Written by By Davian Views (Traditional Industrial Ecologist)
[Part 1 was published here yesterday]
One of the functions of a currency is to provide a measure so that different things can be valued using the same measure. This gives us Cost, Value, and Price to the items we may wish to purchase or sell. Cost represents the resources necessary to produce any given item. Worth is the intrinsic value of the product in terms of its ingredients. Price is a function of the market that exists to distribute the produce.
So taking the example of the car, the Cost of the car represents the necessary resources to manufacture it. The Value of the car descends over time to its scrap value, depending on use and age. The Price represents the demand within the market.
We have established three different prices for the same item. All of these prices are valid, and this discrepancy creates the arbitrage necessary in order for a profit to be made from the sale and use of the car.
Without the profit, the economic model that we are used to would cease to exist. In many ways, over time, this simple model has been abused so that now there is much manipulation and subsidy by the main players that the market system in its pure form has ceased to exist, if it ever truly did. The prime reason for this is centralisation of money creation, which greatly distorts the natural order and pricing.
This degeneration of the system into what has now been called a Cleptocracy of crony capitalism has made the economy dysfunctional in its purpose of providing a living now and in the future for its participants.
To restart a simple economy so that members of society can accumulate capital, the structural dysfunction must be addressed as a beginning. The first item on the agenda is to remove the central creation of currency. The next item is the nature of the currency to be used in order to protect the environment and ensure a sustainable economic system.
The only practical choice is to copy nature and use energy transactions as the basis for a currency. The nature of such a currency would allow an industrial economy to flourish as nature does, in harmony with life by creating a robust, healthy and diverse industrial ecosystem, within a thriving natural ecosystem.
We are familiar with the kilowatt-hour as a unit of measurement in the industrialised world, using the kilowatt-hour as a unit of currency, we can achieve change that is familiar and, therefore, less like change that is too radical. I will now briefly detail the parallels that are evident between the current system of Fiat currency and that of a Barter currency based on the kilowatt-hour.
The first point to note is that a Barter currency and a Fiat currency are not mutually exclusive; they can function alongside each other quite happily, and members of society can choose which currency is most suitable for the task in hand.
One of the most striking observations when talking about currency is the complete ignorance and lack of understanding about what makes them tick.
Perception of value is, in reality, only perceived by the mind of an individual, as all individuals are different, their assessment of value is different too. If a person has a wealth of £1000 and another person as wealth a £1 million, if an item is priced at £500, then its price is different for each person. To the first person, it represents 50% of his fortune to the second person, it represents 0.05% of their fortune, i.e., In relative terms, one thousand times less.
The effect of price, relative to purchasing power is particularly apparent when considering the essentials such as food. In poorer parts of the world, the cost of food can be over 50% of wages, which leaves little left for the rest of the necessities. In the developed world, minimum wages are topped up by social security payments, thereby providing a subsidy to multinational companies ( e.g., Starbucks et al.) at considerable cost to the taxpayer, and creating a less than level playing field, financially favouring foreign-based companies over resident companies. The employees have the dubious delight of being on the “Social” and in “Work” simultaneously.
This is a classic case of meddling in order to benefit the few to the cost of the many. To draw a parallel from history, in America, there was an expression “A One Horse Town”. Where economic activity in a town was dominated by one employer and so a large percentage of livelihoods were dependent on the one employer. Other towns would then court the one employer, and eventually, the “One Horse” or OH would move on, leaving a collapsed economy behind. Today this is done on a slightly grander scale in what could be described as One Horse countries. But the principle and results are exactly the same.
What is required for the basis of a sustainable economy is to enable each town or area to be self-sufficient so that the essentials are provided whether or not there is employment in a larger industry, is that it has a broader geographical base. The basics are what I term the “Bread And Butter Economy” or BABE for short, which is essentially food, clothing, water, shelter, labour, and energy. If these basics are generated at a local level, then the jam economy of the larger employers can be accessed according to the benefit of the surrounding area rather than creating pools of desperate people who will undercut each other’s bid in a race to the bottom to entice an employer to set up shop in their town.
A bread-and-butter economy requires space in which to grow those resources as well as the urban environment where people have shelter, industry, and community. Most boundaries are drawn for political reasons and, as such, do not embrace the parameters required for a self-sufficient economy. Self-sufficiency requires the land can be managed in a sustainable fashion. Boundaries for self-sufficiency are geographical rather than political. This then avoids the bizarre practice of having a boundary in the middle of the river. Geographical boundaries are essentially the natural formation of a River Basin, with the peaks of the surrounding hills defining the perimeter. For coastal areas it is simple enough to extend the geographical boundary along the sea floor for some miles to look after the fish stocks, which are a vital source of food for the population, which can still be defined by the sub-surface topography.
The creation of such a network of geographical boundaries also does not require any political consideration; the process does not require any debate, purely the decision by the inhabitants of the area to take it on board. As for what such an area could be called, I suggest you call it a leaf. This is because if you view a “River Basin” from above, an area of land, the river and its tributaries, they appear similar to veins on a leaf. A LEAF can mean Local Ecological Area Foundation. That’s because that’s what it is, the land is the foundation on which the habitat grows. Because the leaf boundaries cross existing political boundaries, the political element will need to co-operate rather than compete in order to create a healthy, diverse habitat and economy.
[to be continued with part 3]