Whoever controls the seeds, controls the farms. Whoever controls the farms, controls the stomachs.
Whoever controls the stomachs, controls the hearts and minds.
If we take a look at the formula of Capitalism again, we would see that it starts with money. To play the game, you need money to buy the materials and/or machines and labor power to produce a product or service to sell at a profit. How do we acquire the money to get started? Usually you’ll get it from the gatekeepers such as banks, venture capitalists, angel investors, and various types of funds. However, what if the gatekeepers don’t believe in the potential of your business or what if your business severely removes their control upon a particular industry? It’s highly unlikely that you would get funding to start your business (or play the game). So basically, everyone doesn’t have easy access to funds to start a business. Therefore, money controls labor. If you can’t get the finances to start a business, you’re forced to work for someone else.
In addition to the gatekeepers of money, the majority of national currencies are created through compound interest debt, which I believe is the main cause to the majority of problems we have in society. I will go further in depth with that in the next section “What is Money”.
In addition to the lack of access to capital, there’s other major problems with this system; first, the motivation of the self. According to one of the most well known theorists of Capitalism, Adam Smith, everyone in the marketplace is operating out of their own self-interest. That leads us to ask “What is the self?” Is the self an isolated body, independent of others? Or is the self a united body, interdependent of others?
Smith’s theory of the self breeds a view of the world that is based on ego consciousness, which is a belief system that everything is disconnected and people need to be in constant competition with each other. This belief system is false because there has been numerous studies that show everything in this universe is energy. If everything is made of the same thing, there’s no way everything is separate. If we see each other as a reflection of ourselves, how do you think our interactions with each other will be? Would we be more open to collaborate and cooperate instead of compete? Here’s a quote from a fellow Peer to Peer interest group member, Floris Koot, explaining his theory of the two types of Capitalism.
"Exclusive capitalism: What I got from you, is mine now. There's winners and losers and If you can't pay, you can't play.
Inclusive capitalism: What I got from you is what we have. We all benefit from the exchange. We are members of one codependent system. We all play, and money is but one of the factors to make that happen."
As stated earlier, the top 1% of Americans possessed 35.4% of the national net wealth, while the bottom 95% held 36.9%.This drastic inequality of the control of resources create the majority of the problems we have today. This breeds cut-throat competition which leads to crime, corruption, non-cooperative behavior, and many other negative side effects.
The traditional corporation that is publicly traded has legal authority to maximize shareholder value over any other purposes. Therefore, putting profit over people and the environment.
This leads to:
An example was the sale of Ben & Jerry’s Ice Cream to Unilever. Ben & Jerry’s had a social mission embedded into its enterprise. One of the companies that wanted to buy B & J would have kept their social mission in tact, but offered a lower price than Unilever. However, Unilever wanted to remove the social mission and seek higher profits. Due to corporate law, B&J was forced to take the higher bid at the expense of its social purpose. This example inspired the B Corporation movement, which is a corporate form that has a social mission designed into its articles of incorporation so the board of directors can’t be sued if they stick to their social mission in expense to seeking higher profit.
This leads to business interests only being concerned with efficiency, meaning operations being faster, cheaper, and better, but not concerned with the side effects of their business on humanity and the environment. Fictitious entities’ (corporations) needs become more important than human needs, than the ecosystem’s needs. Will this lead to everything being owned by a tiny minority? Or Is this already in place? Maybe delving into what money is will answer that question.
that doesn't have to Currently, banks rob us through lending privileges granted by governments, on money that is not theirs, but also destroys our purchasing power and savings. I'll briefly cover how national currencies are created and managed to show you their inherant problems.
What is Fractional Reserve Banking, and why should I care you may ask? As you will see, this deceptive practice of lending is a scam on everyday people because they don’t understand how it works.
Banks do not loan out their own money, they loan out their account holder’s money. For example, let’s say you set up an account with a bank and deposit $1000. The bank can now loan out up to 9x times the amount of your initial deposit ($9000) to other account holders. Where does the extra $9000 come from? Yup, probably guessed it right; the banks created it out of thin air! The irony of this is if people did this exact process, we will be arrested for counterfeiting!
(Image of Fractional Reserve Banking)
Now here is where it starts to get even worse. In addition to loaning money (the principle) created out of thin air, banks create another layer out of thin air, compound interest, on top of the original loan. For example, imagine I needed a loan of $10,000 from a bank. They told me I can get the loan if I pay an interest rate of 8% for up to 3 years; which will total the loan to $12,400. Where did that extra $2400 come from? Yup, out of thin air again!
Now let’s say I took the loan and they credited my account with $10,000. How do I pay back the extra $2400 if it never existed? I have 3 options. First, I can take $ from someone else in the economy in the form of "competition." Second, I can take out another loan and go in even more debt. Third, I will lose the collateral I put up for the loan.
Now here's where it gets interesting. Using the $10,000 loan example above, let's say times are tough and I'm late on making my monthly payments. I also have to pay interest on the interest ($2400 from above example), which can lead to my debt increasing exponentially (compounding) if I don't pay it off. I only used a small debt amount for this example. Imagine what the compound interest is like on the U.S. government's debt in the trillions!? 8% of $1 Trillion is $80 Billion!
(Image of Compound Interest)
Essentially, interest is the transfer of wealth from the people that work and produce to those who don’t but have capital to lend. A study by Margaret (Last Name) states that all of the prices in our economy has about 40% capital cost added to it. So, if there wasn't any interest charged, people would enjoy about a 40% savings
Fiat money is open to abuse by the banking system printing more money than goods and services are available; thus driving their prices higher - which is inflation. Inflation is created by the banking system through the Fractional Reserve Banking process, and adding compound interest to loans. Guess who are the biggest recipients of those loans? Governments! Governments such as the U.S. have an unlimited credit line with the Federal Reserve.
Here's an analogy I like to use to explain inflation. Imagine Joe the farmer sells milk to a community. He wants to make more money per sale and comes up with an idea to do so. His plan to make more money per sale is to dilute the milk with water. First, he starts out with a formula of 90% milk/10% water. Then, it's 80% milk, 20% water, 70% milk/ 30% water, and continuing on. However, Joe the farmer is selling his quarts of milk as 100% milk! If this isn't fraud, I don't know what is.
National currencies such as the Dollar tries to serve two purposes, being a medium of exchange and a store of value. As stated earlier, a medium of exchange is anything used to facilitate exchanges of goods and services. It can be a piece of paper, sea shells, wooden sticks, or virtual bits of information. Its main goal is to continously circulate within an economy. A store of value is anything that holds a financial worth over time. It can be a financial document such as a stock certificate, gold, art, a house, paper money, and virtual bits of information as well. Its main goal is to be accumulated with hopes of it gaining more value. Its main goal isn't to circulate in an economy (although it can), but to be accumulated and hoarded.
So what's the problem with national currencies trying to serve two masters? When money is constantly circulating (a.k.a. velocity), we have a good economy. When money is hoarded, we have a bad economy. By acting as a store of value, money doesn't have a shelf life, it lives forever. This doesn't give people with a lot of capital incentive to keep it circulating, but to sit still and accumulate interest.
(image comparing blood/circulatory system - money/economy)
If we look at money and the economy the same way we look at blood and the circulatory system, we'll understand why hoarding money is a major problem. Imagine if 93% of our blood only went to our brains, but didn't reach the rest of our body; the other areas of our body would not get nourished and suffer. Well, 20% of the population controls 93% of the financial wealth, while the remaining 80% of the population only controls 7%! We see the side effects of this wealth inequality everyday in the form of crime, distressed social relations, suffering local economies, and more. We need to add a feature to money called demmurage, which will incentivize circulation instead of hoarding. I'll touch on that in Part 2 of the book.
National currencies such as the Dollar have no allegiance to local areas. The main goal for them is to get back to the financial centers of a country. When money is spent at a big chain store, it's more likely to leave the local area where it is doing business. This leaves less money to circulate in that local area to spur more economic activity. However, when money is spent locally, there's a much higher chance of it staying local and benefiting the community.
A study by Civic Economics covering Louisville, Milwaukee, Ogden, Utah, and the Six Corners area of Chicago prove that money spent at independent outlets is more likely to stay local than that spent at a chain. For example, in Louisville, independent businesses recirculated 55.2% of revenues compared to 13.6% for big retailers, and that local restaurants recirculate 67%, while big chains do 30.4%.4
There are various efforts in creating local currencies to keep wealth from leaving the community. I'll also touch on that topic in more detail in Part 2 of the book as well.
Use software analogy: Old Game is like Windows instead of Linux; Centralized Structure
Trains people to think like corporations, zero sum game mentality; breeds ruthless competition
Consumer Driven instead of Producer Driven; extract value instead of creating it
Value moves to the center
Undemocratic
Caters more to Corporations instead of people
Forces many people to sacrifice their values in order to make a living
"Everything is has a price tag" mentality
Media Manipulation
Economic Exploitation
Focused on Accumulation; if everyone focuses on accumulating as much as possible, everyone will be served
War is utilized to protect or expand markets
Inhumane: Insensitive to human and planetary needs
Only measures success in monetary possession
Outdated
Promotes Conformity instead of being unique
We're dependent on a monopolized market
Innovation Is Stiffled Due to lack of access to funds
Lack of Equal Opportunities
Exponential Growth
Too dependent on nonrenewable energy
Only focused on effeciency
"characterized" by innovation and investment to increase wealth
greed-based
pyramid-structured
private property rights that stiffle innovation
free markets are like electricity, it depends on its use
Money
Centralized
Debt-Based
Compound Interest
Privately-owned bank for governments
Scarce in circulation within most local communities
Incentivized to accumulate and hoard
most people are focused on trying to make money to survive, instead of inventing, producing value
the barrier to produce is lack of access to capital and outdated private property laws
Inflationary Fiat
the design of a currency is a direct representation of people's interactions with each other
Finance
Too many gatekeepers
Speculative, World's Largest Casinos
Profit-Driven
Too Much Red Tape
Decision makers aren't personally held liable for intentional abuse, power without responsibility
Too much red tape to create a startup, not a lot of support
Most employers want to pay the lowest amount to employees, and employees want more...antagonistic relationship
Replaces Collaboration With Conflict (Employers vs. Employees)
legalized exploitation
Workers are disengaged, not happy
Undemocratic
Slow to adapt to change, workers are risk adverse
Lack of Trust in Big Business
Lack of autonomy, mastery, and purpose
Education
The youth of today is going into the 21st Century Economy with a 20th Century Toolkit
Government
Outdated
To much red tape
Reactive Instead of Preventive
Biased to Big Business, gives corporations the same rights as people
in these times, it wouldn't be radical to say government needs to be socialized
3. Civic Economics, "Ten New Studies of the "Local Economic Premium" - http://www.amiba.net/resources/studies-recommended-reading/local-premium#ixzz2E8DjiVpH ^
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