Welcoming author Douglas Rushkoff to the WFMU stable tonight at 7PM with the debut of Media Squat, a program looking at how life has been literally "incorporated" by
business and economics, as well as looking at possibilities for how to
incorporate LIFE back into our lives: local commerce, community, social
currency, and all that good stuff. Thanks to Arthur's blog for posting Rushkoff's recent essay after the jump (he's also a columnist for them). Media Squat actually had its debut of sorts already this past December with guest Paul Krassner, but is now added onto the WFMU regular schedule. Look forward to some intriguing radio.
March 15, 2009 LET IT DIE With any luck, the economy will never recover. In a perfect world, the stock market would decline another 70 or 80
percent along with the shuttering of about that fraction of our
nation’s banks. Yes, unemployment would rise as hundreds of thousands
of formerly well-paid brokers and bankers lost their jobs; but at least
they would no longer be extracting wealth at our expense. They would
need to be fed, but that would be a lot cheaper than keeping them in
the luxurious conditions they’re enjoying now. Even Bernie Madoff costs
us less in jail than he does on Park Avenue. Alas, I’m not being sarcastic. If you had spent the last decade, as
I have, reviewing the way a centralized economic plan ravaged the real
world over the past 500 years, you would appreciate the current
financial meltdown for what it is: a comeuppance. This is the sound
of the other shoe dropping; it’s what happens when the chickens come
home to roost; it’s justice, equilibrium reasserting itself, and
ultimately a good thing. I started writing a book three years ago through which I hoped to
help people see the artificial and ultimately dehumanizing landscape of
corporatism on which we conduct so much of our lives. It’s not just
that I saw the downturn coming—it’s that I feared it wouldn’t come
quickly or clearly enough to help us wake up from the self-destructive
fantasy of an eternally expanding economic frontier. The planet, and
its people, were being taxed beyond their capacity to produce. Try
arguing that to a banker whose livelihood is based on perpetuating that
illusion, or to people whose retirement incomes depend on just one more
generation falling for the scam. It’s like arguing to Brooklyn’s latest
crop of brownstone buyers that they’ve invested in real estate at the
very moment the whole market is about to tank. (I did; it wasn’t
pretty.) Now that the scheme we have mistaken for the real economy is
collapsing under its own weight, however, it’s a whole lot easier to
make these arguments. And, if anything, it’s even more important for us
to come to grips with the fact that the system in peril is not a
natural one, or even one that we should be attempting to revive and
restore. The thing that is dying—the corporatized model of
commerce—has not, nor has it ever been, supportive of the real economy.
It wasn’t meant to be. And before we start lamenting its demise or,
worse, spending good money after bad to resuscitate it, we had better
understand what it was for, how it nearly sucked us all dry, and why we
should put it out of our misery. Chartered Corporations Back in the good ol’ days—I mean as far back as the late middle
ages—people just did business with each other. As traveling got easier
and people got access to new resources and markets, a middle class of
merchants and small businesspeople started to get wealthy. So wealthy
that they threatened the power of the aristocracy. Monarchs needed to
come up with a way to stabilize their own wealth before the free market
unseated them. They invented the corporate charter. By granting an exclusive
charter, a king could give one of his friends in the merchant class
monopoly control over a region or sector. In exchange, he’d get shares
in the company. So the businessperson no longer had to worry about
competition—his position at the top of the business hierarchy was
locked in place, by law. And the monarch never had to worry about
losing his authority; businesses with crown-guaranteed charters tend to
support the crown. But this changed the shape of business fundamentally. Instead of
thriving on innovation and progress, corporate monopolies simply sought
to extract wealth from the regions they controlled. They didn’t need to
compete, anymore, so they just sucked resources from places and people.
Meanwhile, people living and working in the real world lost the ability
to generate value by or for themselves. For example: In the 1700s, American colonists were allowed to grow
corn but they weren’t allowed to do anything with it–except sell it at
fixed prices to the British East India Trading Company, the corporation
sanctioned by England to do business in the colonies. Colonists weren’t
allowed to sell their cotton to each other or, worse, make clothes out
of it. They were mandated, by law, to ship it back to England where
clothes were fabricated by another chartered monopoly, then shipped
back to America where they could be purchased. The American war for
independence was less a revolt against England than a revolt against
her chartered corporations. The other big innovation of the early corporate era was monopoly
currency. There used to be lots of different kinds of money. Local
currencies, which helped regions reinvest in their own activities, and
centralized currencies, for long distance transactions. Local
currencies were earned into existence. A farmer would grow a bunch of
grain, bring it to the grain store, and get receipts for how much grain
he had deposited. The receipts could be used as money—even by people
who didn’t need grain at that particular moment. Everyone knew what it
was worth. The interesting thing about local, grain-based currencies was that
they lost value over time. The people at the grain store had to be
paid, and a certain amount of grain was lost to rain or rodents. So
every year, the money would be worth less. This encouraged people to
spend it rather than save it. And they did. Late Middle Ages workers
were paid more for less work time than at any point in history. Women
were taller in England in that era than they are today—an indication of
their relative health. People did preventative maintenance on their
equipment, and invested in innovation. There was so much extra money
looking for productive investment, that people built cathedrals. The
great cathedrals of Europe were not paid for with money from the
Vatican; they were local investments, made by small towns looking for
ways to share their prosperity with future generations by creating
tourist attractions. Local currencies favored local transactions, and worked against the
interests of large corporations working from far away. In order to
secure their own position as well as that of their chartered
monopolies, monarchs began to make local currencies illegal, and force
locals to instead use “coin of the realm.” These centralized currencies
worked the opposite way. They were not earned into existence, they were
lent into existence by a central bank. This meant any money issued to a
person or business had to be paid back to the central bank, with
interest. What does that do to an economy? It bankrupts it. Think of it this
way: A business borrows 1000 dollars from the bank to get started. In
ten years, say, it is supposed to pay back 2000 to the bank. Where does
the other 1000 come from? Some other business that has borrowed 1000
from the bank. For one business to pay back what it owes, another must
go bankrupt. That, or borrow yet another 1000, and so on. An economy based on an interest-bearing centralized currency must
grow to survive, and this means extracting more, producing more and
consuming more. Interest-bearing currency favors the redistribution of
wealth from the periphery (the people) to the center (the corporations
and their owners). Just sitting on money—capital—is the most assured
way of increasing wealth. By the very mechanics of the system, the rich
get richer on an absolute and relative basis. The biggest wealth generator of all was banking itself. By lending
money at interest to people and businesses who had no other way to
conduct transactions or make investments, banks put themselves at the
center of the extraction equation. The longer the economy survived, the
more money would have to be borrowed, and the more interest earned by
the bank. Financial Meltdown Which is pretty much how things have worked over the past 500 years
to today. So what went wrong? Nothing. The system worked exactly as it
was supposed to. The problem was that after America’s post WWII
expansion, there was really no longer any real growth area in the
economy from which to extract wealth. We were producing and consuming
about as much as we could. Almost no commercial activity was occurring
outside the corporate system. There was no room left to grow. Sure,
outsourcing, lay-offs, and technology created some efficiencies, but
wars, rising costs of health care, and exchange rates essentially
offset any gains. Making matters worse, all that capital that the wealthy had
accumulated needed markets—even fake markets—in which to be invested.
There was a ton of money out there—just nowhere to put it. Nothing on
which to speculate. The dot.com boom seemed to offer the promise of a new market, but it
fizzled almost as quickly as it rose. So speculators turned instead to
real assets, like corn, oil, even real estate. They started investing
speculatively on the things that real people need to stay alive. What
real people didn’t understand was that there is no way to compete
against speculators. Speculators aren’t buying homes in which to
live—they are buying houses to flip. Speculators aren’t buying corn to
eat or oil to burn, but bushels to hoard and tankers to park off shore
until prices rise. The fact that the speculative economy for cash and
commodities accounts for over 95% of economic transactions, while
people actually using money and consuming commodities constitute less
than 5% tells us something important. Real supply and demand have
almost nothing to do with prices. We do not live in an economy, we live in a Ponzi scheme. Luckily for us, the banks, and the speculators depending on them,
made a bad wager: they bet on our continuing capacity to provide a
reality on which to base their highly leveraged schemes. We just
couldn’t do it. They put us between a rock and a hard place. With
George W’s help, they sold us on the notion of home ownership as a
prerequisite to the American dream. And they created a number of loan
products which made it look as if we could actually afford over-priced
homes. The banking industry spent hundreds of millions of dollars
lobbying for laws making bankruptcy difficult or impossible for average
people to accomplish—while simultaneously selling average people loans
that they would never be able to pay back. The banks didn’t really care, anyway, since they never meant to keep
these loans. They simply provided the cash to mortgage companies, who
then packaged the loans. In return for putting up the original cash,
the banks also won the right to underwrite the sale of those mortgage
packages to investors—investors like pension funds, retirement funds,
or you and me. Get it? The banks get all the interest, but we put up
all the money. Our retirement accounts and pension funds invest in the
very mortgages that we can’t pay back. The bank collects any interest,
playing both sides of the equation but responsible for neither. And when the whole scheme begins to break down, what do we do? We
try to bail out the very banks that created the mess, under the premise
that we need these banks in order for business to come back, since only
banks can lend the capital required for businesses to flourish. Yes, It is Wrong President Obama may be smarter than most of us, but he’s still
attempting to rescue the very institutions that robbed us in the first
place. He’s not a socialist, as conservatives may be arguing, but he is
a corporatist. Using future tax dollars to fund government job programs
is one thing. Using future tax dollars to give banks more money to
lend out at interest is robbing from the poor to pay the rich to rob
from the poor. As painful as it might be to watch, and as irritating as it might be
to those with shrinking retirement savings, the collapse of the
centralized corporate economy is ultimately a good thing. It makes room
for a real economy to rise up in its place. And while it may be
temporarily uncomfortable for the rich, and even temporarily
devastating for the poor, it may be the fastest and least violent way
to dismantle a system set in place for the benefit of 14th Century
monarchs who have long since left this earth. If the corporate supermarket chain’s debt structure renders it
incapable of stocking its shelves this spring, this may be the wake-up
call that consumers need to finally subscribe to a Community Supported
Agriculture farmer. If the former associate fund analyst at Lehman
realizes that he is unable to get a job not just because his industry
is contracting but because his work day creates no real value for
anyone at all, he will be forced to learn how to do something that
does. If an urban elite parent realizes he can longer pay private
school tuition for his kids, maybe he’ll consider donating to public
school the time he would have spent earning that tuition. In short, the less we are able to depend on business-as-usual to
provide for our basic needs, the more we will be forced to provide them
for ourselves and one another. Sometimes we’ll do this for free,
because we like each other, or live in the same community. Sometimes
we’ll exchange services or favors. Sometimes we’ll use one of the
alternative, local currencies coming into use across the country as
Central bank-issued currencies become too hard to get without a
corporate job. Deprived of centralized banks and corporations, we’ll be forced to
do things again. And in the process, we’ll find out that these
institutions were not our benefactors at all. They were never meant to
be. They were invented to mediate transactions between people, and
extract the value that would have passed between us. Far from making
commerce or industry more efficient, they served to turn the real world
into a set of speculative assets, and real people into debtors. The current financial crisis is the best opportunity we have had in
a very long time for a bloodless revolution against the faceless
fascism under which we have been living, unaware, for much too long.
Let us seize the day. Longtime Arthur columnist Douglas Rushkoff
has just finished his life’s work, “Life Inc: How the world became a
corporation and how to take it back,” to be published June 2, 2009 by
Random House. (Pre-order info: Amazon). His new live talk radio show, Media Squat Radio, begins tonight, 7pm Eastern time on WFMU. Streams at www.wfmu.org and iTunes.
by Douglas Rushkoff
The answer is higher taxes on the wealthy. Next problem?
Posted by: Zelmo | March 16, 2009 at 04:10 PM
Are you guys planning on offering this as a podcast?
Posted by: Ryan | March 17, 2009 at 08:55 AM
I gotta say, I listened in on this show last night, and was very impressed.
Please podcast this.
Posted by: DBinNYC | March 17, 2009 at 11:38 AM
Just read the article and was blown away by the sweep of ideas from Rushkoff. Just like anyone else these days, I've been brought low by the crash - first, losing my job in advertising (talk about using fake currency, right?) and then losing my home in L.A.
I now live in a small apartment in Oakland, take what freelance writing assignments I may and do a lot of volunteerism helping the homeless and hungry. The recent turn of events may not have been a wake-up call for everyone, but brother, they sure were for me. Thanks for shining a light in the darkness...
Posted by: Lucia | March 17, 2009 at 08:10 PM
I second the podcasting idea.
Posted by: Michael Chagnon | March 19, 2009 at 10:21 PM
Ok... I get it, I get it. But isn't Random House a corporation?
"And I'm not being sarcastic."
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