Category Archives: Book review

Sacred Economics

sacred-economics cover art“Within every institution of our civilization, no matter how ugly or corrupt, there is the germ of something beautiful: the same note at a higher octave. Money is no exception. Its original purpose is simply to connect human gifts with human needs, so that we might all live in greater abundance. How instead money has come to generate scarcity rather than abundance, separation rather than connection, is one of the threads of this book.” (pg 10)

Charles Eisenstein writes with a rare clarity. While I don’t subscribe to all his conclusions, his analysis of the current global economy is spot on, and I’ve learnt much from this book about how the current system has developed, why it has enslaved the world to a cycle of near-irreversible self-destructive consumerism and what some of the keys might be to moving on from this current nightmare.

Connecting human gifts with human needs

Eisenstein’s hypothesis is that society did not develop our present money system as a way to facilitate competitive enterprise in the form of barter as such, but to facilitate mutual gift-giving of resources that would be wasted if not shared. In fact there have been societies that have functioned in a much healthier way without life being denominated in terms of money. He says:

“Let me be very naive for a moment so as to reveal this core, this spiritual (if not historical) essence of money. I have something you need, and I wish to give it to you. So I do, and you feel grateful and desire to give something to me in return. But you don’t have anything I need right now. So instead you give me a token of your gratitude—a useless, pretty thing like a wampum necklace or a piece of silver. That token says, “I have met the needs of other people and earned their gratitude.” Later, when I receive a gift from someone else, I give them that token. Gifts can circulate across vast social distances, and I can receive from people to whom I have nothing to give while still fulfilling my desire to act from the gratitude those gifts inspire within me.” (pg 20)

The fact that human gifts and skills are not being well utilised in our highly developed world (most people don’t love the work they must do) and human needs are very largely unmet through a massive polarisation of wealth illustrates that what we have come to now is an absolute failure.

Instead, money has become a way to reduce human life and the natural world into a reductionist, centrally controllable machine-like and decidedly un-sacred place. He says: “…reductionist science seems to rob the world of its sacredness, since everything becomes one or another combination of a handful of generic building blocks. This conception mirrors our economic system, itself consisting mainly of standardized, generic commodities, job descriptions, processes, data, inputs and outputs, and—most generic of all—money, the ultimate abstraction.” (pg 9)

Instead of enabling well-being for society, our economic system has become the tool of crippling the linking of human gifts and human needs. Money as we know it is not the answer, money is actually the problem.

“It is ironic indeed that money, originally a means of connecting gifts with needs, originally an outgrowth of a sacred gift economy, is now precisely what blocks the blossoming of our desire to give, keeping us in deadening jobs out of economic necessity, and forestalling our most generous impulses with the words, “I can’t afford to do that.”” (pg 22)

Reductionism and commodification

As an accountant by training, I know how powerful the story behind our economic system is, and how hard it is to break out of that mindset. We are trained that everything can be expressed by some sort of a monetary value: time, goods, people, resources, land, water, entertainment, culture etc.

When we link this to the other unquestioned assumptions of our age – maximisation of wealth as expressed in possessions and net worth, and the value of individualism, we have a toxic brew for dehumanisation and destruction of the earth.

Eisenstein shows how society has moved progressively from very little being denominated in monetary terms to almost everything. Much of what was once regarded as the commons – the common property of humanity for the good of all – is now private, protected by private ownership, regulation, patent law, digital rights management and so on.  This has had the effect of not just separating us from our joint cultural heritage but also of separating us from each other and ultimately from our own worth. In a generic world where everything is exchangeable nothing carries any kind of meaning – including our lives.  We see this in western culture where although we have an abundance of stuff we are the most dissatisfied of generations.

“…the products of slave labor embody the spirit that goes into them. Who but a conscript would produce the crappy, dispirited, toxic, ugly, cheap objects and buildings that surround us today? Who but a slave would be so resentful and unpleasant in providing services? The vast majority of our “goods and services” are made by people who only do so for the money, who only do their work because they “have to.” I want to live in a world of beautiful things created by people who love what they do.” (pg 199)

By denominating almost everything in terms of money, we can “own” what was once the possession of all, limit it making it scarce then make a profit. By denominating abundance into money (a scarce commodity) the abundance of the world is withheld from the needy and wasted by the powerful.

“When everything is subject to money, then the scarcity of money makes everything scarce, including the basis of human life and happiness. Such is the life of the slave—one whose actions are compelled by threat to survival. Perhaps the deepest indication of our slavery is the monetization of time.” (pg 31)

The non-organic nature of money

If almost everything is denominated in terms of money, things once intrinsically valuable not only lose meaning and true value, but the status of money is elevated to a higher value than the goods that it is supposed to represent.

Almost everything in the real world decays over time – food, fabrics, timber, manufactured goods, even ideas and culture. They need to be refreshed and nurtured. Even land if left unkept losses some of it’s intrinsic value (an orchard left to become overgrown say). This is why gold was regarded so highly in ancient cultures – it did not rust or decay like everything else.

Money as we know it on the other hand (because it can be loaned at interest) functions in the exact opposite way. It gains value over time. Money, something that has no intrinsic value but is simply supposed to be a way of linking human gifts with human need, has now become something to be desired above all else, to be hoarded rather than used to benefit society.

Eisenstein argues that this is actually not just ridiculous, but it is at the heart of our inequality and what he calls “wealth polarisation“. Those who somehow have money gain more for doing virtually nothing, and those who don’t get worse off. The scarcity of money drives economic slavery.

The problem with interest

“Economic thinkers since the time of Aristotle have recognized the essential problem. Aristotle observed that since money is “barren” (i.e., it does not leave offspring like cattle or wheat do), it is unjust to lend it at interest. The resulting concentration of wealth had been seen many times already by 350 BCE, and it would happen many times thereafter. It happened again in Roman times. As long as the empire was expanding rapidly, acquiring new lands and new tribute, everything worked passably well, and there was no extreme concentration of wealth. It was only when the growth of the empire slowed that concentration of wealth intensified and the once-extensive class of small farmers, the backbone of the legions, entered debt peonage. It was not long before the empire became a slave economy.”

Loaning at interest – the backbone of the modern economy – only works in times where there is room for growth – new lands to conquer, new products to make, new needs to create, new resources to exploit, more gullible people who will believe that they too can be “rich”.

When we start running of out the commons (what is left of our shared culture and our natural world), when we become satiated on the drug of consumerism, when pleasure no longer is pleasurable, the system starts to break down.  Then it gets nasty. The economy starts to implode, democracy becomes a commodity for sale to the highest bidder, regulation multiplies so only huge exploitive corporations are able to survive, debt becomes unsustainable, jobs become harder to find and higher-pressure. In the intensity of human suffering violence escalates and the poor and minorities usually become the scapegoats.

No reverse gear

The current system is clearly unsustainable. It is an insatiable beast without the ability to regulate itself.

While Eisenstein offers some great solutions at a macro level which could reverse the process  I’m not convinced that without a serious rupture in the current system there will be any appetite for real solutions. Our best hope is to at least aware of the vulnerability of the current economy and not to put our hope in it, but to begin to rebuild an economy of care and generosity that isn’t focussed on or indebted to the money system.

Although the details and timeline of this unraveling are impossible to predict, I think we will first experience persistent deflation, stagnation, and wealth polarization, followed by social unrest, hyperinflation, or currency collapse. At that moment, the alternatives we are exploring today will come into their own, offering an opportunity to build a new and sacred economy. The farther the collapse proceeds, the more attractive the proposals of this book will become. (pg 101)

Going Local – Creating Self-Reliant Communities in a Global Age

Going-Local-Shuman-Michael-9780684830124Anyone who starts their book with a quote from Wendell Berry will get my attention.

But while Berry produces exquisite art that feeds the soul with inspiration and practical wisdom, Michael Shuman writes books for the “how to” of localisation. This one is filled with examples of what has and hasn’t worked – mainly from USA examples from the 1990’s but still highly relevant to our present time and place.

What I like about Shuman is the reasonableness of his position. For instance:

Going local does not mean walling off the outside world. It means nurturing locally owned businesses which use local resources sustainably, employ local workers at decent wages, and serve primarily local consumers. It means becoming  more self-sufficient, and less dependant on imports. Control moves from the boardrooms of  distant corporations and back to the community, where it belongs (p6)

He deconstructs the current narrative that cannot perceive prosperity and well-being outside of increased reliance on the global economy, where we are obsessed with attracting overseas investment as our only hope of economic salvation. He says:

The only way communities can ensure their economic well-being is to stop chasing multinational firms with no community loyalties, and start investing in community corporations. Prosperity follows when ownership, production, and consumption become intimately connected with place.  (p7)

He has some great examples of cities and regions abandoned by large industry who have faced social and economic disaster, but instead assessed what was left and found ways to recover a buoyant local economy.  His hypothesis is that the costs of courting large-scale overseas investment is too high. The advantages are temporary at best. A long-term, robust economy is founded instead on solid, locally owned sustainable businesses.

The final chapter in the book addresses ten steps toward community self-resilience. I want to explore how we could adapt these to Northland:

Step 1: A Community Bill of Rights

By this he means developing a shared vision of a better future, asking questions like: What do we want to produce? How? Where? What kinds of goods and services are necessities? What should be our standard of worker right and wages? What should be our stand on preserving our land, water and sea? What kind of ownership structures will best serve our community well-being? As he says:

A community bill of rights accomplishes several goals. It enables residents to assert, fundamentally, that ends come before means – that businesses are welcome if they serve the community. It creates a set of public norms about commercial behaviour that protects the public and provides fair notice to corporations. A business’s faithfulness to the Rights. while voluntary, carries consequences. Every time a citizen considers making a purchase…he or she will have the list of qualifying companies in mind.

This is what we have in mind through a our Localise Project – developing a set of voluntary standards around shared values and then identifying businesses that are on-board with these values that they may support one-another.

Step 2: The State of the Region Report

This is about taking stock of what our city, town or region is and has. Every community has resources, assets and culture that are capable being revived and empowered. Sometimes we forget how blessed we are in Northland in terms of climate, resources and history. Shuman recommends recording and publishing this to remind ourselves of who we are and what we have. This not only gives us a starting point for moving forward, but inspires a new sense of collective identity.

Virtually every community… has a gold mine which economists have yet to discover. Along its veins and other deposits may be found unemployed human resources, underused civic institutions, and discarded economic assets…. Many kinds of human assets now lie fallow…… the inventiveness of the young, the forgotten skills of retirees…tally the inanimate objects that have been all but written off: empty buildings, idle machinery, wasted energy. (p184)

This report would also include our local renewable resources, non-renewables, community organisations, measures of current exports and imports, indebtedness and investment on a region-wide basis and so on. This report is not so much about finding answers, but identifying where we are at – that in many ways we are richly resourced, but just need co-ordination and vision for that to be utilised in a sustainable and empowering way for the whole community. This requires research and coordination – an essential part of the process. The Ministry of Economic Development recently commissioned a report on Northland which has collected much data around the Northland economy. Many of the conclusions are framed in terms of a global/industrial narrative, but the information could provide a great resource for a State of the Region Report.

Step 3: Anchor Corporations

From this report, Shuman says, there will be obvious ripe business opportunities. Unmet needs suggest new markets for local businesses. Under-utilised or poorly utilised resources may then be matched with people with ideas but lacking capital or land – unused buildings or land for instance, discarded goods that may be recycled or up-cycled. Import replacing businesses will begin to emerge based on a joint commitment made at step one. This is where a few companies must step up to point the way forward. Shuman says:

The existence of one or two successful community corporations – using local inputs, producing quality goods, operating in harmony with the environment, selling to local consumers, treating workers well, delivering profit to local shareholders – should inspire others to follow… As they increase the demand for inputs to production, new firms will be motivated to set up shop. (p187-188)

In Northland we have at least one great example of a Social Enterprise that has lead the way in CBEC (Community, Business and Environment Centre) is based in Kaitaia but has ventures throughout Northland. With a focus on running community services (transport, home insulation, solar power, conservation and recycling) in a sustainable way they have proven the viability of the Social Enterprise model in Northland. The Akina Foundation is presently working in the Far North coaching a series of new social enterprises, for example AKĀU – a design and architecture studio in Kaikohe using local materials to make quality furniture and other locally designed products, providing training for local youth in association with Northtec.

Step 4: Community Friendly Business Schools

Most people who have been employed by large companies all their lives (or have been unemployed) haven’t had the opportunity to learn the skills of business ownership. The availability of coaching and mentoring around the values identified at step one has been rare in the past. Shuman says:

The transformation of business schools and university economics departments is another imperative. Lewis Mumford once observed that industrial society transformed all seven deadly sins except sloth “into a positive virtue. Greed, avarice, envy, gluttony, luxury, and pride [are] the driving forces of the new economy”.

Fortunately we have organisations like Akina who are leading the way in ethical Social Enterprise and locally Northtec is playing a significant part in sustainable development and training.  They have carried out some significant research including an extensive study of the impact of the Whangarei Growers Market. From my background as a Chartered Accountant I see the great disconnect between great people with exciting ideas and the realities of compliance with regulations and reporting requirements. I am still involved in informal business mentoring with a number of forming ventures and may formalise this in future as there is a great need for incubation of new ventures. We are also in the process of creating software tools to assist with compliance and governance.

Step 5: Community Finance

Shuman sees the development of sources of finance as essential for the starting of community organisation. Conventional sources of finance form a point of “leakage” from the local economy, reducing the “multiplier” effect of keeping funds in circulation.

As community corporations expand, so will the need for local investors. A concerted effort must be made to convince your neighbours to transfer their pensions and other assets from global stocks and bonds to local ones, and from mutual funds with no preference for place to local mutual funds targeting local businesses.

Many will of course argue that this may expose their retirement funds or their children’s inheritance to undue risk.  But are investments in the global economy actually that safe anyway? There are ways to invest locally in safe way – for instance investing in land or buildings that are made available for social enterprise or start-ups at an affordable rate as a way of promoting these ventures. Mechanisms already exist for protecting peer-to-peer lending. Simply using a local solicitor to draw up an agreement is the most simple way if there is already some kind of relationship between the borrower and potential investor. New peer-to-peer lending businesses like Harmoney allow lenders to choose who to invest in. So a local investor could go in there are choose from a range of local ventures.

Step 6: Community Currency

Community currency is a proven way to stimulate a local economy. As well as reducing leakage for multinational banks and credit card companies, it provides resilience in times of natural disaster, economic or political crisis. Shuman says that local currency systems:

…demonstrate that designing, managing and recruiting participants for community currency is a terrific organising project. It raises awareness  about who lives in the community which citizens are committed to self-reliance, and what and where goods are locally available. It strengthens relationships between local business and consumers. It heightens public appreciation that every purchase is a civic act.

Northland has had community currencies and time-banking in the past. Laurence Boomert,  a guru on alternative currencies did a great presentation on Complimentary Currencies at the Resilient Economies Conference in Kaitaia in 2014. As far as I know there are no current currency initiatives in Northland however there are tools to enable virtual local currencies available and once some of the other steps are more progressed this would be natural extension.

Step 7: Community-Friendly Local Councils

While all the above can be achieved without local government support, if the local councils do get on board, there are massive advantages. Shuman says:

It can make sure that the only beneficiaries of local investment, contracts, purchases and bond finance are community corporations. It can help to match local-input supplier and workers with local producers. It can set up scholarship funds… If your mayor or local city-council members  refuse to start making the kinds of economic stands that make difference, consider standing against them.

There are some encouraging signs for Northland in this arena. The Far North District Council hosted the Resilient Economies Conference in Kaitaia in 2014. They are supporting the Akina social enterprise work in the Far North. The Whangarei Council seems open to suggestions. We just need to keep working on them!

Step 8: Political Reform

This is where it can start to get messy. As Shuman says:

A community that begins the transformation to self-reliance will soon encounter powerful enemies. Multinational firms that find themselves losing local markets and special government privileges can be expected to retaliate… and continue to use trade treaties and friendly courtrooms, wherever possible, to circumvent the inconveniences of democracy… But their most likely – and dangerous -reaction will be to tighten their grip on local governments.

This is a challenge. Once we make a stand to take our independence back from the global economy there is likely to be opposition. Already the TPPA is a massive threat to a thriving local economy. The good thing about the Northland economy is that nobody outside of Northland really cares about us. Our production is insignificant in national terms and no-one in central government wants to tackle our social problems so hopefully we can “fly under the radar.”

Step 9: A Lobby for Localism

This is about pushing for policies that devolve power back to local communities and local councils.

Local elected officials have to steer the devolution revolution so that they are given real powers over the local economy, and not just more responsibilities without the revenue-raising capacity to pay for them. They need to push the national government to reorient the nation’s trade policies away from the centralised autocracy…

In New Zealand local government has less power and less resources than in most other countries – lots of responsibility but little real power. But once we have a working model of a truly resilient local vibrant economy that doesn’t keep begging for government handouts, is addressing it’s social problems in creative and compassionate ways and is reclaiming a truly local identity then hopefully we will have a great case for government to look seriously at making it easier for local communities to at least be on a level playing field with the corporations, and to trust local councils with more power to facilitate this.

Step 10: Inter-localism

Finally Shuman suggests a better way of forming global connections:

A more responsible course for a globally minded community is to move toward local self-reliance, and to help other communities worldwide do likewise. How? By transferring innovations in technology and policy that foster self-reliance, especially to the poorest communities in the world that desperately need a new approach to sustainable development.

In fact it is many of the “poorer” countries where social enterprise is thriving and we can learn from them. However the idea is sound, that we get our own house in order, care for our own people – our own “zombie towns” – then perhaps we will have learned some skills to help others.


Clive McKegg