The Lure of Alternative Economies

Capitalism, perhaps not fundamentally different? A London street.

Capitalism, perhaps not fundamentally different from the village market? Business in London.

Our planet has some big problems, and we humans are heading down a dangerous path. Inequities, abuses, unfairness and destruction abound. When faced with all of this, I often see people or groups who almost reflexively start to imagine kinder, gentler paths. They imagine economic systems where good people work hard and treat each other fairly, in families, in small groups, in small towns and villages, and ultimately across the globe. They imagine fairness and generosity and some measure of equality, both in opportunity and outcomes. They imagine the earth and our natural systems being prized and valued, along with spirituality and community, and they imagine an end to our current fixation on material goods. Often, as they’re imagining, they picture people living with some level of self-sufficiency, growing their own food, close to nature. And, partly because we don’t have enough of any of these things, these groups often find much of the fault in our economic systems, and blame capitalism, industrialism, “debt-based money”, fractional-reserve banking, or even money itself for our problems. Related, they also find fault with the super-rich, and their control of the media and politics. But, I’m not so sure about all of that…

And it’s not that I don’t see the problems, I do, and I’ll get to that. But it could be that our real problem is a people problem. But let’s digress just a bit, and let me throw out some thoughts that will likely get me pilloried from both sides of the political spectrum, and accused of a wide range of intellectual and ethical deficits—it’s likely that the market system (invariably labeled “capitalism” or “industrialism”) is not as bad as some fear. For large portions of the world’s people who live in market systems with democratic governments, we’re pretty free. We can buy goods from all over the world with a click of a button, we can use the latest technology in the form of computers or solar panels or electric vehicles. We can work, or not work, as we choose. We can travel or we can stay home. Despite some people’s fear of government control, the government leaves us largely alone. There are rules, of course, we have to pay our taxes, and abide by the law, but these are good things. Governments provide us with roads, and infrastructure, and education systems, and regulations that help protect us or the environment from harm. And, before readers start to freak out—I know it isn’t all perfect. But, for billions, the system delivers goods and services, food and housing and medical care. In economic-speak, it allocates goods, and lowers prices, and promotes efficiency and productivity. We all have, collectively, more stuff than we’ve ever had, and for less work.

Our market system, in miniature.

Voluntary trade benefits both parties. A market in Burma.

I find many of the complaints against the system to be red herrings. All this talk of “debt-based currencies” and the evils of fractional-reserve banking fall into this category. Just to throw out a small example, sure, the banking system can charge us interest on money they create out of thin air. But, it’s just money, and they don’t even get the money, the person they’re loaning it to does, and when that person pays it back all that money that the bank created disappears again (we don’t usually hear this side of the story from those who find fractional reserve banking to be the world’s greatest evil). And, the banks aren’t creating wealth as they create money; each dollar of such credit is offset by a dollar of debt. The net effect of this can be inflation as the money supply goes up, but inflation isn’t quite the bogeyman people fear either; some inflation can actually help people who are in debt by reducing the real costs of the money they pay back. Then, the increased money supply often spurs the economy, creating demand and then more jobs. The banking system does charge for this service of loaning a person money, but they aren’t putting guns to people’s heads, this is a service people want, and go asking for. The interest does provide profits to the “bankers”, but if we want to be a “banker” all we have to do is buy stocks from the banking sector, easy enough to do with a few hundred dollars and access to the web. Etc.

On the other side, the suggestions about alternative economies are themselves nearly always woefully lacking in workable detail. Gift economies won’t get us solar panels made with materials sourced from around the globe. Command economies, regardless of their stripe, will give us more equality only at the cost of freedom. Local currencies won’t finance the type of investment that creates large wind towers, or that brings us plants or seeds from another continent. I won’t belabor it all here, but suffice it to say that many of the people who dream of “a more beautiful world” can sometimes explain how small pieces of the economy can be love and happiness, but fail to envision a complete system. (See my post “Crop Circles and Water Memory” about Charles Eisenstein, one of these thinkers). (In fact, I have written several times about some of these issues, notably “The Amish Question“, and “The Role of Self-Sufficiency“.)

Now, back to the “people problem” part. Our real problem isn’t that market systems don’t work, it’s that they work too well. The drive toward efficiency and productivity work too well; we humans can now leverage energy and mechanization to literally move mountains, or fish every fish from the sea. Then, that power is combined with a flexibility that allows markets to provide us with exactly what we want, in terms of goods and services. (And, through advertising, many things we don’t actually need but are convinced that we want anyway). Part of the problem, ultimately, is us; we have a people problem. There are disconnects between our brains and our actions. We see the mono-cropped corn field, and lament the loss of biodiversity and soil and the rampant pesticide use, but then we go buy food created in this way. We protest the big oil companies, as we drive our fossil-fuel cars around every day (or even to the protests). We lament global warming as we board the jetliner for the tropics. We understand how advertising works but get caught up in materialism anyway.

The mall---where we often go to get what we want but don't actually need.

The mall—where we often go to get what we want but don’t actually need.

What people don’t realize is that the very power and flexibility of the market can be our greatest tool. When we decide to demand food grown in sustainable ways, the markets will deliver it. When we quit buying electricity made from coal, then coal companies will wither like grapes on a severed vine. When we decide that we’ve had enough of economic inequality, and get involved and vote, then policies can be changed. If we can ignore advertising and the power of popular culture, then the markets work for us. They are our tools, and with our dollars we can control them like dogs on a leash. The politicians are ours, too, and will respond to our votes. But we have to get involved, politically, and socially, and economically.

So, just to sum up before I leave half of you wondering and half of you angry—we have some big problems, but they are fixable with people power, even big problems like wealth inequality. It could be that there are indeed better economic systems out there, and it won’t hurt to try and figure them out. But let me suggest that until we do, it would be better to not throw out the baby with the bathwater, and focus as well on making the systems we have better. Because, the bogeyman does not lie quite where some people think it does.


 Top image credit: Trey Ratcliff, “Business in London”, Flickr Creative Commons. Image has been cropped.
Market image: Eustequio Santimano, “Myanmar/Burma Market”, Flickr Creative Commons. Image has been cropped.
Shopping mall: Agustin Rafael Reyes, “Winter Shopping”, Flickr Creative Commons. Image has been cropped.

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