The force that transforms human nature is, ultimately, our desire to find meaning and order in the world. As an idealist, I believe no possibility – however far-fetched it sounds, at first – is truly out of reach. It is a question of what we choose to pursue together – how we define our purpose and what we consider meaningful. Most of us will agree that our current system – based on property, privilege, the brutal exploitation of people and nature – is not the best we can do. Apart from leading to ecological ruin, it doesn’t make us truly happy. It induces anxiety, stress and fear, and it creates an insecure and unfree world.
The contrast is obvious if you visit a place where people still live in traditional ways, in intact communities. One finds a baseline level of happiness far above that of the middle class or the wealthy of the developed world. People don’t have that disappointed, jaded, suspicious look in their eyes. They don’t innately expect to be ripped off or shafted.
My question, again, is how do we transition to a regenerative society in the time available? There is no doubt that this requires a far more equitable sharing of the world’s wealth and resources. There are two ways this can happen: either through social convulsions, or through the construction of a viable alternative supported by some subset of the elite and the privileged – the 1 per cent. We know we need to reduce excess consumption, redesign industry and shift back to organic agriculture. All of this is necessary – but it is utterly impossible within the current economic system. Why is that the case?
People think of money as a natural phenomenon, similar to air or fire or water. Actually, money is an instrument that was designed by human beings to accomplish certain goals.
The modern form of a debt-based currency, issued by central banks, which are actually private institutions, and decoupled from any tangible resources, is a recent development that has accelerated the global dominance of finance capitalism. The inherent tendency of this system is to convert every natural resource into a profit source and constantly expand markets by privatizing aspects of the commons. Today, the small privileged financial class who control how money is issued literally control the world.
Since the 1970s, the financial sector has undergone a rapid, cancerous growth. We now live in a hyper-leveraged, deeply indebted ‘financialized’ society ruled by banks. In 2008, the global economy collapsed when we found that ‘subprime mortgages’, packaged into securities, were the basis of a massive Ponzi scheme. The beneficiaries of this scheme were the financial elite, and the losers were everybody else – the middle-class and working-class people who actually produce value for society.
When you think about it logically, it is obvious that those who profit excessively through the financial services industry are parasites. They don’t create wealth. They extract it from the productive classes. The year after three million people lost their homes, Wall Street handed out $36 billion of bonuses. Through the alchemy of the financial system, the loss of assets of those three million people got transmuted into those bonuses. Virtually none of the bankers who created this fiasco were punished – quite the opposite. Today’s monetary system is like a source code that has been thoroughly corrupted.
After the subprime meltdown, the governments and central banks worked together to prop up the existing system. They decided to protect the ‘too big to fail’ financial institutions. Rather than fixing the flaws or returning funds to the poor and the shafted, they rewarded the perpetrators. They created vast sums of money and gave them to the corrupt banks and securities firms, to ensure their continuity.
In the months after the 2008 collapse, the Federal Reserve bought $1.75 trillion in bonds, including US Treasury Bonds and mortgagebacked securities, and engaged in successive rounds of ‘Quantitative Easing’. In September 2008, with the recovery still weak, the Fed started to buy $85 billion worth of bonds per month, and continued to do so for a number of years. They bought $600 billion worth of bonds in 2010 alone. The amount of US debt is currently $13 trillion, and still growing.
People will eventually realize our economic system failed – kicked the bucket – back in 2008. Since then, it has continued as a kind of virtual simulation of itself, a ghost, based on ever-growing debts that everyone knows will never be repaid. Around the world, global debt is increasing at 7 per cent per year, while global gross domestic product lags behind at 2 per cent. Debt forces unsustainable development. The system has only perpetuated itself by artificially inflating the monetary supply.
Whoever controls the money system and the money supply controls the world. In January 2012, Kevin Roose, a reporter for the New York Times, managed to sneak into an annual dinner of a Wall Street secret society called Kappa Beta Phi, held at the St Regis Hotel. The 250-person party featured a ‘Who’s Who’ of Wall Street plutocrats, including the CEOs of Citigroup and the Blackstone Group.
In a series of skits and comedy routines, the financial bigwigs mocked the poor as well as liberals, lampooning the system which rewards them. They changed the lyrics of ‘I Believe’ from The Book of Mormon, singing, ‘I believe that God has a plan for all of us. I believe my plan involves a seven-figure bonus.’ ABBA’s ‘Dancing Queen’ became ‘Bailout King’.
Roose was astonished. ‘Here, after all, was a group that included many of the executives whose firms had collectively wrecked the global economy in 2008 and 2009. And they were laughing off the entire disaster in private, as if it were a long-forgotten lark.’
A major problem we confront in engineering the necessary transformation of our current political-economic system is that the people who currently run the show tend to be greedy and self-serving. Postmodern capitalism fosters winner-take-all competition and treats social and environmental costs as meaningless externalities. It self-selects its leadership from sociopathic character types. Given this system, those who seek to maximize self-interest in any circumstance, with no moral qualms or compunctions, naturally rise to the top.
I don’t believe that the political and financial ruling elite, whose short-sighted greed and hypocrisy corralled us into this disaster, will be able to lead us out of it. Lawrence Summers was one of President Obama’s key economic advisers and a former chief economist for the World Bank. Summers – himself worth an estimated $40 million – is on the record as stating, ‘There are no limits . . . to the carrying capacity of the earth that are likely to bind at any time in the foreseeable future . . . The idea that we should put limits on growth because of some natural limit is a profound error.’ Somehow or other, the financial elite who exercise such tremendous power and influence must be displaced. This can be done either by leaders like Bernie Sanders, who respond authentically to the problems they have unleashed, or through a ‘leaderless revolution’ where the people govern themselves via direct democracy, or some hybrid of the two.
John Fullerton, founder of the Capital Institute, resigned from JP Morgan in 2001, after a 20-year career. Believing the banking industry had lost any connection with the values and principles of earlier times, he went on a search to find answers to the underlying problems of the global financial system. He discovered that we were facing ‘profound, interlocking crises’, which included the reality that we are ‘destroying the ability of the planet to support life as we know it’. The most startling discovery he made was that ‘the modern scheme of economics and finance – what Wall Street “geniuses” (like me) practiced so well – formed the root cause of these systemic crises’.
Fullerton believes our greatest challenge ‘is to address the root cause of our systemic crises – today’s dominant (neoliberal) economic paradigm and the financial system that fuels it and rules it – by transitioning to a more effective form of capitalism that is regenerative and therefore sustainable over the long term’. He considers this to be our economy’s ‘Copernican moment’, requiring the emergence of a new systemic and holistic worldview, embedded in an interlocking set of social and financial institutions.
According to the Belgian financier Bernard Lietaer, one of the architects of the euro, there are a few important design features of our money, which he calls ‘our most pervasive information system’. Money is issued by a country, or, in the case of the euro, a group of countries. It is issued by fiat – in other words, it is not linked to any tangible resource, whether gold or energy. It is created out of nothing. Because our money comes into existence as bank debt, it accrues interest over time.
When you get a loan from a bank, the bank doesn’t create that money physically. It credits your account for the amount, which you can then use to buy a mortgage, or for some other purpose. While the bank issues you the initial amount of the loan, it does not create the extra amount you will need to return – in other words, the interest. You have to compete against everyone else in society to bring back that excess. Money is ‘destroyed’ – it disappears – when the loan is repaid.
The current financial system is designed to perpetuate artificial scarcity. In such a system, there will always be losers – in other words, bankruptcies. There will always be competition for money, which is artificially maintained as a scarce resource. Central banks control the global money supply by manipulating interest rates, among other means. Such a system is based on fear. It forces excessive, destructive growth.
‘Conventional national currencies and monetary systems are programmed to produce competition and remain scarce,’ Lietaer writes. Over time, interest has the effect of concentrating wealth in fewer and fewer hands. We have seen an extraordinary increase in wealth inequality over the last decades. It is estimated that 50 plutocrats currently control more wealth than that of half of the planet’s 7.2 billion people. The poorest 80 per cent of the world’s population control less than 1.4 per cent of global wealth.
Can we resolve the systemic problems – the ecological mega-crisis, the ever-increasing wealth inequality – unleashed by our current system by reforming finance capitalism, even drastically? Or do we need to transition to a different economic system, consisting of new instruments for exchanging value, which support social equality and ecological health?
According to scientists, we are up against hard limits in how much more CO2 we can produce before our planet becomes unliveable. We have released an estimated 1,900 billion tons of CO2 into the atmosphere in the last two centuries. We have raised global temperatures more than a degree. We can only release another 500 billion tons of carbon dioxide, roughly, if we want to stay below the two degrees Celsius limit considered necessary to avoid runaway climate change. At current rates of CO2 emissions, we will release that amount in the next 15 years. This gives us very little time. It underlines the urgency of our situation.
Unfortunately, we now know that even two degrees above preindustrial levels is too much. It will produce catastrophic feedback effects. It may make large-scale methane eruption inevitable. Therefore, a massive, globally orchestrated restriction of CO2 emissions must be combined with a comprehensive, global scaling up of renewable energy as well as all practical techniques to remove excess carbon from the atmosphere. This is what we must do – at least I can’t see any alternative – if we decide we want to try to salvage our civilization and protect the world’s children, including our own kids and their kids, along with the integrity of our biosphere. The change will have to happen exponentially, not incrementally.
At present, the main proposal for dealing with CO2 while maintaining the current capitalist system is by taxing carbon pollution. Ways to do this include ‘cap and trade’ schemes that establish markets for the right to pollute and emit greenhouse gases, and ways to make companies pay for ‘ecosystem services’; as well as systems of financial reward where money is given to companies and countries for not polluting or for leaving CO2 sequestered in forests or underground.
‘Cap and trade’ seeks to regulate emissions by providing a profit incentive for companies to transition away from polluting. The market defines a certain number of ‘allowances’ for pollution which can be auctioned off to companies. These companies can then trade or sell off these allowances, if they are unable to reduce their emissions fast enough. The number of allowances can be reduced annually, limiting the total amount of CO2 production, and forcing companies to innovate and switch to non-polluting sources, over time.
‘Cap and trade is itself an innovation in how we operate as a society’, Ramez Naam optimistically writes. ‘It combines the best traits of the market – the rapid rate of innovation and the ability to find ever more efficient ways to do things – with the unique ability of government to set goals around things that the market is blind to, like damage to the environment. And it’s worked.’
Naam points to the George Bush-led efforts to cap and trade sulphur dioxide emissions in the 1990s as a model. Between 1990 and 2000, sulphur dioxide emissions in the US declined by half, to under seven million tons. Unfortunately, sulphur emissions started rising globally again after 2000, largely due to China’s intensive use of coal as an energy source.
That points to the deeper problem: as long as we maintain a global economic system that forces rapid growth, we will be unable to address the biospheric crisis at its root. We will keep shuffling deckchairs on the Titanic. Left-wing critics argue that creating new markets for CO2 within the existing financial system will not help. The growth imperative underlying our system will simply lead to new forms of harm.
The Indian activist Vandana Shiva makes a compelling argument against carbon trading and similar markets. ‘Creating a market in pollution is ethically perverse,’ Shiva writes in Soil Not Oil. ‘Some things should not be tradable – water and biodiversity are too valuable to be reduced to marketable commodities. Other things, like toxic waste and greenhouse gases, should not be generated. To turn them into tradable commodities ensures that they will continue to be produced.’ On the other hand, if we can design a system that protects natural assets using market mechanisms, it would be far preferable to not doing so.
Carbon taxation is another strategy. ‘The key to building a global economy that can sustain economic progress is the creation of an honest market, one that tells the ecological truth,’ writes Worldwatch founder Lester Brown. ‘To create an honest market, we need to restructure the tax system by reducing taxes on work and raising them on various environmentally destructive activities to incorporate indirect costs into the market price.’
Theoretically, if new taxes aggressively penalized CO2 emissions, as well as other forms of pollution and environmental degradation, this would have the effect of transforming the capitalist system. It would force corporations radically to change their practices, embracing renewable sources of energy and regenerative processes on all levels. The likelihood of establishing such an aggressive tax policy, however, remains very remote, considering the power of corporations and their ability to evade or wriggle out of restrictions.
The underlying problem is that truly addressing the hidden costs and externalities involved in the current form of capitalist production will make the things we use every day far more expensive. For instance, a smart phone might cost $5,000 or more – which probably is closer to the actual value of its manufacture and materials. Prices have already been rising on many goods over the last decades. Without a transition to a system that resembles socialism in some ways – that applies technical efficiency rationally to satisfy people’s basic needs – we will see extreme privation and misery, preceding a deeper doom-spiral.
Brown proposes a carbon tax of $240 per ton by 2020. He notes that this may seem steep, but it is still far less than petrol taxes in Europe. When he wrote the 2008 version of his book Plan B, Britain’s petrol tax was £3 per gallon, equivalent to a carbon tax of £1,239 per ton. ‘The high gasoline taxes in Europe have contributed to an oil-efficient economy and to far greater investment in high-quality public transportation over the decades, making it less vulnerable to supply disruptions.’
The market bases the valuation of the major energy corporations on the stored reserves of fossil fuel they plan to extract over the next decades, while they still spend $90 million per day searching for hydrocarbons. These reserves also play a major part in national planning. As much as $20 trillion of fossil fuel reserves must be recognized as stranded assets, because extracting them would lead to biospheric collapse. Those trillions of dollars of stranded assets are also structural underpinnings of the global economy. This is a knotty problem. It may be impossible to resolve within the current system.
It is possible, in the near term, that we will require a combination of state socialism to manage the energy and banking centres, anarchism to allow for myriad experiments in political and economic systems, and capitalism. In Postcapitalism, Paul Mason argues we must nationalize the central banks as well as the energy companies, in the short term. The state would take control of ‘the energy distribution grid, plus all big carbon-based suppliers of energy’. He points out that the energy corporations ‘are already toast, as the majority of their assets cannot be burned without destroying the planet’. Once made public institutions, central banks could focus on ecological goals: ‘In addition to its classic functions – monetary policy and financial stability – a central bank should have a sustainability target: all decisions would be modelled against their climate, demographic and social impacts.’
The options are either that we build a global people’s movement that forces these corporations to capitulate to the public will, or that we disband these destructive corporations, or that we find a way to compel them to change from within. They could, in theory, redirect their immense store of capital – as well as their capacity for technical innovation – to help engineer the global transition to renewable energy and conservation of threatened resources. One way to stop these companies from extracting those resources would be to compensate them financially for leaving them untouched. As painful as this idea is – like rewarding a tobacco company for not promoting smoking to teenagers – it is preferable to planetary meltdown.
No matter what tactic we choose, the only hope I can see is that we commit to an evolution of consciousness that must be intentionally engineered. We must somehow use the mass media and social media to provoke a mass awakening. The human populace must willingly accept serious limitations – on wealth, consumption and travel – over the next decades. We must voluntarily enrol ourselves in a worldwide effort to accelerate the systemic transition to a regenerative society based on renewable power, sharing, conservation of scarce resources, local farming and distributed manufacturing.
I believe that if the mass media is used as a megaphone – if a chorus of public artists and other public figures use their platforms in an organized way – the people of the world will agree that a period of shared sacrifice is preferable to the end of our species in a universal collapse of the Earth’s life support systems. However I consider it, I can’t see another option. The ecological mega-crisis is destined to unite humanity through either a universal collapse or a global awakening.
Buckminster Fuller noted that ‘under lethal emergencies vast new magnitudes of wealth come mysteriously into effective operation’. During the Second World War, for instance, the United States engineered a rapid shift of its industries towards military production within a few short months.
Now we need a mobilization, on a planetary scale, beyond what any human society has ever undertaken. We know the techniques and technologies that we need to deploy rapidly. We also know we must conserve our dwindling fossil fuel reserves and extract as little of the remaining hydrocarbon reserves as possible. We must intentionally redesign our political-economic system to bring about this transformation – and this is something that has never been attempted before.
Our best approach would be to pursue both solutions – the reformist and the radical – simultaneously. By all means, let’s introduce a carbon tax as quickly as possible, if we can, as well as cap-and-trade agreements that may help limit carbon emissions in the short term and encourage investment in renewable energy. Let’s also put a price tag on ecosystems services, charging industries for their consumption of natural resources. But at the same time, let’s design and launch new instruments for sharing and creating value that will hopefully supersede the current system.
Bernard Lietaer draws an essential distinction between ‘Yang’ (masculine, aggressive) and ‘Yin’ (feminine, receptive) currencies. Our modern form of standardized national currency is entirely Yang. It is designed to be scarce. It forces incessant competition and hoarding.
Reviewing the history of monetary systems, Lietaer finds many examples of Yin currencies. These currencies are designed to increase social, rather than financial capital. They do this by building cooperation. They are issued in such a way as to discourage private accumulation or make it impossible. Currencies with a negative interest, or ‘demurrage’ charge, were widely used in Egypt and in medieval Europe. These societies had such an extraordinary excess of social wealth, despite their comparatively low level of technology, that they built enduring monuments like the Pyramids and cathedrals.
The simplest way to stop excess hoarding of a currency is to give it a negative interest rate, so it automatically declines in value over time. If you are using a currency that loses value the longer you hold on to it, you will want to get it back into circulation as quickly as you can. If there is nothing productive you can do with it, you will share it with other people and organizations who need it, building up goodwill instead of storing profit.
We have recent examples of negative-interest currencies used in Germany and Austria after the First World War, and in the United States during the Great Depression. Currencies such as the Wara in Germany, the Wörgl in Austria, and a number of ‘stamp scrips’ in the US depreciated in value. These alternatives rapidly reduced unemployment and supported the growth of local economies by keeping money flowing within the community. The reason we don’t know about these experiments today is not because they failed but because they were surprisingly effective. The governing elites realized they threatened their central bank’s control over the monetary supply and quickly made them illegal. President Roosevelt, for instance, prohibited these ‘emergency currencies’ in 1934, at the height of the Great Depression.
Lietaer proposes a negative-interest currency, the Terra, as a global standard for making trades. The value of the Terra would be linked to a ‘basket’ of commodities sold on the stock market, and therefore would not float in an abstract void, like today’s currencies. The Terra would feature a ‘demurrage’ charge, losing value over time. The way that money currently accrues interest – eternally – has no relationship to nature. In nature, things degrade, break and rot over time. A negativeinterest currency like the Terra could bring human activity more in alignment with natural processes.
A trading currency like the Terra could be combined with local currency initiatives, such as Time Banks and Local Exchange Trading Systems (LETS). These currencies would be designed to keep value circulating within communities, instead of flowing to distant rentiers or corporations. Instead of only using one type of currency – debt-based, issued by central banks – for everything, we would have an ‘ecosystem’ of currencies used for different purposes, intentionally designed as an interdependent whole that supports ecologically restorative activities.
We can develop many different instruments for exchanging value. Local and complementary currencies can be designed to keep value circulating within communities instead of flowing out to corporations. ‘Local currencies work best for locally generated goods and services, or when a commodity’s markup is derived from a locally added value, such as atmosphere or labor,’ writes Doug Rushkoff in Throwing Rocks at the Google Bus. ‘Complementary currency’s purpose, more often than not, is either to kick-start a local economy or to make local transactions less burdened by the cost of currency and thus more competitive with non-local corporate, chain store, or big-box offerings.’ Rushkoff, like many thinkers, believes we need to reprogramme ‘the operating system of money . . . from the ground up to be biased less toward preserving passive wealth for the rich and more toward exchanging value among everyone else’.
One simple way to measure value is through hours of work exchanged. This is how Time Banks operate. On the time-banking platform TimeRepublik, for instance, people can offer skills to each other on an hour-per-hour basis. A carpenter might come to your house to fix your shelves. You pay them with hours you have accrued, and they then use those hours to get a babysitter. A Time Bank system can be a useful complement to other forms of currency. A time-dollar network makes great sense in areas where traditional employment is scarce. Cities in Italy and Spain are currently working with TimeRepublik to encourage skill sharing locally.
In a LETS, local businesses, service providers and manufacturers come together to back their own interest-free currency. ‘Any group of traders can organize to allocate their own collective credit among themselves – according to their own criteria, and interest-free,’ writes Tom Greco, in The End of Money and the Future of Civilization. Such systems can ‘open the way to more harmonious and mutually beneficial trading relationships when done at a large enough scale that includes a sufficiently broad range of goods and services, spanning all levels of the supply chain from retail to wholesale, to manufacturing, to basic commodities’.
LETS are a means for local communities to exchange goods and services without debt or interest – without being controlled or influenced by multinational companies and predatory financial institutions. They can also support new initiatives that help build diverse, healthy, mutually supportive enterprises. Utilities that fulfil basic needs – like electricity or water – provide extremely stable foundations for community currencies, as everyone accepts the value they provide.
I am not going to pretend that I have The Answer to the money problem. However, the work of Lietaer, Greco, Fullerton and many others suggests that we can reprogramme our economic operating system to reduce wealth inequality, incentivize conservation and increase cooperation – just as our current system creates artificial scarcity and forces accumulation, waste and competition. The current money system actually deforms human nature, which is innately altruistic. It forces people to compete against each other in order to survive. Because human nature is inherently malleable, new forms of currency can reshape our behaviour towards altruism, conservation and communal cooperation – in fact, this would be closer to our original, premodern condition.
A new system must incentivize ethically grounded action based on long-term forethought over the pursuit of short-term, self-centred goals. We can accomplish this by changing the reward system – but we will also need to transform our society’s values. Instead of the private accumulation of wealth, we must prioritize efficient sharing, mutual aid and the rational redistribution of resources. The share of global wealth controlled by the tiny class of the financial elite must be reduced significantly – but this can happen within a global movement towards a society that produces greater happiness and opportunity for everyone, including the 1 per cent.
To replace the single monolithic currency, we require a combination of diverse instruments for exchanging value. These would include community currencies, negative-interest currencies for global trading, Time Banks and so on. New currencies – ranging from local to global instruments – would support equitable development and cooperative social ventures. The need for constant economic growth would be reduced if people were given a universal subsidy, freely provided with the basic means to live a decent life.
Instead of moving towards a more hopeful future, we are currently seeing automation displace millions of jobs, and this problem will get far worse in the next decades. Our current economic system perpetuates outmoded forms of the struggle for existence, and forces excess waste, unnecessary development and ecological destruction. I don’t see how reforms will be enough. What we need, instead, is to launch a new operating system.
With the Internet, humanity now possesses a globally interactive medium for enhancing knowledge, building consensus, sharing value and supporting collective action, on every scale. We are continuously connected with each other, globally. When it comes to engineering social transformation, this means we don’t have to undergo a slow, linear progression any more. We have the potential to supersede our outmoded systems and institutions rapidly. We can bring about changes in a handful of years that would have previously taken decades or centuries.
In the short term – there is no getting around it – we must undertake severe restrictions in CO2 emissions. No market mechanism can help us here, as this move goes directly against the capitalist system and our profligate lifestyles. As draconian as this sounds, I think we need something like a global moratorium on meat eating, excess consumption and exotic vacationing until we bring about a technical and economic transition. Surely, if we expressed it to them properly, the vast majority of our human family would agree that a period of shared sacrifice is preferable to a total breakdown in the planet’s life support systems. The potential also is that we make a shift into a post-capitalist mode of existence where people everywhere work far less and have more opportunity for self-development.
One way to do this is, I believe, would be through collective agreements or voluntary social contracts. We merge the breakthroughs we have seen with online crowd-funding like Kickstarter and movementbuilding platforms like Avaaz to ask people to commit to changing their lifestyle for the benefit of the whole. A social network could provide instant support groups for people who wanted to shift to vegetarian diets, form solar energy cooperatives or engage in building wilderness corridors to protect threatened species. What would happen, I wonder, if, through the Internet, 100 million US citizens made an agreement not to pay taxes until the US redirected funds from military weapons programmes to renewable energy? The government might be forced to change its priorities. Globally, through online referendums, the people can ratify a universal code of conduct, agreeing to follow something like the already existing Earth Charter, which seeks to define ‘interdependent principles for a sustainable way of life as a common standard by which the conduct of all individuals, organizations, businesses, governments, and transnational institutions is to be guided and assessed’. In other words, humanity needs to agree on a universal code of ethical behaviour that will align our actions as a species with the limits of our biosphere.
As part of this process of building a truly participatory and democratic planetary culture, we must also design new instruments for sharing and storing value. We have a recent example in the partial success of Bitcoin. Bitcoin is not perfect, but it proves that virtual currencies can work without a central banking system. Entirely decentralized, managed by peer-to-peer technology, Bitcoins are virtually ‘mined’. What this means is that each Bitcoin depends on the outcome of a complex mathematical operation, which takes a great deal of time and computer processing power to solve. Bitcoins are designed in such a way that only 21 million of them will ever exist. This alone doesn’t limit their potential, however, as a Bitcoin can, in theory, be divided forever.
‘Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer,’ tech investor Marc Andreessen wrote in the New York Times. ‘The consequences of this breakthrough are hard to overstate.’
I know this is a fairly abstract idea, but since Bitcoins have no tangible value, when you get a Bitcoin what you are actually receiving is a ‘share’ in the greater entity of Bitcoin. Bitcoin is something like a distributed, leaderless and autonomous organization or corporation. This opens up the possibility that we can use the blockchain – the underlying architecture of Bitcoin – to build other kinds of companies and organizations. The blockchain functions as a transparent ledger where all exchanges get stored and can be permanently tracked. In theory, the blockchain could take away the opacity that currently obscures many aspects of our financial system. Compared to the blockchain, the actual Bitcoin currency may be of negligible importance. The blockchain could be the infrastructure for something like the resource-based economy envisioned by the Venus Project.
Vitalik Buterin, founder of Ethereum, calls these new enterprises, Distributed Autonomous Organizations (DAOs) or Distributed Autonomous Companies (DACs). DAOs and DACs can be based on selfexecuting contracts, defined by mathematical rules. It is possible to have ‘an organization whose organizational bylaws are 100 per cent crystal clear, embedded in mathematical code’, he writes. This could be a new way to operate a non-profit organization, a trust, a media company, or to issue any number of currencies. As I write this, the first major initiative of this type, called The DAO (for Distributed Autonomous Organization), has raised $150 million from small-scale investors, which will be used to develop more applications using the blockchain.
For instance, a DAO could be a worker-owned cooperative, or a network of permaculture projects, meditation centres or urban farming collectives. These kinds of distributed organizations might replace the current form of corporations, which are hierarchical, proprietary and profit-driven. As an example, Doug Rushkoff asks us to imagine ‘a platform-independent Uber, owned by the drivers who use it. There’s no server to maintain, no venture capital to pay back, no new verticals or horizontals in which to expand, no acquisition and no exit. There are just drivers whose labour and vehicles constitute ownership of the enterprise.’ He points towards one experiment, La’Zooz, ‘a blockchainmanaged ridesharing app’, where ‘drivers are co-owners of a transportation collective organized through distributed protocols’. It is conceivable that every social function could be reconfigured in such a manner.
Rushkoff notes that the potential for such ‘platform cooperatives’ actually answers the original egalitarian dreams promised by the digital revolution:
The basic behavior of downloading an app in order to work or rent property has already been anchored in users by Airbnb, Uber, TaskRabbit, Mechanical Turk, and countless others. Using a blockchain is just a small step further, compared to the original leap into digital labor and exchange. It is the disintermediation that all these supposedly disruptive platforms were promising in the first place.
I know it is hard to imagine reinventing the global financial system. But I don’t think we have any choice: debt-based currency is inevitably destructive, forcing unsustainable growth. We need to inspire people to become active agents in bringing about this systemic change, providing them with the tools to facilitate it.