What kind of money do we need for the next value revolution ?

Beyond fiat money and crypto, how do we measure and reward systemic contributions, i.e. contribution to common infrastructural and care value ?

(I was asked to write a French-language editorial on ‘value and money’, with 13k characters maximum length; I wrote the draft in English first; and this is what you will be reading below; a version with additional and detailed footnotes can be found here: https://docs.google.com/document/d/1oAnRu4hUvdhJBUIdB8nqMRBsuBpvl1HBAHLbvklDPf4/edit#heading=h.xidfb9su7zcn )

Before  we talk about money, and complementary currencies, we have to talk about value, 

But let’s place this discussion in the wider context of the history of human civilization.

First of all, for many thousands of years, human groups did not use what we now call money. Some tribal societies used ‘tokens’, but they were not generally used as indicators of a market price, since markets hardly existed but in the context of a value system that was primarily about gift and counter-gift.

Money was really born with the state, and as David Graeber argued in his book ‘Debt: The First 5000 Years’.as a means to pay for the armies of that state, to finance the logistics needed for warfare. Once the ‘civilizational’ model was established, say more or less 5,000 years ago in Mesopotamia, and we created a complex society based on the division of labor where imperial citizens were no longer  able to produce everything needed by themselves, markets were needed to supply products and services, especially in cities, and money became a technical necessity as a universal equivalent, so that all products and services could be compared according to a single standard. But still, for the longest time, the money systems were designed with negative interest in mind, a feature which is technically called ‘demurrage’.

Think about a temple in Mesopotamia, responsible for regulating the flow of rice, which is overflowing in the harvest season, but is missing in the drier periods. The temple stocks the rice on behalf of the farmers or owners of the land, but that rice deteriorates over time. Thus, the logic of the money reflected that: it lost value over time. For example, in the European Middle Ages, Brakteaten money was in circulation, and every few years, citizens were obliged to exchange them, resulting in a loss of value. This meant that money lost value over time, that hoarding was not beneficial, and that it was better to invest it in productive activities and machinery. .It held in check the inequality of this type of caste society, which was seen as an organic unity, where every social group had a more or less fixed and complementary role, and socially assigned income level. The ‘demurrage’ logic reflects the really existing material logic of low growth or static societies, where the enrichment of the one, could only lead to the impoverishment of the other, unless the excess value  came from the outside, i.e. through conquest. This is why ancient societies regulated property and status levels more tightly, and guaranteed income levels according to social status and societal role, even regulating market prices to ensure the continued supply of food to its citizens. In the medieval West, this was based on ‘just price’ theory.

In his book, the Mysteries of Money, Bernard Lietaer tells the story of how the defeat of the Cathar heresy in the 13th century, led to the replacement of that money with interest-bearing money, and how that completely changed Western society. 

Margrit Kennedy echoes his insights:

“Since nobody wanted to keep this money, people instead invested in furniture, solidly built houses, artwork and anything else that promised to keep or increase its value. During that time, some of the most beautiful sacred and profane works of art and architecture came into existence. "For while monied wealth could not accumulate, real wealth was created." We still think of this time as one of the cultural culmination points in European history. Craftsmen worked a five-day week, the "blue" Monday was introduced and the standard of living was high. In addition, there were hardly any feuds and wars between the various realms of power. However, people obviously disliked the money which lost so much at regular intervals. Finally, towards the end of the 15th century, the "eternal" penny was introduced and with it came interest and accumulation of wealth in the hands of increasingly fewer people, as well as the accompanying social and economic problems. The lesson here is that taxes should be levied separately and not connected with the circulation fee on money."

Once interest was in place, you needed more money to repay your debts, and if you could not  grow yourself, you would get poorer. According to Lietaer this introduction of a new monetary system led to the breakdown of medieval and feudal society in the 14th century, dissolving the social fabric, and opening the way for the plague and other disruptions that ultimately would destroy the feudal order.

Such a radical change shows two things: that money is designed, it is not neutral, and can be designed for various uses and to benefit certain groups more than others. It also points to changes in ‘value regime’, i.e. how the conception of what is valuable changes over time, and can lead to fundamental civilizational transformations. 

Once you have interest-bearing money, you enter a society that needs to grow, and those with labor but no money, need to borrow money, and pay back more, which leads to a permanent flow of money from the poor to the rich. 

According to Margret Kennedy, and this is a study that was done several decades ago, anything you buy today, has about 40-50% of debt repayment included in it. Indeed, every agent in the supply chain borrows money, and needs to pay it back at interest, which is then reflected in the price of any product and service.

Let me give you some examples of a deep change in the value regime, since I believe that we are at the cusp of a new value revolution.

Think about the situation in the declining Roman Empire, it was led by a slave-owning ruling class, whose ideal was to be entirely free of material work, since that work was done by slaves. Hence, work had a negative value, and the word labor is said to originate in the word ‘tripalium’, which is the harness used to force domestic animals (boeuf) to work. Once the slave-owning empire collapsed, and the christians became the hegemonic religion of the emerging Middle Ages, their slogan was ‘ora et labora’, i.e. work and pray. So suddenly, in the new value regime, labor became a positive value, the monks had to work, and working became a way to change the world for the better. The work of farmers, craftspersons and monks became a means to help the divine make a more perfect world, following the Adam-ic (creating better humans)  and Eden-ic (creating a better society) impulses inspired from the Hebrew Bible. The Greek ideal of personal improvement through the virtues, only available to the non-working elites, became a duty of everyone although of course, educational capacities were not equally available. 

Nevertheless, this meant a radical change of value regime, and the feudal system was entirely different from the roman slave system. Something similar happened when the merchant cities emerged, first in Italy and the Flanders, when double-entry book accounting was invented, and the market started its long march to hegemony. By the 17th century, economists discussed the need to abandon the value regime based on land, and to replace it with a value regime based on labor, eventually augmented by the other ‘factors of production’. Again this was a profound change in the dominant value regime. Each time the value regime changes, the form and design and function of the monetary system changes with it. Think of the evolution from the Gold Standard, to its abandonment, and to the current high-risk ‘fiat’ printing of money by governments and banks. Whereas at first, the money supply was directly linked to the availability of mined gold and silver, it became something that was produced through the loans of the banking system, as regulated by the Central Banks. While the first aim of this change was to make enough money to allow for the economic growth of an industrial economy, it has become the method to finance a highly speculative economy, which is constantly making bets towards the future.

It is my conviction that we are at the cusp of a new value regime and that once again, the redesign of our monetary systems is on the agenda.

But note something absolutely essential about the value regime that was instituted in the 17th century: value is now based on the ability of labor to extract commodities, and the implicit cost of labor of the other factors of production, In other words: price is a function of the scarcity of a commodity (and that includes labor itself, as well as the cost of natural resources): in order to create value, you have to be engaged in extractive, and scarcity-creating activity. This also meant the exclusion of non-extractive activities, which were previously integrated in the value system: think of all kinds of care work, especially those carried out by women. We are now in the paradoxical situation, that polluting the ocean or beaches after an oil spill, ‘adds’ value to the economy, while volunteering to clean the polluted beaches, ‘subtracts’ value from the economy.

So where do we look for a new change in value regime ? The post-industrial value creating communities that are using digital networks for trans-local are a prime candidate, but we should also look at the relocalized communities, experimenting with complementary currencies, and we will attempt to explain how both are linked.

Looking at accounting is vital, as it shows us what society ‘counts’ as value. As we mentioned, the first ledger was found in Sumer, and this ability to count commodities coming in and out, created the first temple ‘states’. So, in some fundamental way, accounting (i.e. the ability to account for the flows of goods) actually made possible the creation of the State. In the 14th cy., with double entry accounting, we created the accounting system that would enable the hegemony of capitalism. Today however, we have created a universal ledger, i.e. one single open accounting system. This changes the value system from a narcissist vision of what ‘enriches your own business or corporation’, without any view on systemic social or ecological impact, to  a 3D accounting system that accounts for value in a network or ecosystem. Suddenly, we have the means to visualize ecosystemic impact and externalities. On this planetary ledger, where we are developing the metrics to permanently assess the ‘ecological state’, we have developed programmable currencies, i.e. designed current-sees (‘seeing the currents’) that can be domain-specific. 

At the same time, we are developing new types of ecosystemic accounting, reviewed in the P2P Foundation report, ‘P2P Accounting for Planetary Survival’:

• Contributory accounting systems account for contributions that are not accounted for in a commodity economy that ignores externalities

• Flow accounting, such as the REA system (Resources, Events, Agents) allows for any transaction to take place in a open ecosystem of networked cooperation

• Thermo-dynamic accounting enables the view of flows of matter and energy, including human labor and contributions, outside of a purely financial vision.

Let’s review what this all means:

• In a commodity regime, only what has been extracted and is scarce has value and creates profit; this means that the state can then tax that profit, and eventually redistribute capital for welfare and ecological restoration, but note: in this value regime, it is impossible to directly fund regenerative activities

• In a contributory value regime, it is now possible to recognize and value contributions directly, as contributions, i.e. value becomes ‘systemic’: how does an activity contribute to the overall value of the networked system. Through this fundamental change in our vision of what constitutes value, i.e. what supports the overall ecosystem, we can now value many of the externalities. At the most basic level, we can distinguish between positive and negative, and between social and ecological externalities, with ‘contributions’ referring to actions with a  positive impact, and ‘impact’, referring to negative consequences.

On the basis of this analysis, how could we look at an integrated value system that is no longer exclusively commodity-based, i.e. extraction-based ?

Again, we can be inspired by Bernard Lietaer, who proposed a four-tier value system, based on different kind of programmable currencies:

• The first level is the local level, where complementary currencies should be designed to protect the value streams at the local level. Notice that when people put money in the bank, this money is not invested locally but in remote speculative activities, therefore creating a value loss for the local community. In such a context, nested bioregional banks and currencies can be designed to maintain more of the local flow of value creation.

• The second level is the domain-specific level, geared towards specific economic realities, for which programmable currencies can be created. Think of online mutual credit systems for labor exchange, for energy-based currencies such as Solarcoin, rooted in real energy production, or to experimental systems like Fish Coin. This type of thermo-dynamically aware currencies can be programmed for example with a maximum amount of fishing rights, tied to the currency distribution to right-holders.

• The third level remains the regime of national (or to be invented: bioregional) currencies, which aim at the macro equilibriums in any given regional or national (or transnational) economy. A lot could be changed at this level as well.

• Bernard Lietaer, and Margrit Kennedy, also proposed a fourth ‘trans-national’ level, through the world-currency proposal of the Terra. Such a global currency could be tied to a ‘basket of commodities’, including ‘energy’, and represent the ‘thermo-dynamic limits’ of the world system.

All in all, this is, I believe, a quite realistic vision of the next value system we may be evolving towards, but note that this only concerns monetary value. Not every human activity will need to be measured, valued, and rewarded, but that would be the topic of another article, about going ‘beyond monetary regimes’.

So, more specifically looking at measurable value, we have to look at two levels of change:

• The level of local, regional and domain-specific obeys to the principle of differentialism: this is the context of self-organized local-geographic or virtual-specialized translocal value economies, which can evolve towards a position of ‘value sovereignty’. With value sovereignty, we mean the development of local and virtual currencies that are designed to respect new and specific value regimes, that recognize contributions within a specific context. Any open source community, any local community, can decide to reserve part of the value flow to finance and reward what it believes to be contextual value.

• At the level of the trans-local value streams, the value exchange that takes place within non-local open ecosystems, we have to start thinking of  the importance of ‘systems value’, i.e. to value and finance ecological and social impact, at scale, with a view of protecting the natural ecosystem and non-human beings we are interdependent with, as well as the internal social equilibrium of human society itself.

Note that this proposal unites both ‘differentialism’, i.e. the right to be different at the local level, to protect local habits and cultural communities, including for trans-local specialized communities, while at the same time, upholding ‘universalism’, i.e. the capacity to care for the whole planet, as the ‘cosmic’ level. This is why we propose the concept of cosmo-localism, in which, ‘what is heavy is as local as can be’, and what is light, i.e. ideas, code, etc.. is as global and shared as can be. Differentialism is the core orientation of locality, universalism is appropriate for the common care of our whole planet.

All of the above concerns an underlying shift in value regime that is ongoing, and not something that is to be exclusively expected in a far future. The current value regime <is> imploding,  and we need to prepare at all cosmo-local levels of our economic, social, and ecological reality, to adapt to the new systemic realities we are facing in an era of interconnected and accelerating ‘meta-crisis’.