of nature, the law of return, and charge for all the environmental and social damages caused by present production techniques, and it will promote simpler economic and social systems based on a sense of gratitude, of gift in return for what has been given. Eisenstein calls this the “Economics of Reunion” and points to many present initiatives that bear the hallmarks of these new economic and social relationships, from the land-trust movement to local and complementary currencies; from ethical investment and carbon and environmental taxes to the gift and mutual-exchange economy. Eisenstein proposes seven major steps: creating negative-interest currency; eliminating rents and interest; compensating for the depletion of the commons; internalizing all social and environmental costs; pushing for economic and monetary localization; realizing the social dividend and spreading it through a form of basic income; promoting de-growth and fostering a gift and people-to-people(P2P) economy. (7)

Part 3, “Living the New Economy,” describes what we as individuals can do to contribute to a more local, sustainable, and gift-based economy. While quite idealistic in tenor, these closing chapters do challenge us to rethink and to transform our relationship to money, work, possessions, and community, and offer us opportunities for growth and for sharing our gifts with others.

I wholeheartedly recommend 'Sacred Economics' for its penetrating analysis and its hopeful image of our economic and social future. Savor it, and then add the following works to your reading list: Martin Large’s 'Commonwealth' for a detailed picture of the contribution threefolding is making to society’s future; Christopher Houghton Budd’s 'Finance at the Threshold' for its penetrating analysis of the international financial system and the problem of excess capital; Gary Lamb’s 'Associative Economics', because it makes visible the central role that associations among consumers, producers, and traders must play in a new economy; and Steiner’s 'World Economy', because, while difficult, it contains the most far-reaching discussion of labor, capital, land, and price that I know of. (8) Together, these five books provide a basis for a new economics curriculum and a far reaching and possible new society.

Dr. Christopher Schaefer is a lecturer, writer, researcher, and organizational development consultant, and co-director of the Center for Social Research at Hawthorne Valley (thecenterforsocialresearch.org)

Notes:

1 David Korten, When Corporations Rule the World, 1995, & Agenda for a New Economy, 2009, both Berrett Koehler, San Francisco; Gar Alperowitz, America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy, John Wiley & Sons, Hoboken, NJ, 2005; William Greider, The Soul of Capitalism: Opening Paths to a Moral Economy, Simon and Schuster, NY, 2003

2 Eisenstein, Sacred Economics, 50.

3 Ibid., 69–90.

4 Ibid. 102.

5 See Robert Reich, After-Shock: The Next Economy and America’s Future, Alfred Knopf, New York, 2010, 32–8.

6 Eisenstein, Sacred Economics,136.

7 Ibid., 331–346.

8 Martin Large, Commonwealth: For a Free, Equal, Mutual and Sustainable Society, Hawthorn Press, Stroud, UK, 2010; Christopher Houghton Budd, Finance at the Threshold: Rethinking the Real and Financial Economics, Gower, London, 2011; Gary Lamb, Associative Economics: Spiritual Activity for the Common Good, ASWNA, Ghent, NY, 2011; Rudolf Steiner, World Economy: The Formation of a Science of World Economics, Rudolf Steiner Press, London, 1949.