Sacred Economics – Life After Capitalism
Sacred Economics: Money, Gift & Society in the Age of Transition
2011, Evolver Editions
(This review is divided into two sections. The first covers Part I: The Economics of Separation, describing the history of money and capitalist economics. The second half covers some intriguing fixes Eisenstein proposes for our broken economic system in Part II: The Economics of Reunion and Part III: Living the New Economy.)
Book Review – Part I
The title Sacred Economics makes Eisenstein’s book sound like a New Age treatise on spirituality. The book is actually about the end of capitalism. It offers an extremely well-researched discussion of the history of money, capitalist economics and the world wide movement for economic re-localization. The main focus of Part I is an exploration of the profound effect money has on human thinking and psychology. Eisenstein is most concerned about the illusion of separateness and of scarcity. Both, he argues, are mistaken beliefs that can be traced back to the privatization of communally owned land, an early consequence of the introduction of money.
Owing to his determination to avoid simplistic clichés about greedy corporate CEOs and amoral banksters, Eisenstein arrives at some startling conclusions. By tracing the western conception of money back to its earliest origins in ancient Greece, he makes a strong case that the money system itself is responsible for rapacious growth and resource depletion, greed and the demise of community.
How Money Destroyed the Gift Economy
The book begins by describing the gift economy that has characterized all primitive cultures. Public gift giving was a major social ritual in all early societies. It was the primary mechanism early human communities employed to satisfy basic survival needs. As civilizations became more complex, gift exchange and barter were impractical over long distances. Thus money was introduced as a common medium of exchange. Because money also represented stored value, it also had a profound effect on our perception of ourselves, other human beings and society.
The Illusion of Scarcity
An early artifact of the introduction of money was the mistaken belief that the basic necessities of life are in short supply. This illusion underpins all western economic theory. In fact many textbooks define economics as the study of human behavior under conditions of scarcity. As Eisentein points out, this is a ludicrous notion in a world in which vast quantities of food, energy and raw materials go to waste He links the illusion of scarcity to the illusion of the “discrete and separate self.” This, in turn, stems from the concept of personal wealth and the privatization of communally owned land. Prior to Roman times, land, like air and water, was considered part of the commons and couldn’t be owned. Under Roman tradition, there was no way for an “individual” (a Greek invention related to the concept of money and personal wealth) to legitimately take possession of common lands. Thus the Roman aristocracy must have seized it by force, just as the English stole the communally owned lands of Native Americans.
During the many centuries our ancestors had access to communal lands for their herds and crops, they enjoyed a sense of interconnectedness and interdependency. This was lost when the wealthy began fencing it off as private property. Many sociologists believe this loss of interconnectedness has left all of us with a fundamental inner emptiness we experience as never having enough.
The Origin of Greed
Eisenstein attributes greed to this illusion of scarcity. He can see no other explanation for the extreme generosity of poor people (according to numerous studies), in contrast to the wealthy. Low income people give away far more money, relative to income, than their rich contemporaries. Studies also show that rich people worry much more about money than anyone else. This, in turn, makes them even more inclined to perceive scarcity when none exists. Einstein talks about the immense anxiety people in rich countries experience over “financial security.” No matter how much they accumulate, it’s never enough.
Debt, Usury and Perpetual Growth
Sacred Economics argues that what economists commonly refer to as growth is the expansion of scarcity into areas of life once characterized by abundance. Fresh water, which was once abundant, has become scarce following its transformation into a commodity we have to pay for.
The fractional reserve banking system, which allows bankers to create money out of thin air – as debt – accentuates the pressure to convert more and more of the commons into commodities. Because the debt and interest created is always greater than the money supply (current global debt is estimated at $75 trillion, in contrast to global wealth of $30 trillion), there is always constant pressure to create more goods and services to repay it. This explains why there are always people willing to cut down the last forest and catch the last fish.
Extreme wealth inequality occurs because economic growth is always lower than the rate of interest. When debtors can’t make interest payments by producing new goods and services, they are forced to turn over more and more existing wealth to creditors.
As natural resources, such as fossil fuels, minerals, forests, fish and water, are rapidly converted to commodities, a similar transformation occurs in the social, cultural and spiritual commons. Stuff that was free throughout all human history – stories, songs, images, ideas, clever sayings – are copyrighted or trademarked to enable them to be bought and sold.
According to Einstein, the main reason for the world’s current financial crisis is that we continue to face mountains of increasing debt – yet have run out natural, cultural, social and spiritual capital we can convert to money to repay it.
To be continued, with a discussion of some of Eisenstein’s novel solutions.