Can We Give the World a Gift Economy?

There's been some nebulous talk of the ESM implementing an alternative currency system at some point in the future. There are two motivations for this program and they are both good ones: the financial system is in chaos and so is the economy, with wealth more concentrated and poverty more widespread than at any time in history and both of these likely to accentuate in the near future; meanwhile the growth imperative of global corporatism is destroying the planet. To a large degree that growth imperative is the result of the structure of our monetary system (interest-accruing debt-based currency), which in turn is the natural egoic expression of the blind greed that rules the hearts of the global elite.

It was Reality Sandwich's publication of Eisenstein's essays on the nature of money that first opened my eyes to a real alternative to the interest-based system: demurrage, the game in which money is seen to be a commodity as any other, generated by economic activity and decaying with time, just like wheat or bolts of cloth. Sit on it too long and it will just disappear; the only way to get value for it is to trade it for something else of value, something real that you can eat or wear or live in or use.

At a stroke, this system removes the impetus for the hoarding of monetary wealth, and so acts against the concentration of wealth; instead it is a spur to economic activity, encouraging the steady circulation of the money supply, spreading the wealth as evenly as possible throughout the population. If somehow you haven't read Eisenstein's essays I recommend them to you for their detailed exposition. He makes a very compelling case and his forthcoming book on Sacred Economics promises to be very interesting.

Now, demurrage is something that has been tried before a few times. Eisenstein gives the example of Worgl, an Austrian parish that did just fine for itself during the Great Depression by issuing its own demurrage currency and allowing local taxes to be paid with it (until the Austrian central bank forced Worgl to cease issuance of its local currency and restore exclusive use to the central bank's currency, at which point the Depression showed up in Worgl, too.)

Douglas Rushkoff gives the example of medieval towns, many of which used a form of demurrage called 'grain receipts' (which were exactly what they sound like) and shows that the cathedrals resulted. Essentially, the townsfolk were looking for some long-term high-value storage for the excess wealth they generated with every harvest, and they found that by building cathedrals: multigenerational projects whose primary benefit would be derived in centuries yet unknown.

See many cathedrals being built these days? Funny that. New projects started grinding to a halt just as kings across Europe opted to make taxes payable only in centralized national tender. Just a coincidence I'm sure.

So, this has been done before; it is extremely powerful; and we can do it again. I've been thinking about 'how' ever since I read Eisenstein's essays a year and a half ago and I think the answer is very simple: promotional points.

You know those customer loyalty cards every store and it's corporate sister hands out? Lots of people have wallets bulging with them (because each store issues its own.) It's a good idea but cumbersome, what with all the different cards. However its usefulness as a currency is neutered by the fact that the points disappear upon redemption. If that condition alone were changed, the possibilities really start to multiply.

It would work like this: any individual or business that wanted to could participate. A buyer, after transactions with a number of businesses, would then be able to redeem the points at any of the participating businesses. Those redeemed points would then be transferred to that business, which would then be free to use them in transactions with other businesses, to pay its employees in part (or in whole) with the credits, etc.

Credits are generated with every transaction, not just those using 'legal tender'. So when a business buys something from another business, pays its employees etc, it generates points for itself. This ensures that the amount of new money being created always reflects the actual amount of activity within the economy.

At the same time, each group of credits is uniquely identified and has a built in expiration date, or rather a built in rate of decay that will eventually see those credits dry up and disappear entirely. Thus old money gets flushed out of the economy as new money is created.

It would be very easy to index the amount of credits created in a given transaction (1% to 10% of the transaction size, say) to some inverse of the credits' life expectancy (ie 1% -> decades, 10% -> days.) Essentially what this system does is turn the customer in every transaction into their own personal central bank, with the growth of the money supply tuned by individual choices made on the spot, in response to individual needs. Thus short-term ramp-ups in the money supply (in response to some need for an immediate increase in the economy for ie a large infrastructure project) could self-generate their own capital, with the excess money created quickly flushing itself out of the system once the activity has ceased.

Implementing this system online would be fairly simple: the algorithms (unique identifiers for individual currency units, creation-quantity indexed demurrage, mutual authentication platforms for transaction participants) are not complex, and once the platform is up and running online businesses can be invited to participate through a word-of-mouth marketing campaign.

An offline application is the killer app, of course, since that's where by far the majority of the real economic activity remains, and this has been the most vexing question for me. The natural market, initially, is the small businesses that can't derive much benefit from individual points plans, in the face of the economies of scale available to global megaconglomerates. Few of these businesses have an internet-enabled computer at the front desk and I doubt they'd take the trouble just for something like this. At the same time the economics of a specialized card-reader / tele-verification system are pretty daunting, given that none of us here is a global megacongomerate.

One idea that's occurred to me is to use stamps: all participants, businesses and customers, would have a stamp, with some seal on it, it's mark uniquely identifiable under a microscope due to inherent random striations and other abnormalities. The currency would be embodied on a card with a series of columns and rows on it, delineating the quantity-indexed life expectancy of the transaction; the seller in the transaction would stamp an empty box in the appropriate category, writing the number of points and the date created. When the points are no longer viable, or when they are redeemed, they are x-ed out on one card and entered on another. When a card is full, new cards can be obtained from participating businesses at need, free of charge, just as they are now, with the businesses ordering refills as they need them. In early promotional stages, the cards could be given to the businesses for free.

One can imagine cottage industries in custom stamps and credit cards springing up ... but with the latter looking more like business cards and functioning more as personal chequebooks.

Note that nowhere in this system is there a central body dictating at what rate money shall be created, nor is debt built into the system at every level. Let me emphasize that. This doesn't mean the system will be entirely self-regulating or flawless: inevitably, there is the potential for false dealing: in one scenario a 'buyer' and 'seller' sit down and trade their credits back and forth very quickly with no actual goods or services trading hands, while registering a high number of customer-credits to themselves and then attempting to redeem these with other business. The best way I can think of is to allow third parties to cry 'foul' and assemble on-the-spot local participants in a sort of common-law court, which if it decides against the defendants causes the invalidation of the currency they created and possibly a suspension of participation (for repeated offenses). There would be some need of arbitration here perhaps; and it's hard to see how the responsibility for dealing with this wouldn't rest with whoever it was donating their time to support the project.

It's also important to note that this system is built to be organically scalable: it can be piggy-backed off of any current monetary system I'm aware of, boot-strapping itself into existence off of current economic activity and then feeding its own growth. It could be implemented in your town today, improve its economy tomorrow and have the towns around it expressing interest the day after that. Just as with RS and e+, the infrastructure costs are relatively fixed and fairly low: once in place, they can be utilized anywhere, by anybody around the world, to conduct business in a new way not just with local merchants but with anyone anywhere who's using the system. If it goes viral - and that can happen very quickly - it could cause a reversal of the current economic slide into indentured servitude that's starting to feel like falling through the event horizon of a black hole, and it could reverse that trajectory for people faster than anyone now expects to be possible.

So Evolver, what do you think of this idea? Surely many of you have your own thoughts on the matter and this is a conversation I strongly feel we should be having. Now. ESM is looking for a raison d'etre it seems: now that it's starting to regard itself with the dawning self-awareness of an organism, it is wondering what to with itself. Planting food and educating others is all well and good but that's not something that requires a movement so much as a whole bunch of individual initiative. Developing and deploying an alternate economic infrastructure which can step into the decaying tatters of the old as fast as it needs to and pick up the slack as it does sounds like an ambitious goal perhaps and it is; but it's something that I don't see anyone else trying right now; it's something that we can do with very low costs; and it's something that will require the dedicated work of a large number of people, something practical to contribute to, develop, participate in and present to the world as our special gift to it. It's not just something we can do together, it's something that we can only do together, and it's something that could be enormously powerful.