Podcast

Willyam Bradberry/Shutterstock

Charles Hugh Smith: Fixing The Way We Work

Closing the wealth gap with meaningful work
Sunday, November 15, 2015, 2:34 PM

Charles Hugh Smith returns to the podcast this week to discuss the theme of his new book A Radically Beneficial World: Automation, Technology and Creating Jobs for All.

Automation and artificial intelligence are changing the landscape of work. Tens of millions of jobs are on track to be eliminated over the next decade or so by these advancing technological innovations in the US alone.

The way in which our current economy is constructed, the fruits of those cost savings are likely to go into a very small number of private pockets, while the millions of displaced workers will find themselves with no income and no work to do. It's a huge looming problem that is not being address in national dialog right now.

But there's opportunity to course-correct here. To use our new technologies to increase total productivity in a way that empowers rather than diminishes the individual worker.

What if we could hit the reset button on the way we create money, work, commerce and community? 

This is not an idle question, for technology now enables us to hit that reset button and organize the creation of money, work, commerce and community in new ways. If we could start from scratch, what would a new system look like?

To answer that, we must understand why the current system is failing. The current system is based on five principles that are assumed to be true:

  • Money created by banks trickles down to create work for all
  • Technology creates more jobs than automation destroys
  • Centralization is the solution to large-scale economic problems
  • Expanding debt and consumption (i.e. growth) is the path to prosperity
  • Maximizing private gain organizes the economy to the benefit of all

All five have proven to be untrue. No wonder inequality is rising and opportunity is declining. Clearly, we need a new system that offers what the current system cannot: meaningful work for all.

We have the ability to design a global system that integrates money, work, commerce and community in new ways, using social/technical innovations that are already in daily use. I've proposed a practical blueprint of a new system that offers opportunities for meaningful work and ownership of the sources of prosperity not just to a few, but to everyone. In this system, every individual has the power to change the system for the betterment of themselves and every other participant. Being at the top of the heap is no longer a prerequisite. Everyone who is powerless in the current arrangement is empowered in this new system. Empowered to not just better themselves and their family, but better their community and the larger community of Planet Earth.

A radically beneficial world beckons—what are we waiting for?

Click the play button below to listen to Chris' interview with Charles Hugh Smith (44m:54s)

Transcript: 

Chris Martenson: Welcome to this Peak Prosperity Podcast. I am your host Chris Martenson. Today we're going to take slightly different look into the future. As you probably know, Adam Taggart and myself have a new book out called Prosper. That walks the reader through things they can do individually to prepare for what is certain to be a very disruptive future, however, there's another quiet form of disruption happening to people's jobs and lives right now, and it's only going to increase in the future. I'm talking about robotics. Automation is completely reshaping the entire global-economic order, and it could threaten to complete undo literally everything about how we value time, money, and even find meaning in our lives. But how could it do all of that. To help us understand that is one of our very favorite and most thoughtful guests, Charles Hugh Smith. Charles has a new book out on this topic. It's entitled A Radically Beneficial World: Automation, Technology, and Creating Jobs for All: The Future Belongs to Work that is Meaningful. Welcome, Charles.

Charles Hugh Smith: Thank you, Chris. Glad to be here.

Chris Martenson: Now that's a really big title and it's a really big concept, so let me open this up. I want to quote a recent Ambrose Evans Prichard piece in the Telegraph. It just came out about a week ago in early November, 2015. It reads, "The pace of disruptive technological innovation has gone from linear to parabolic." Says Bank of America, "Robotics and robots will take over 45 percent of all jobs in manufacturing and shave $9 trillion off labor costs within a decade, leaving great swaths of the global society on the historical scrap heap. In a sweeping 300 page report--300 page, I haven't read it yet, but I will. I'll look at some of it--Bank of America predicts that robots and other forms of artificial intelligence will transform the world beyond recognition as soon as 2025 shattering old business models in a whirlwind of creative disruption with transformation[al] effect amounting to $30 trillion or more each year. Help us understand that. Is this a hyperbolic report from Bank of America potentially or are they on to something here?

Charles Hugh Smith: Well, Chris, it's only one of almost a flood of automation-related stories. There was a big McKenzie report called the four fundamentals of workplace automation that came out that same week. Just today there was a big piece, a speech by a guy from the Bank of England. He extrapolate [forecasts] that as many as 80-million U.S. jobs could be at risk from automation. Well, there's only about 130-million jobs, of which 27-million are part time, so 80-million is like pushing 65 percent of the total labor force. So even if the guy is wrong by half, as you say, then we're still talking 40, 45, 50 percent of all jobs being wiped our or replace by software, Artificial Intelligence (AI), and robots.

Chris Martenson: Well, this raises so many questions, I don't even know where to begin. I mean first of all what do you do if nobody is working? Then in our model who ends up buying any of your products, that's one, and then the second thing that pops up in my mind, I want to get to both of these, is isn't this just sort of like what capitalism has always done, which is to take highly labor-intensive processes, capitalize them, create a more automated, streamlined process? Isn't this automation just really another evolution [adaptation] in the streamlining process. Part of this feels like capitalism to me, but the first thing I mentioned, capitalism doesn't work if everybody is out of work. So I don't know how to put these two pieces together.

Charles Hugh Smith: Yeah. You know, Chris. It's interesting that we know that automation has been a force in the global economy since the beginning of the first Industrial Revolution in the 19th century, and of course, the initial wave of creative destruction [transformation] of labor was what led Carl Marx to extrapolate the end of capitalism in a social, political, economic implosion because he could see that as automation lowered the value of labor, people had very little money, and capitalism itself has no real means to, or really any interest, in employing people at wages that don't allow for profit. In other words there's an internal tension to capitalism because capitalism has one simple law. The capital has to grow, and it has to create profits, and if doesn't do that, then that enterprise or organization will eventually go out of business.

It will eat through its capital as it loses money, and then it will shut it's door. We can disagree about the goal of capitalism or say that it's a bad system or whatever we want, but the bottom line is, if it can't create a profit and expand its capital, it will go out of existence. It's a very Darwinian system. In my mind it's creating two sort of memes that are developing as solutions to this automation problem of the destruction of labor. One camp holds that technology always creates more jobs than it destroys. That's proposed as sort of a natural law.

Regardless of anything else, technology always creates more jobs than it destroys because that's what it's done through the first two industrial revolutions, but I'm not so sure that's true, and here's why. Each previous complete disruption of the economy by the destruction of entire industries and employment created a lot of new entry-level jobs, so the guy who lost his job on the farm in 1890 or in 1910, he went to a Ford factory where he was taught his job in [on] the factory line in five minutes. He didn't really need any special knowledge to go and become and industrial worker at a Ford plant.

It took five minutes to show him how to put this part on this thing, and then you just do this for eight hours a day for the rest of your life, and welcome to the industrial revolution. The second industrial revolution of telephony, radio, and marketing, consumption, consumer credit, all of the things that developed in the '30s, '40s, and '50s, there were a lot of entry-level jobs there for sales and telephone switch operators and millions and millions of relatively low-skilled jobs were created. This industrial revolution that's digital and software, it's not creating tens of million of entry-level jobs, and it never will.

Chris Martenson: It never will because?

Charles Hugh Smith: Because profit only flows to what's scarce, and so what's scarce is-- It used to be [that] what was scarce was a high level of skills, so that you'd get high wages for those high skills, and capital itself was scarce and so the capital earned a good return. As Economist Michael Spence and some of his colleagues have described recently, the problem is labor is no longer scarce. There's an abundance of people with college degrees. There are a bunch of people who have entry-level skills.

I mean essentially hundreds of millions of people have surplus labor. Capital is no longer scarce either. It's in vast abundance, which is why the interest rate you earn on capital is tenth of one percent. Spence says that there's a third kind of capital. It's the kind of capital about which we talk at Peak Prosperity because it's the capital of social capital, intellectual capital, of news ideas, and new business models, and so all of the profit in the global system is flowing that way.

The question for an entrepreneur or a business owner is if I hire some entry-level persona at $15/hour or whatever the wage is, can I make a profit off of that person's labor. Increasingly the answer is, no, you can't. If you can't make a profit off of that person's labor, you're going to go out of business. You're going to be eliminated from the economic gene pool.

Chris Martenson: Well, absolutely, and of course there's another trend pushing under all of that, which is to have an employee, particularly if you're in Europe, France, I'll pick on France. That's a major, major, investment potentially a lifelong investment if you're in a country like France, but even here in the United States to take on an employee is not to find somebody you're paying for $8.15/hour or whatever the minimum is at this point. You're signing up for a whole lot of bookkeeping, recordkeeping, Occupational Safety and Health Administration (OSHA) laws. You're signing up for, potentially, Obamacare. You're signing up for Workman's Compensation (Comp). There's a giant raft of things that go along with that. Certainly, none of those sorts of overages or complexities apply to a robot do they?

Charles Hugh Smith: No, Chris. I used to hire when I was a building contractor. I hired dozens of people at various times, and I learned the hard way that you can pretty much double the wage that the person is earning. Your employee is getting $10/hour. He's costing you, the employer, about ten bucks to cover Worker's Comp, Disability Insurance, Unemployment Insurance, [FICA], all the labor overhead you mentioned. Of course the problem is, Chris, is [that] the labor overhead is rising by leaps and bounds because it include healthcare, which goes up like 7.5 percent a year while the economy is growing at 1, 2, 3, percent a year and wages are like stagnant, but to the employer the costs keep going up, so the employee might not see any raise at all, or he might get ten cents more an hour, but the employer is seeing much higher costs. That's true in the U.S. as well, despite the reputation of being like a low labor-cost society. That's no longer true.

Chris Martenson: Well, let's talk about that labor for a second. One report I read said that the threshold for when somebody a business might decide to go with a robot over workers is if the robot is 15-percent cheaper on an hourly basis than, say, an employee. Looking at American and Japanese car industries right now, it costs, once you factor in the total cost of ownership for a robot, $8/hour to employ a robot for spot welding. We compare that to about $25/hour for a worker, but as you say, you might have to almost doublet that number to get the true fully burdened cost of having an employee. But even just comparing the $8 to the $25, that's a no brainer isn't it.

Charles Hugh Smith: Yeah. Absolutely. The other dynamic here, Chris, of which I know you're aware, is that the cost of robots and software are declining rapidly. A robot that used to cost $40,000 now costs $22,000. These two lines are crossing in the wrong direction for hiring. In other words the cost of labor keeps going up, and the cost of robotics and software keeps going down. These are not trends that are limited to any one area. There's a guy, Emmanuel Walerstein a Socioeconomist who's famous for proposing the way that we understand our whole economic and social system is called a world system, and that include the economy and the society that economy supports and creates.

He's pointed out that it's a global phenomenon, the cost of labor rising, and it's due to urbanization, it's due to the externalization of costs finally coming due, to the demand on governments for more of everything in terms of social service, education. That's why wages in China have tripled in the last decade as well. It's not just the U.S or France, it's everywhere That's why we have global problem. It's that the automation and software are getting cheaper and cheaper, and in the case of software, free. For instance, I just have heard that AutoCAD, which produces the software used to design all kinds of widgets, CAD systems, they've just released almost a free version of their powerful software. In other words they've realized that they can't sell this thing for thousands of dollars per copy anymore, and so they've made it available for very low cost, and so this is giving really powerful tools to anybody with a few bucks. That means, yeah. So then they can automate more work at a much lower entry price.

Chris Martenson: Some of this gets lost, I think for the average listener because it's a big world, and so what if one factory goes slightly more automated over there in Tennessee somewhere. I like to do this thought time. Let's just go silly. Let's pretend I just invented a machine today where I can produce anything, anything in the world, from a car to a radio to toilet paper, it doesn't matter, but I can't produce anything cheaper [more cheaply] than anybody else can with my big, fancy robot. It cost me a bunch of capital to build this thing, but literally I am the only source of products in the world because I can undercut everybody. Doesn't that sort of lay bare where this is all going. How can it be that one person with one machine has all of the capital in the world, is producing all of the goods, and everybody else is doing what exactly?

Charles Hugh Smith: That's right, Chris. That's extending this trend to the sort of singularity if you will. The second sort of solution meme that's out there is, well, let's just tax your one guy, the owner of the robot.

Chris Martenson: Okay.

Charles Hugh Smith: Or all the owners of the robots. We'll tax the heck out of them, and then we'll use that money to fund a guaranteed income for every household. This has been catching a lot of interest because it appeals to people's innate sense for [of] social justice. Like, well, gee if there are no more jobs or only half of the workforce can find a job, then we're going to have to support the other half, so [that] they can buy all of the stuff, the goods and services that they need to live and also all of the goods and services that are produced. In my book I go through this by actually putting some numbers because actually all of these people who are suggesting this is a wonderful idea and a real solution, they never put any number on the page.

Where is the money going to come from. How much money are we talking about? Can those owners of those robots generate enough profit that we can tax them to fund this. Again, we're just going to throw out a few numbers. I hope I won't lose the audience too much. But just as an example, the federal government of the U.S. spends $3.2 trillion. State and local governments spend another $3 trillion. The government, as it is right now without any guaranteed income for everybody, is already spending $6.2 trillion out of a $17 trillion economy, so it's already sucking up about 35, 40 percent of the entire Gross Domestic Product (GDP). Now we don't know how much more it's going to cost to give a guaranteed income to every household, but if 40-million people lose their jobs, we can anticipate that $6.2 trillion is not going to be enough.

Another $3 trillion, $4 trillion, another $6 trillion. I mean we're talking about huge amounts of money that we're going to have to acquire. Let's take a really super profitable business like Facebook, I mean, immense money, right. Its gross margins are 40 percent or something. It makes a little under, about $3 billion in profit. Well, that means we need 2,200 Facebooks just to fund the current federal government. Then we'd need another 2,000 Facebooks to fund state and local governments, but guess what? There's only one Facebook. There's not going to be 2,000 Facebooks. It already dominates its entire sector. The same goes for Google and Apple, these highly profitable firms. If we took every cent of their profit, we would only have a tiny slice of the current federal revenues, never mind the money needed to fund another 30-,40-million households guaranteed income. It just simply doesn't work.

You know, Chris, there's another reason it doesn't work, [which] is automation cuts profits too because, if I can buy a robot for $22,000 and slash my labor and generate more profit, well, you can buy the same robot. The barriers to entry for competitors keep dropping instead of requiring, like, if you were going to start an engineering firm to design a lot of great stuff, and the AutoCAD program was $3,000 per engineer. Well, now it's $100. Well, what's to stop me from hiring some engineers and giving them the $100 software. The process of automation is actually just devastating to profits. I think we can look at some of these big firms like [like, such as] IBM that are seeing their sales and profits absolutely implode. I think this is evidence that this process is already well underway.

Chris Martenson: Well, it does seem ridiculous to think that we would be able to sort of tax, under the current as it's structured, given how money operates, right, and we understand particularly at peak prosperity there's a growth imperative built into our money system that has nothing to do with humans' need for growth or the factual realities of the world being a finite place. But we have this money [monetary] system, and it's pretty insistent on this idea that it needs to grow, so if we have that money system, and we're trying to then keep inflation at a few percents where banks don't implode and let the banks just siphon off tens if not hundreds of billions of dollars every year from the system.

That all has to get siphoned off from the productive class [proletarians], and as well, all the taxes that would have to be siphoned off to give to the families who are not longer working. I mean what you really have is that then your manufacturing class, such as it is, is really the only wealth-producing engine in your country, and you have tax them at a high enough rate, so that everybody else can live the life they feel they're accustomed to and deserving of. Have you run the numbers? I mean with the Facebook example, you take it one direction, but just that feels fundamentally unworkable to me.

Charles Hugh Smith: Yeah. I think it is, Chris. As you point out, the system is set up not just for stagnation. If we don't grow the money supply and pay more interest and pay more taxes, the system basically implodes. And so that's the other thing we have to ask. A huge percentage of the federal revenues and state and local government revenues come from wages, taxes on payroll, so if payrolls are slashed by 45 percent, where is the government going to get all of that money.

The people who say, well, we're just going to tax the owners of robots, well, they forget that one feature of automation is it commoditizes everything it makes, that's products and services. That's why having a call center or having a factory, it can be anywhere in the world. If someplace like [-like, such as] the United States is going to tax all of the owners of robots profits and 95 percent to fund its guaranteed income, well, guess what, everybody is going to leave. They're going to move their robots to some other country because they really have no choice. If they don’t grow capital and make a profit, then they're going to go out of business.

Chris Martenson: Yeah.

Charles Hugh Smith: The two solutions that are constantly offered to automation, number one, that technology always magically creates more jobs than it destroys, that seems false.

Chris Martenson: Wait! Let me add to that one before you go to number two.

Charles Hugh Smith: Yeah.

Chris Martenson: I think that many of those observers, who say that, that technologies always come with greater jobs might be confusing correlation with causation. One of the other dynamics that we had, up until about 1972 or 1973, in this country was we had rising per capita energy coming from oil. Right. If you remember that was the golden years like 1950s, 1960s, early 1970s. People were like whoo, one-income households. It sort of balanced. Staring in the mid '70s it went downhill to the point that you can't even get by on two incomes if you're both earning minimum wage at this [that] particular point. The fact that we always had more jobs being created during a long stretch of history might have been due to new technology. It might have been due to that, plus the fact that we also had abundant surplus energy there with which to do whatever we wanted. I just always want to hold that one out.

To me it's a very interesting observation that right around the time per-capita oil production in the United States maxed out, things started to get progressively and steadily a little bit more difficult for the middle class, a whole host of reasons impinging on that as well, but to me that's a piece of this. Okay. Step one, part one of what you're saying is that there's potentially a fallacy here around this idea that new technology always created more jobs. I will weigh in on the plus side of that. Then, number two.

Charles Hugh Smith: Yeah, and number two is that we can tax the owners of robots an software to fund guaranteed income for all. But, you know, Chris. You raise a very good point about jobs. It's not just a function of technology. It's energy and it's also the way that we create money. As you have often discussed with Mish and John Rubino and myself on podcasts in the last couple of years, the way our money system works is essentially free money is created and given to those at the top of the pyramid who can then use that money to enrich themselves further. The general idea in Economics 101 is, oh well, when Joe and Suzy Capitalist borrow a billion dollars for almost nothing that someone is going to create a lot of jobs.

What we've seen is that the money flows into stock buybacks, which doesn't create a single job, or it flows into overbidding for apartment buildings in London and this kind of thing where the new owners jack up the rents to make more money, and they didn't create new jobs [by] doing that either. The amount of maintenance on that apartment complex is the exact same before and after the new owner bought it for a gazillion dollars and then doubled the rent. So the money that's being creating is flowing into completely non-productive hyper-financialized [financed] ways of greatly expanding wealth that don't create a single job.

Chris Martenson: It's almost like you're saying that creating debt money doesn't create jobs.

Charles Hugh Smith: Yes. I’m afraid that's true. As Mish and others have pointed out, what this dynamic of lowering the cost of money to near zero while the cost of labor keeps rising, basically, it puts every business in a vice. The vice is crushing them that the cost of money is so cheap that it's like, well, why shouldn't I borrow money at 1 percent or 2 percent and replace my employees with robots and software because the cost of those employees keeps rising while the cost of money makes it even more and more compelling to replace them with automation and software.

Chris Martenson: Right. Right. A couple of things here. Look. I guess we could imagine a utopian sort of a place, which is where humans always wanted to get to, and if we're lucky, we'll get to back to what our hunter-gatherer forebears had, which was plenty of time, right? Isn't there an argument to be made here, which is like, well listen. Why are we shackled this ideology of 40-hour work week. That's the bare minimum. That's what it takes to earn a living.

France is sort of decoupled from that. So that how about 35, but you're making a case here that, if automation really goes forward, a, we don't need that many workers, and by the way we have so few as it is already. I mean, what, 130-million workers out of 320-million. I mean it's less than half. It's just ridiculous. Maybe it's not ridiculous. Maybe it's okay. But wouldn't it be less ridiculous, if instead of having 130-million people working their tails off and everybody else sort of kicking around-- Are you saying we could maybe distribute that out a little bit and have everybody have a 20-hour work week? Is that one way this goes, or how do we begin to make sense of this?

Charles Hugh Smith: Well, Chris, that is one option. A lot of people find that [to be] a valuable idea. In other words if we just cut the workweek in half, at least everybody will have half of the income. Of course, as you point out, it now takes two full-time jobs to maintain a quasi-middle-class existence. What we're really saying, if we do that, is everybody is now going to be poor.

Chris Martenson: Yes.

Charles Hugh Smith: That may be sustainable [maintainable], but it's not the happy future everybody was promised. There are two issues that your question raises. One is what is work, and you know that's another question to which we think we know the answer like what is money? Well, we think that work is what's paid, but let me give you an example of work that cannot possibly be profitable. Let's say that a town or community wants to put in a bike lane dedicated to bicycles only, no cars allowed. It's not a little bike lane that's created with a gallon of paint that paints a strip on the road. This is a legitimate real bike lane like [-like, such as] the kind you have in Europe where bikes can operate safely. Why would they do this? Biking has so many benefits, right. It's good for the health. It takes cars off of the road, reduces pollution. I mean the list goes on and on. It's an absolute economic win, right, on multiple levels. Well, where's the profit in building a bike lane? Is Google going to come in a build a bike lane, so it can make a lot of money? No.

There's absolutely no money to made on this at all because the benefits are generalized and they can't be scooped up by one company. So in the current arrangement, well then, the government taxes us all to raise the money, and then it hires, at enormous expense, some private contractor who's going to try to make as much money as possible to construct this bike lane. But if neither of those things is possible, in other words, the government doesn't have the money to do this, or there's no private enterprise that can make a profit off of it, where does that leave us? The point to me is there's an enormous amount of work that would benefit our communities that can't be done and paid for in the current arrangement. And so what we really want to do is we want [to create] a system that pays people to do this useful work that is not profitable and doesn't really align itself to governments that depend on high taxes.

Chris Martenson: Well, you're touching on something as well. I love really talking about what work is. I do agree that that's something maybe we all think we know, but maybe we should think that through a little bit more and make sure we're clear on that. Something else that you're touching on is also touched on in our new book, you're touching on something as well. I love really talking about what work is. I do agree that that's something maybe we all think we know, but maybe we should think that through a little bit more and make sure we're clear on that. Something else that you're touching on is also touched on in our new book, Prosper, is this idea of how we find meaning in our lives, right, and that there are lots of different things and ways we can value both our experience in life and feel valuable in all of that.

Work is very traditionally not just work. Work sounds like drudgery, so let me reshape it. When people can bring their gifts out and provide some measure of service to their community and in return they're supported for those efforts, and now that might be money, right, and we might call it work. That's how we combine those two things. I go out and work and I get a paycheck, and so that's how I know I'm valued, but there might be another way to go about this, but really isn't work really just a way for us to be productive and express ourselves and find a way to really keep ourselves not just occupied but, if you do it right, really grow into and become a master of whatever it is you're doing. That's fulfillment.

Charles Hugh Smith: That's right, Chris. That's one of the big holes, I think, in the current narrative, at least in my view. The current narrative is all dominated by consumerism. In other words, we're basically told every day thousands of times a day that our source of meaning and identity and pride is all in what we bought today or what we own.

Chris Martenson: Right.

Charles Hugh Smith: Right. What's odd about that is it turns us into these sort of atomized individuals with no connection to any community, and it makes us very dependent on profitable economic activity. It turns out that if we really look at that closely, that doesn't actually make us fulfilled, and so it's actually a false promise. We all know this, and I think it's the source of a lot of anguish, unhappiness, and despair, that when people's livelihood is taken away, then they lose their purpose, pride, and meaning. Just giving them free money to go buy stuff to be a consumer, what I call the super welfare state of guaranteed income, that's not really providing them with the necessities of human life.

It's actually a form of serfdom. Like, here's a few bucks for you to go spend, have a nice life. If we look at human nature as you say going back to the way that humanity developed, our core identity is a social one. In other words we need to belong to a group, we need a chance to contribute to that group and perhaps even [to] sacrifice for that group. That's our source of pride, purpose, and meaning. If we don't have that, we're going to be unhappy.

There was an article recently that came out from I think the Atlantic magazine where people studied middle-aged Caucasian people in America and discovered that their death rate is rising rapidly. Their dying from despair was the conclusion of these sociologists. To me it's no mystery at all. The middle-aged Caucasians who are not highly educated and don't have opportunities for work, they are dying of despair because they've lost their sources of meaning.

Chris Martenson: Well, you're raising a bunch of, obviously, very important points here. It looks to me like this robotic and automation trend, I agree, it's not just advancing, it's going parabolic. We can expect more of that to continue, yet we already can see all around us the impact of not just that automation but the [of] the off shoring to the cheapest common denominator location. Right. In the United States, that's translated into a relative paucity of jobs especially good jobs and not a lot of opportunities for advancement for entire swaths of the economy at this point in time, particularly those who are not tied in at the hip to the insider-trading information that the fed gives to its favorite clients and all of that. It really feel like there just this growing disparity not just in wealth but in opportunity. That's not really a recipe for social happiness. What's the opposite of social unrest? Social rest?

Charles Hugh Smith: Yeah. That's right, Chris. You combine the rising wealth inequality, then I think one of the conclusions I came to is that people want to think that if only we could tax the top one-tenth of one percent and we could change the fed and all of that stuff that we would fix all of these problems. What we're really talking about here is these problems cannot be fixed by just taxing the one-tenth of one percent as good as that would feel or [by] abolishing the fed. I mean that would be a good first step, but the kind of conventional economic fixes such as more education to train a more highly trained workforce.

None of those things is going to really fix any of these things. We need to ask, what kind of system do we want or need that would produce the output we want, which is guaranteed work for all, meaningful work, not just bs work, but meaningful work for everyone. That would, of course, mean a stable or secure income because ultimately our wealth and our income flows from performing work that's valuable in our community. That's the system that we obviously want and need. And so that's the system I try to work on outlining.

Chris Martenson: Now it's interesting. Now is this dangerously close to Marxism there? Is it not? There's this idea of work for everyone or something like that. I know that there are going to be people who misinterpret that or wonder if that's where you're going with this. But to follow your train of thought to its conclusion, these trends were already in play. It's not a question of shall we go down this path where literally automation boots probably half of the workforce out of productive enterprise, but that's where we're going. Your book then is about, okay, we're going there. How do we want to get there.

We all know what the default is, right? We just go there trying to both preserve our current system because this is the only system we know, so this is how it works, right. People work 40 hours, and you have to get a mortgage from a bank, and you have to pay interest on that loan, and that's how the system works, right. But you're saying that, if we preserve both the status quo of how we operate, plus, allow this other big trend to come along, that just ends up in a very suboptimal place. Is that about right?

Charles Hugh Smith: Yeah. Absolutely, Chris, and so then my book sort of poses this question. If we could reset the socioeconomic system, start from scratch, what would we design. How would we do that because our natural state as humans is to look at the present and assume that that's the only way it could be. And so what I'm proposing is if we look at the new technologies that many of us use everyday, like for instance, Bitcoin, it's a digital currency. It's not created by a central bank. It's basically a form of decentralized money. That's pretty neat. What if we had a system that was global and similar to Bitcoin that wasn't controlled by the fed or by the central banks. What if we had a system that was like Craig's List, which believe it or not I believe it has 40 employees globally.

In other words we could create a global marketplace with very little capital and labor required in it. The internet is enabling a lot of new technologies that, in my view, we could lever into boosting the part of the economy that actually works and creates meaningful labor, which is the community economy, the local economy. Why not lever these technologies that we're already using all of the time, and put them into an integrated system that produces paid work for everyone who wants it? I think it's possible.

Chris Martenson: In your book-- This is really fresh-start thinking. Right? We just have to pretend as if instead of thinking that we have an ideology about how things are supposed to work, right. Sort of chuck that and start over and say, what systems are actually in play, and how could they work, and can we reimagine that. I have to confess at this point, Charles, the thing that always I get tripped up on, that I don't know how to get around is just our money system. As long as we just have this debt based interest based money system, I can't see any other way around this except that everything has to be constantly be going in a parabolic, exponential direction.

Charles Hugh Smith: Right. One of the core ideas in my book is let's set aside the current system. My idea is I don’t need to replace or shut down the current state cartel money creation, however you want to describe it our current economic system. That can just kind of run along as it's currently running, and it will end up where we all know it will end up with financial crises and so on. But we could start a whole parallel system with a new kind of money, which I call the "l'argent," which is based on the French word for money Largent. It would be create digitally when a community group created goods and service.

My kind of insight into the way that money should work or could work is let's create money, instead of out of thin air and then hand it to the super wealthy and the banks, why don't we create money only when a community creates and services that are useful to that community. What I'm proposing is a kind of money that is not going to replace gold and silver. It's a money that's specifically designed for greasing trade in goods and services. In other words, it's not a store of value, it's the kind of money that we know from history is used for everyday transaction. If we look back in history when gold and silver were in short supply, say in the pre-Renaissance Europe, then people created money scripts and bills of sale, and they used a lot of this kind of script money because that's what they needed to function in everyday life.

We know from history that these kinds of money actually work quite well, and that the only thing that destroys them is if somebody of some elite can create the money out of thin air. What I'm proposing is money that is only created by the production of goods services and it's distributed to those people at the bottom of the pyramid who created the goods and services. Then you've got a money that can't be inflated away like [-like, such as] central bank money. It's sort of based on the history of money, which is quite interesting. David Graeber, who became famous as part of the Occupy Movement. He wrote a book Debt: The Fist 5000 Years, which I highly recommend to anybody who wants to explore money beyond the sort of conventional boundaries that we normally think of it as.

Chris Martenson: Well, that was all just absolutely fascinating. Who's your ideal reader of this book? For whom did you write this?

Charles Hugh Smith: That's a good question, Chris. I think I wrote it for everyone who understands that the current system is just not sustainable. We'd better start thinking about a new way of organizing money and work and community because, if we don't, then we're going to be left with a nasty default, a basically implosion and social disorder. I think we don’t have to follow that path. We could start now and start thinking about how could a new system work and be beneficial to every participant in that system. That's my book. It's an attempt at that. Let's design a system from scratch that actually works and is sustainable [maintainable].

Chris Martenson: Well, what I love is it's taking a view of the big trends that are in play, and of course it fits right into the Peak Prosperity fold that way because there are all kinds of disruptions on the horizon. This whole idea of automation is right here, it's already happening, there are plenty of people who have already been disrupted out of a job, and other people are unaware of how they're being disrupted, but they do know they're having a tough time finding a good job. They are sort of the silent dispossessed in this story. This is all fantastic and fascinating. Where can people get their hands on this book.

Charles Hugh Smith: Well, Chris, it's on Amazon as a Kindle ebook or as a print book. You can find the links on my site at OfTwoMinds.com, and I'm hoping that Adam will post a link on the Peak Prosperity site or in a Peak Prosperity emails, so [that] you can just click on that link and take a look at the book right from your Peak Prosperity page.

Chris Martenson: Of course, we'll do that. Well, Charles, thank you so much for your time today, and thank you for writing this book. I think people are going to get a lot out of it. I'm looking forward to the conversations that are going to be elicited from this at Peak Prosperity.

Charles Hugh Smith: Fantastic, Chris. Thanks so much for giving me a chance to talk about it.

Chris Martenson: My pleasure.

About the guest

Charles Hugh Smith

Charles Hugh Smith writes the Of Two Minds blog (www.oftwominds.com/blog.html) which covers an eclectic range of timely topics:  economy, housing, Asia, energy, longterm trends, social issues, health/diet/fitness and sustainability and community. He is also a regular contributor here at Peak Prosperity. From its humble beginnings in May 2005, Of Two Minds now attracts some 300,000 visits a month. Charles also contributes to AOL's Daily Finance site (www.dailyfinance.com) and has written multiple books, most recently "The Nearly Free University and the Emerging Economy: The Revolution in Higher Education".

Endorsed Financial Adviser Endorsed Financial Adviser

Looking for a financial adviser who sees the world through a similar lens as we do? Free consultation available.

Learn More »
Where to Buy Gold & SilverWhere to Buy Gold & Silver

We endorse this dealer as our all-around favorite for purchasing and storing precious metals.

Learn More »

Related content

57 Comments

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
My observations of the

My observations of the labour market is that because there is so much Overhead to hire someone, fewer people are hired. And those who are hired have to work extraordinarily long hours. Meanwhile others have no work at all.

Underlying the entire automation revolution is the need for cheap transport energy. I have been watching battery developments and would not write off chemical energy storage yet. Of cause even better sources of energy are in the wings.  US  technology is in danger of being superseded by others who are less vested in yesterday's solutions.  Although Bose Taylor of SPAWAR says that their experimental results have gotten ahead of their publications. 

http://www.lenr-forum.com/forum/news/index.php/NewsOverview/

Humanity needs some overarching goal to give them meaning. Useless eaters are not my idea of a fulfilling existence.  Therefore it is very important to embrace Dr Gerard K O'NEIL's vision and business plan to transfer the bulk of humanity to the le Grange points. If we Don't then I am confident that our illustrious leaders will use any surplus up in their traditional persuits. More war. The Emdrive is an interesting development in this regard.

http://emdrive.com/

Mark_BC's picture
Mark_BC
Status: Gold Member (Offline)
Joined: Apr 30 2010
Posts: 386
Delete the Elite
We'll tax the heck out of them, and then we'll use that money to fund a guaranteed income for every household. This has been catching a lot of interest because it appeals to people's innate sense for [of] social justice.
 
This is one of the reasons why income / profit taxes don't really work. Fundamentally this is another symptom of a world that is no longer growing because profits entail that there is more of something next year than this year, which is growth. A world that is no longer growing has zero or negative net profits, so what's there to tax? One could think of it as "stock versus flow". Wealth is stock and profits are flow. There is still wealth out there but it isn't moving much. Actually there still are some real profits being made, for now, but it's 1) coming at the expense of the masses, and 2) not being made by the corporations who make and use robots -- it's the crooked financiers and central bankers who make profits these days.
 
However, there is another relatively easy solution that does work, and I'm surprised it wasn't discussed. Firstly, instead of taxing profits (flow), tax wealth (stock). Don't tax the owners or inventors of the robots; instead tax the guy who made $10 billion off what the robots did to derivatives, capital flows and markets, and who "happened" to be on the right side of that trade to enrich himself. No one can say that profits aren't being made anymore when you have people like Soros and any of the unmentionable vampires at the center of the Fed scam getting rich. A wealth tax might be a bit complicated with global capital just leaving the country where the wealth taxes are being imposed but I don't actually see anything that would be a deal-breaker.
 
The other reason that "tax the profits of the rich and give it to the poor" doesn't work is because, as we all know, people who get freebies and don't have to do anything in return become lazy and the whole society falls apart. We all understand that. The solution to that of course is to reduce the work week which was briefly discussed. However, the following objection was raised:
... if we just cut the workweek in half, at least everybody will have half of the income. Of course, as you point out, it now takes two full-time jobs to maintain a quasi-middle-class existence. What we're really saying, if we do that, is everybody is now going to be poor.
 
But that's just not how it would work. If we cut the work week in half, in today's system, it might be the case. Because ultimately, the reason everyone would be / is poor is because the remaining wealth out there is concentrated into the hands of a few and has no way of making it to to masses regardless of how may days they work. The fact is that if we had a fair taxation system, as I alluded to above, then the economic re-organization that would automatically come from reducing the work week to 3 days would naturally lift everyone up so that they would be just as prosperous on 3 days as they were before on 5, all else being equal. It's like my previous criticism the other week about how you can't claim that universal healthcare and other government expenditures are unaffordable and unsustainable, using today's dollar as a metric, because today's dollar is meaningless and when the system gets reset, so will currencies and everything else, and what today looks untenable, suddenly becomes tenable.
 
The wealth of Americans, actually of all westerners for that matter, has been stolen by a very small number of elites. Our illusion of middle class wealth only comes from the nice toys we can buy, if we go into debt to those same elites who have stolen our wealth. And yet, mind bogglingly, somehow, people object to the idea of "taking", "taxing", "stealing" (whatever term you'd like to use) that wealth back, because apparently taxes lead to "inefficient allocation of capital", or some other esoteric free market-based rationale. I say screw the theory and focus on the elephant in the room! It was our wealth that has been stolen from us, now let's take it back! Reducing the work week is a necessary step to fair wealth allocation afterwards, but that alone will not solve the wealth inequality problem. The ONLY way that is going to happen is through, first, a bloody revolution, second, imposing a wealth "tax", and third, overhauling the labour market rules.
 
"My idea is I don’t need to replace or shut down the current state cartel money creation, however you want to describe it our current economic system. That can just kind of run along as it's currently running, and it will end up where we all know it will end up with financial crises and so on. But we could start a whole parallel system with a new kind of money,"
 
I like that idea but the problem I see is that the average person still has no wealth!!! How are they going to trade the "production of goods and services" when they don't have any means to "produce" anything and aren't given the opportunity to, because they don't own any land or capital, because the elites have gained ownership of it all? Secondly, who honestly believes that the elites will just stand back and allow for this kind of heresy? They'd shut it down before it gained traction. Just like Bitcoin is a nice idea, until it becomes a real rival to fiat money, then the elites will just shut it down or take it over for their benefit. Any solution will only work if it is structured around deleting the elite.
 
Unless you impose tolls on every bike lane, which I argue doesn't make for a very nice society, the fact is that the only way bike lanes are going to get built is through government taxes and expenditures because as you rightly point out, no single entity is making profit off a bike lane. You can rightly complain about the way the current government who's funding the bike lane operates, but in the end it's a government bureaucracy that's going to build it, one way or another. Sure, municipal governments are better at doing this, which is why they do it, but they have to get their money from somewhere.
charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
energy and "growth"

Arthur, good point about energy driving automation. As we all know, the current system needs more of everything to survive: more wages, more taxes, more jobs, more energy and more consumption. What we're discussing is: what kind of system could be sustainable with *less of everything*? It will have to be a new system because the current arrangement can't be re-engineered to survive on less of everything.

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
taxes, wealth and the community economy

Mark, you raise many excellent points and I'm not trying to respond to each one, but rather I'm adding to the discussion you've launched.

Taxing wealth (or land, in many models) is appealing, but there are three flies in that ointment:

1. wealth buys political power, so the political structure is captured and will never tax wealth.

2. wealth is increasingly mobile (for the reasons I noted re: the 3rd form of capital drawing most of the gains in a Power Law distribution), which means once wealth gets taxed at a rate high enough to fund our $6.2 trillion in government expenditures, the wealthy will figure out a way to move much of their wealth.

3. as I noted, profits are crushed by automation/commoditization. And since profits are the bedrock of wealth, if profits erode for systemic reasons, so will wealth--especially the kind you mention that is largely finance-based.

I understand your reasoning about deleting the elite, but the danger here is 1) mobilizing the elite to crush any opposition and 2) that we get a "meet the new boss, same as the old boss" new elite that's no better than the old one.

I can't really summarize my book, but clearly, real change is only enabled in crisis, when the existing arrangement ceases to function. My basic idea is, we need to have systems in place that can scale to fill the vacuum created by the implosion of the current world-system of finance, fiat, debt and welfare rather than opportunities to build capital and contribute to one's community. 

My framework is not a piecemeal 'fix," it's an integrated system. Even if nobody agrees with my system, that approach is the only real way forward. Trying to patch up a failed system is more mal-investment in my view.

What new system could actually function sustainably on less of everything? That's the question we're discussing.

AKGrannyWGrit's picture
AKGrannyWGrit
Status: Gold Member (Offline)
Joined: Feb 6 2011
Posts: 279
Value System

I don't think that our economic system is broken, rather it's our value system that shows our collective insanity.  Think about it.  Our sick care system, penal system, food, education, water, entertainment and on and on are for profit.  Our role models are fictional, or rich, or athletes or entertainers or discuss in detail their gender confusion or sexual preferences.  Death destruction and misery will reign supreme until we can live peacefully on the planet where no thought is given to power and profit.  I suspect the species that follows ours will find us incomprehensible.

Good luck with your book CHS I hope you have solutions that will lead us to a different scenario than the one I foresee.

Curmudgeon

westcoastjan's picture
westcoastjan
Status: Platinum Member (Offline)
Joined: Jun 4 2012
Posts: 538
Charles, I love you to death, but....

We have the ability to design a global system that integrates money, work, commerce and community in new ways, using social/technical innovations that are already in daily use. I've proposed a practical blueprint of a new system that offers opportunities for meaningful work and ownership of the sources of prosperity not just to a few, but to everyone. In this system, every individual has the power to change the system for the betterment of themselves and every other participant. Being at the top of the heap is no longer a prerequisite. Everyone who is powerless in the current arrangement is empowered in this new system. Empowered to not just better themselves and their family, but better their community and the larger community of Planet Earth.

A radically beneficial world beckons—what are we waiting for?

Bolded section my emphasis.

While I want so desperately to buy into your hypothesis hook, line, and sinker Charles, I know that it will just amount to kicking the "hope" can down the road a little further. Colour me seriously disillusioned. From what I can see there are select few who actually get what is going down (the enlightened 1%?), therefore the vast majority sees no reason to change to a new system. The party must go on and it will go on - after all, that is what TPTB are telling us, right?!?  People don't want to change, because they cannot fathom any other existence beyond their daily consumerist, social media orgies.

I concur with AKGranny - it is about values and sadly I don't know to many people who even know what their values are anymore, largely because they cannot come up for air long enough from their social media narcissism to even reflect on what values mean. I knew we hit peak everything the day"selfie" was named word of the year for I think it was Oxford Dictionary. Need I say more?

Charles you are one of the good ones so don't stop trying to cheer us up with your optimism! :-) I am seriously pessimistic about the ability of the average joe & jane to wake up before it is too late. I truly wish I could somehow find a way for the 99% un-enlightened to buy your books and put on their thinking/analysis/critical thinking caps in a big way. Somehow, I can't help but think, I'll score a lottery win before that happens.

Jan

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Humans

If they find the energy Feedstock to enable the automation Charles then won't we have more productive capacity? We won't be in a future of less,  but a future of more.  But more for who? More for anyone with the readies to buy it. 

And by "anyone" I don't mean some flesh-and-blood human. Corporations are people too, you know.  I can see a time when humans are just not in the loop. 

And is war in the Corporate interest?  I would argue not, except for those making war toys. (robots).

The problem for corporations then becomes "How to get rid of the parasitic humans? " That is even if we come up on any boardroom agenda, which I doubt. Whether humans are tolerated will depend on whether they add to the bottom line, I guess.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
And Robots

Here is the latest youtube video of Asimo. (There are no wires. )

This demonstrates that we have the technology to mine the moon and send the materials to the le Grange points with linear accelerators. ( There is a minor wobble in the tidaly locked moon, but other than that  the accelerator can be fixed at the south pole where the water is.) 

All the ducks are lining up in a row to get it done. 

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 3567
money creation, inflation, direct democracy, robots

So money is created by the community, in response to a worker performing "useful work" for that community.  Does money ever get destroyed?  Or does it just build up in the system forever?

Martin Armstrong proposes something similar for the Federal Government.  The Feds no longer borrow money, nor do they collect taxes - they simply print new money to pay for stuff, presumably limited by law to a % of GDP.

What I wondered about with his scheme - and yours - is, doesn't the money just keep building up, year after year?  If that's true, then there is a built-in inflationary bias, similar to the current system.  Perhaps even worse.

And clearly, if you are in government, there's no feeling of "limits" or "scarcity" there, since you can simply create money to pay for government work.  Politicians, police force, teachers, firefighters - they will all get pretty good salaries.  And pensions.  Presumably, they are also paid by newly-created money too.  So when I hear you say "worker", instead, I think "government employee."  That's how it would work out.  Does it still sound as nice?

And of course every newly-printed dollar is an invisible tax on the already-existing dollar holders.  I'm going to guess inflation will be an issue.  If inflation is too severe, nobody will want to hold this money for longer than a few days.  That leads to hyperinflation.

I recognize that the profits & control advantages of money creation is too important to be left with the private bankers.  But giving that "gatekeeper" function over to the gang in government - is that any better?  I don't think so.

Perhaps some sort of direct democracy is a necessary check & balance on the whole mess.  Perhaps the people themselves are the check on government.  We'd need a new constitution, where people are constitutionally required to approve - say - annual appropriations.   We have the technology to effect direct democracy, for as much or as little control over government as we want.  How much do we want?  How much can we really pay attention to?  In addition - perhaps the initiative process (e.g. California) can be available if people really get upset.  They can choose to restructure government pay schedules if they really want to, or they can have an initiative to de-fund an entire department.

These are just idle thoughts.  Somehow, politicians can't be the gatekeepers.  People need the veto power.

Not that I particularly trust people.  They are easily swayed by false flag attacks, propaganda campaigns, and whatnot.  But this way they can't blame anyone other than themselves if things blow up.  And this allows them to change their minds once they figure out something is a bad idea.  Can you imagine an initiative to order the US army out of Afghanistan?  Or another one to eliminate the NSA snooping?  Most of them would not pass, but even the threat alone would be a serious check on government.

Money creation, direct democracy, its all linked.  Who is the gatekeeper over money creation?  That's the key question here.

Last point.  The logical end point of this process is a vast army of robots who do almost all of the dirty work - from mining, to manufacturing.  Soup to nuts, supervised AI takes care of everything, leaving us to do...what?  Forgetting about money for a moment - which is simply a marker for what sized share of the aggregate productive capacity a particular individual can lay claim to - how do we divide up the treasure here?  It makes no sense to chop it all up equally; there will still be work to be done, and that needs to be rewarded.  Someone will need to tell the AI what products to build.  It also makes no sense to exclude the vast majority of the population from it all because they have no real contribution to the manufacturing effort - because most of us won't.

But ultimately, utopia will be pretty boring if most of us don't have anything to do with all our time.

I mean, we could all become artists and writers and literary critics - but we'd probably end up fighting over really stupid things, and we'd use our robots to do it.

Uncletommy's picture
Uncletommy
Status: Silver Member (Offline)
Joined: May 4 2014
Posts: 186
New Best Seller - Fiction Category

I must apologize for wearing my curmudgeon hat again and I mean no disrespect to CHS, but to embrace this line of thinking is to ignore history and, more fundamentally, basic natural processes. If you think that the millions of feet padding their way across the Levant, North Africa and now Europe, is not indicative of the current plight of the world, then you choose to acknowledge our privileged state here in the "developed" world and that "WE" might have a future solution. While I must applaud CHS's excellent thought and argument, my personal perspective is that I would be better served by using the $25.00 to buy beer and a pizza and invite my neighbor over for an interesting discussion on the points he raises.

Yes, the current system does leave a great deal to be desired but, what he puts forward (and I haven't read the details), seems somewhat naive, given the current state of affairs. I think our best investment, today and in the future, is to treat our neighbor decently and share the few resources that we have left with each other or go into the basement and load another box of shells. I think Mr. Smith implies the  the first option. The thought of leaving it to the politicians, is downright scary!

Hotrod's picture
Hotrod
Status: Silver Member (Offline)
Joined: Apr 20 2009
Posts: 134
In the year 2525

Dave,

Remember the song, "In the year 2525" by Zager and Evans?  You may be too young, but it is about machinery doing all work and humans extremities becoming useless from lack of exercise. How prophetic.

One point I'd like to make is that in my historical research efforts locally there are many periods of massive economic upheaval.  Almost nobody remembers to layer those events into the background of what happened to people.  In my personal history, this farm was foreclosed on in 1894 (panic of 1893) and my grandparents were able to purchase it on quite favorable terms in 1899.  It seems that a pure gold standard can also have huge swings in economic activity.

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
inflation and values

I welcome everyone's skepticism, which is of course warranted by current events and history.  Nonetheless, I have thought through many of these issues in some depth over the past 18 months, so I actually have answers :-)

INFLATION: In my view, inflation occurs not from the expansion of money but from the expansion of money *while the expansion of goods and services remain flat*. If goods and services expand *at the same rate* as money, then there is no inflation. I think history backs me up on this.

Recall that the great trading fairs in pre-Renaissance Europe had insufficient gold and silver for *money as a means of exchange* and so they created bills of exchange, letters of credit, etc--"fiat money" or "credit money". History is replete with these examples.

I strongly suggest to everyone interested in understanding money from the groujnd up to read david Graebers' "Debt: the first 5,000 Years."

My system has a demurrage mechanism similar to airline frequent flyer miles programs should inflation start emerging in the system: money 'disappears' the way frequent flyer miles vanish if they're not used. This keep money velocity high in my system.

VALUES. The problem with values is that values are *not independent of the socio-economic system.*  The system creates, nurtures and incentivizes various behaviors and values. The current system actively incentivizes destructive values, and that's a core reason why it's self-destructing. This is *a feature of a specific system with specific incentives and outputs.*  A different system would produce and incentivize different values and outputs. We blame human nature when we should be looking at our world-system and pinpointing *why* we are self-destructive, greedy, corrupt, self-serving,etc.

Look, I know this sounds like the author pitching his book for a big fat profit, but at $7.45 for the ebook I barely make enough for a cup of Starbucks (in whatever cup they're using at the moment :-) The fact is, if you want to understand why the current system outputs what it does, and how a new system would output different values and results, you have to read the book.

Here's where we are: the current system will implode because it requires constant expansion to feed itself. That is impossible. So we can't just hope for miracles to save a failed system--we have to start thinking about new systems.  These systems are already emerging under the shadow of the old one--we just need to organizes them into a coherent system.

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
in the year 2025

Hotrod, you raise a critically important point.  Systems such as mine have *zero chance* in stable, prosperous times and places.  there is no need for any alternative system if the current one seems to be working just fine. But when the current arrangement crumbles and stops working, then people suddenly realize they need a new arrangement and narrative.  If we've thought about it beforehand, we might have a new coherent narrative in place that's a viable alternative to the usual crisis-narrative, which is fascism/warlords.

As many of you know, various cycles suggest the current world-system will enter a collapse-disorder phase around 2021-2025. if this turns out to be true, we have less than a decade to think through what a different system could produce in the way of sustainable living on a small planet. Just preparing ourselves isn't enough in my view. We can do a lot better if we leverage the knowledge and systems that are already emerging on the edges of the current world-system.

Waterdog14's picture
Waterdog14
Status: Bronze Member (Offline)
Joined: Jan 18 2014
Posts: 76
Bought the e-book!

Charles, I just bought the ebook and can't wait to read it.  I have considered for a long time that there are major flaws in our capitalist system, and we need to develop alternatives.  For example, when there is work to be done that society needs, and at the same time there are people that need work, why can't we connect the workers with the task so everyone benefits?  I'm not talking big government make-work jobs, either.  Consider bike paths, retaining walls, child care, irrigation channels, food systems...

An advanced-age gardener in my community tells the story of how her parents threw out potatoes in years long-past because no one could afford them.  That's where credit or barter could help. 

Arthur's comment about "useless eaters" is significant (where eaters includes mindless consumption and driving around).  Our current system encourages attitudes of entitlement while "dis-incentivizing" hard work.  If we are going to survive the upcoming system collapse-disorder, we need to change our collective thinking, values, and therefore behaviors.  We know the current system is broken - I look forward to reading a book that at least offers possible solutions for employment in the upcoming critical times (during and after collapse). 

Note that fighters are joining ISIS because it pays more than fighting for the Taliban or the Iraq military.  Meaningful and gainful work is CRITICAL to maintaining a stable society.  Since our current capitalist system is no longer providing meaningful work for the masses, let's think outside the box.

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 3567
inflation

CHS-

VALUES. The problem with values is that values are *not independent of the socio-economic system.*  The system creates, nurtures and incentivizes various behaviors and values. The current system actively incentivizes destructive values, and that's a core reason why it's self-destructing. This is *a feature of a specific system with specific incentives and outputs.*  A different system would produce and incentivize different values and outputs. We blame human nature when we should be looking at our world-system and pinpointing *why* we are self-destructive, greedy, corrupt, self-serving,etc.

Ok, did I just hear you say that if you just put a better system in place, people will act better?

You do know that's been tried before.  A bunch of people died.  And in the end, people pretty much acted the same way they always have.

That's a similar argument that the gold standard people use.  "If we just had a gold standard, politicians wouldn't act so profligately and the ponzi debt wouldn't be created" - ignoring the fact that we left the gold standard precisely for that reason.

I think we can bend people's behavior around the edges, but any system that doesn't take into account what I call basic human nature is most likely to fail.

AKGrannyWGrit's picture
AKGrannyWGrit
Status: Gold Member (Offline)
Joined: Feb 6 2011
Posts: 279
Very Reasonable Price

CHS your book is really reasonably priced.  I don't read e-books but rather plan on leaving a well stocked library to my Great Grand-Children and will be adding yours to the collection.  In order not to pass on my curmudgeonly attitude to the young ones I think it's necessary to seek out new ideas and information.   Adapting to our changing world is important and you help all of us to to expand our thinking.

Looking forward to reading your ideas.

AK Granny

Waterdog14's picture
Waterdog14
Status: Bronze Member (Offline)
Joined: Jan 18 2014
Posts: 76
People WILL act better if a better system is in place

Dave, People WILL act better if a different system is in place.  Check out the Dr. Robert Sapolsky's studies of the baboon tribe, which developed a "new culture" after the aggressive males died of food poisoning.  The young baboons that entered the tribe were taught that "we don't behave that way here".  If baboons societies can change, even temporarily, perhaps there is hope that at least some of our communities can change.  Human altruism paid off for our ancestors during the long history of human evolution.  Conversely, human greed, competition, and self-centered behaviors are not paying off for the majority of our society right now.  You are only looking through the lens of the last 100 years of market capitalism.  You need a longer view - both backward and forward.  A long view forward is what Charles is offering.

westcoastjan's picture
westcoastjan
Status: Platinum Member (Offline)
Joined: Jun 4 2012
Posts: 538
re values

Great response Charles, and thank you. You are bang on with your assertions re values, especially this:

The system creates, nurtures and incentivizes various behaviors and values.

I do applaud you for putting forth plausible solutions to our predicament. You, like many here on this site, are well ahead of the curve in terms of critical thinking and analysis of the global predicament. The majority, as we well know, are still in denial that a problem even exists, and therefore do not see any need for an alternative system.

You are doing exactly what is needed in terms of offering ideas for workarounds. These ideas do however need champions to incubate them and foster their growth, so that models of some sort will be available to us after the inevitable implosion of the current system. But who will those champions be? There are many people, activists and advocates who care passionately about these things as evidenced by the numerous blogs (like this one) and other alternative information sites. Some are more vocal than others but I think there remains across the board a tremendous unspoken fear to really put one's self out there to try to sway the masses to move away from the status quo. Those in power have amply demonstrated that they will not hesitate to quell protest of any size or form, have ridden roughshod over constitutional rights, and have and continue to take up arms against their own citizens. They are succeeding in intimidating the hell out of anyone who might stray from the herd. This of course works to inhibit potential champions who promote alternative models.

When looked at from this standpoint, it is very hard to be optimistic that, in spite of good viability, those idea(s) will ever be given a chance to grow. The current model has spawned tremendous benefit to select few, and those few will never, ever voluntarily relinquish that which they have gained. Their behaviours and values have very much been incentivized by a corrupt, broken system that has taken on a life of its own, and will have to die before any new system can take its place. Sadly, the death of this system and all that it entails will affect virtually every person on this planet.

Somewhere along the road to this predicament human integrity went missing in action. I guess I am incredibly naive, but in my world, integrity is really the only thing that matters. There are no half measures. Either you have it or you don't. Unless the people who still have integrity start standing up and being counted in a big way - by being champions - our slide down this awful hill will only accelerate. Where are the champions?

Jan

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 3567
tribes vs civilizations

So I'm a firm believer that lots of stuff works in tribes that doesn't scale to civilizations.

Communism is a great case in point.  It works on the tribal scale - but when you attempt to make it work on a larger scale, it stops working.  Different behaviors emerge once everyone doesn't know everyone else.

So my essential question is, why is it that some things seem to work well at a tribal level, but those same things, scaled up to the civilizational level, don't work any longer?

Waterdog14's picture
Waterdog14
Status: Bronze Member (Offline)
Joined: Jan 18 2014
Posts: 76
Tribes could kick out the sociopaths (?)

I've thought a lot about tribalism lately, and wondered what got us to the current predicament of an overly complex energy-dependent civilization ruled by sociopaths.  I am stepping out of my area of expertise here (I'm an engineer, not an anthropologist or sociologist) but I believe that smaller tribes could either kick out the sociopaths and the "useless eaters" or, better yet, train them to pretend to care and thus bring out the best in all tribal members, for the greater benefit of the society. 

What population level is needed for the tribal structure to work?  We may find out when our energy-dependent complex systems break down and we revert to smaller, more connected communities. 

Can we build or maintain complex societies with a socioeconomic model that is not capitalism nor communism?  I'll ponder the question while reading Charles' book.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Eugenetics

It would seem That there is a push factor and a pull factor.

Some point to the failings of the Savannah ape. That Is what I would call a Push factor. Our instincts push us in the wrong direction. We are not designed for the environment that we have created for ourselves. The obvious answer is that we must shorten  the slow process of evolution. By the time Mr Darwin arrives he will have no fine material left to work with. The Age of abundance has allowed womenfolk to slacken off in their breeding program. Either we seize the nettle or resign ourselves to Mr Darwin's tender mercies. 

And the pull factor. We need to solve this paucity of materials and surplus of Apes.  An asteroid has just whooshed past us.  It was made of platinum. And is that all the platinum out there? Do crocodiles swim in the water? Can you see where this is heading?  Of cause you can. With a strong enough desire for la dolce vita we stand a better chance of not going ape again.

And this whole "money" thingo will seem so quaintly archaic. After all as Asimov pointed out, the only free people have been slave owners. And now our slaves will be machines. That was why he wrote the entire "I Robot" series. He cleverly wrapped his vision up in candy so that people would actually read his stuff. 

Uncletommy's picture
Uncletommy
Status: Silver Member (Offline)
Joined: May 4 2014
Posts: 186
Can't ignore basics, but love the discussion.

I offer a re-visitation of Gregor MacDonald's PP blog on Joseph Tainter's slant from January 17, 2012. I think it's great that, as a civilized (?) society, we continue to seek alternatives. However his blog highlights the inevitable conundrum that large scale social groups face. They run out of resources, as the fundamental PP site elaborates very well. It happens to ants, bees, geese, you name it. Scarcity and complexity always bites you in the behind, eventually, no matter how smart you think you are. I think it is referred to as a sine function.

Homer500's picture
Homer500
Status: Member (Offline)
Joined: Nov 16 2015
Posts: 1
Issue with the numbers

Charles,

I'm new to this forum and these podcasts. Thank you for an insightful and thought-provoking segment. I agree with a lot of what you say, but I'm in spectacular disagreement with your dismissal of a Guaranteed Minimum Income (GMI) as a solution to robots stealing jobs. Your argument goes along the following lines:

1. Software and robotics will become so capable that many (or most) jobs could be automated.

2. This wave of job killing will displace a significant fraction of the American workforce, who will then have no traditional means of financial support.

3. Total government expenditures currently stand at $6.2 trillion **and this number will not change despite point #1.**

4. Taxing automated businesses will not be sufficient to raise the $6.2 trillion plus the several trillions more required to provide a GMI, **assuming the cost of living remains at the current level.**

I've highlighted the portions of points 3 and 4 where I think you've made a major boo boo. How is the $6.2 trillion government budget currently spent? A large part goes to the salaries of government employees so they may provide government services. But this will all change with advanced automation (as per point 1). In other words, the government will be able to do more with fewer employees, just like any other business. You don't expect the private workforce to drop by 60% while all the state and federal government agencies, who have access to the same software and robotic tech, keep their payrolls at the current levels -- do you? No, the $6.2 trillion figure will be drastically reduced, even as the services improve (think robots repairing roads, fighting wildfires, building hospitals etc.).

Not only will the government budget be drastically reduced, but so too will the general cost of living. A GMI will have to provide for the basic necessities of food, shelter, education, health care and so on. And all those items will cost less (much less) when labor prices are taken out of the equation. We have to be consistent with our forecasting!

This is an interesting and very important topic. I don't know how much automation will change the numbers, but those changes will likely be dramatic. And they need to be factored into both sides -- reduced costs along with reduced employment. I would love to see you recalculate the numbers with these ideas in mind.

Daryl

Sterling Cornaby's picture
Sterling Cornaby
Status: Silver Member (Offline)
Joined: Sep 6 2012
Posts: 148
Robots kill work (but I needed to work?)

Just other view this reminded me of

kelvinator's picture
kelvinator
Status: Silver Member (Offline)
Joined: Dec 25 2008
Posts: 154
Can Large-Scale Society Evolve If Forced To, or Only Fall Apart?

Seems like a good point  to me, Homer, about government and cost of living being much less in a society with mass AI and robot production.  That doesn't deal with the problem of capital fleeing taxation, but one thing at a time...

And thanks a lot for your thought-provoking tour of new possibilities, Charles! 

It’s generated a great discussion.  I don’t agree, Dave, that human nature is a fixed thing that can’t evolve, but maybe not in a way that makes a practical difference.   My sense is that while human nature itself can evolve, its rate of evolution seems glacial, and likely way too slow to adapt to the global problems coming at us at a high rate of speed.    The global economy is so complex, status-quo defensive and denial based, it seems much more likely to break than bend when confronted with a rapidly changing environment - at least back to simpler, and more regional or local economies.  My impression is that your new economic model, Charles, might be designed to also function in a more regional or fragmented global economy, if/when it comes to that.

Ultimately, as I think Chris and others have said many times, the good news is that globally, we probably have the capability and resources to actually create a pretty good life for the vast majority of people on the planet, maybe all.  The big problem is figuring out how to imagine, incentivize and create the change to an economic system that could support that, which is what you’re writing about.   I’m interested to hear more of what you have to say.

I'm going to load up your ebook to read on my vacation to Mexico next week.  It might even be indirectly funded by the trip's addition to my gradually devaluing load of United Mileage Plus miles -  value accruing to me while vacationing and consuming instead of working and producing.  Hmmmm...maybe we could set up an economy in which you're paid to consume instead of work.  Oh, I guess we kind of already have that if you pretend debt doesn't exist or matter, which society seems to be doing. 

Ultimately, economies are systems for incentivizing social behavior (or not).  Some Keynesians like Krugman seem to believe that you can create endless debt as a means of incentivizing certain outcomes – building infrastructure, paying medical costs for the society, etc.  They say the debt isn’t important - it's more like an artist’s palette of paint for guiding economic activity.  That doesn’t make sense to me.  I’ll be interested to see how your imagined system works around that.

Oliveoilguy's picture
Oliveoilguy
Status: Platinum Member (Offline)
Joined: Jun 29 2012
Posts: 529
Empathy

davefairtex wrote:

So I'm a firm believer that lots of stuff works in tribes that doesn't scale to civilizations.

Communism is a great case in point.  It works on the tribal scale - but when you attempt to make it work on a larger scale, it stops working.  Different behaviors emerge once everyone doesn't know everyone else.

So my essential question is, why is it that some things seem to work well at a tribal level, but those same things, scaled up to the civilizational level, don't work any longer?

You can empathize at a tribal level but not with a civilization. It's the personal element that makes the difference.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
AutoCAD

Last time I priced AutoCAD it was $11Grand, Aus. Out of my league. I have an idea that will make the James Webb telescope instantly obsolete. But I need the drawing package. Am I unique?  Not really. Once people are made redundant you can expect a lot of intellectual fire power to be freed up.

Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2108
Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2108
DP

DP

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 548
Ground based vs orbital telescopes

AutoCad light is $360 per year or $1,200 for a perpetual license.

Being an amateur astronomy enthusiast, I've noticed that there are some really decent minds already at work in that area.  There are a lot of people developing equipment and implementing ideas, either in their garage (or basement) or at a university.  Innovations are too numerous to mention, but adaptive optics comes instantly to mind.

There are also a lot of "cottage industry" participants in astronomy.  Heck, a semi retired dentist in my own astronomy club designed and manufactures the Obsession line of dobsonian telescopes.  The larger ones are quite impressive, but expensive.

It is clearly possible to compete with orbital telescopes.  An excellent example of this is the most distant galaxy ever imaged.  NASA released an image of a galaxy over 13 billion light years away.  The light from this galaxy is over 13 billion years old, thus the image is of an early galaxy in the life of our universe, assuming you subscribe to the big bang theory.  Anyway, a couple of amateur astronomers decided to attempt to duplicate the image from their back yards.  One was located in California and the other in Europe, Germany I think.  They both owned 20 inch Ricthey Chretein telescopes, expensive by amateur standards.  The short version of the story is that, with a few months of effort, these two amateur astronomers were able to image the same galaxy that the Hubble imaged, over 13 billion light years away.

However, there are unique costs associated with optimizing ground based telescopes, just as there are unique costs associated with running a telescope in space.  I won't even get into how cost ineffective a government organization like NASA is, or the issues associated with government funded "science."

But, there are a lot of first rate minds working on both ground based and space based telescope design.  

One thing that will be difficult if not impossible to duplicate is the efficiency of an orbital telescope.  Ground based telescopes excel only in good to ideal "seeing" conditions.  Orbital telescopes are not constrained by weather conditions.  Sure, a ground based telescope can meet or exceed a space based telescope under ideal conditions.  But ideal conditions are not all that frequent.

Having said all that, a few years back, I was climbing down off of a ladder after viewing Omega Centauri through a 24 inch Obsession telescope.  When I hit the ground I found an older man I was unfamiliar with had joined the group on the ground.  He extended his hand and said, hi, I'm Al Nagler.  Amateur astronomy is a relatively small subset of our pint sized planet.

Snydeman's picture
Snydeman
Status: Silver Member (Offline)
Joined: Feb 6 2013
Posts: 174
davefairtex wrote: So I'm a

davefairtex wrote:

So I'm a firm believer that lots of stuff works in tribes that doesn't scale to civilizations.

Communism is a great case in point.  It works on the tribal scale - but when you attempt to make it work on a larger scale, it stops working.  Different behaviors emerge once everyone doesn't know everyone else.

So my essential question is, why is it that some things seem to work well at a tribal level, but those same things, scaled up to the civilizational level, don't work any longer?

Because evolutionarily, tribalism made sense. Civilization never has. One was created by nature through the same processes as every other life form on this planet, while the other was created by humankind. One lives in balance with its surrounding environment by necessity (not really by choice, despite common misconceptions about hunter-gatherers being all nature-lovey-dovey), while the other deigns itself above such trifling concerns, much to its imminent destruction. The problem isn't​ solved by this form of government or that one, by this economic model or that one. The problem is civilization itself. Daniel Quinn's book "Ishmael" outlines this fairly well, and is a good read besides,.

As much as I love the things civilization has brought to this planet, the destruction it has wrought hasn't been worth it. If we could somehow scale tribalism up, we might make it work. However we haven't been able to so far. Regardless, it seems that if we don't nuke ourselves tribalism may very well be the only form that survives at the end of our 10,000 year experiment with civilization.

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
thanks to everyone for adding to the discussion

Thanks to everyone for adding to the discussion. These are big, long-term issues and there can't possibly be a single "right answer."

In general, though, I think the "righter answer" is increasingly decentralization and opt-in communities, as opposed to further centralization and coercion.

RoseHip's picture
RoseHip
Status: Silver Member (Offline)
Joined: Feb 5 2013
Posts: 140
Thank You CHS

A big heart warming thank you for not just this article/book but your entire body of work. This goes for anyone that is willing and courageous enough to put their ideas and thoughts out into the complex world of social structures we inhabit. Last night my dreams spoke of my past history of social pain and disillusions. And I want everyone to know I support and celebrate them. I can hear your humanity and am encouraged by it. Thank you! Big hugs!  Rose

Nod to CHS, T2H, Dave, Les, Snyd, OOG, Arthur, Kelvin, SC, Homer, Uncle T, Waterdog, WCJ, Granny, Mark and The PP. 

pcm's picture
pcm
Status: Member (Offline)
Joined: Jul 19 2012
Posts: 6
Peace will naturally come

Peace will naturally come when justice is served.  Without justice there will be no peace.  Justice first then peace will come.  There are ten apples for ten people (one each), until one guy decides to grab nine and throw one back out for the other nine guys to fight for the one.

chipshot's picture
chipshot
Status: Member (Offline)
Joined: Mar 15 2010
Posts: 14
An Abundance of Capital?

The one statement in this discussion that jumped out at me was that there is an abundance of capital.

There is an abundance of money, but it is not earned money, which is how I think of capital  (or earned assets, as capital doesn't have to be in the form of currency).

Jim Kunstler has been outspoken about how the lack of capital is going to prevent us from doing many things we'll want/need to do, such as re-building rail lines and fixing infrastructure in general.  Think he is dead on, and it's a subject getting little attention.

It appears overall wealth is contracting.  How can that not lead to shrinking capital?  The causes for the contraction of wealth are many.  Gotta believe the trillions spent on war the past decade or two are a contributing factor--war destroys wealth through it's high cost and incredible destruction. And oil that cost more to produce than it sells for could be another source of major wealth destruction if it continues long enough. At the very least, oil is no longer a source of vast wealth creation.  The astronomical rate of borrowing would be another major cause of contracting wealth.

One thing I took from the podcast is further confirmation that we are all going to end up broke, or at least unable to afford our current overall standard of living.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Values and Moral Relativism.

VALUES. The problem with values is that values are *not independent of the socio-economic system.* 

I am uncertain of you can escape my pretend wrath with that Asterix Charles, but allow me to differ. 

Is this statement correct?

" Values are a subset of Quality."*

If so, then Persig has pointed out that Quality is a thing in and of itself. Quality belongs to neither the subject nor the object. No, beauty is Not in the eye of the beholder, (subject) nor in the thing of beauty (object) but is separate from them both. 

Quality is not manipulated.  It has an independent existence. .

This observation is a stake through the heart of Moral Relativism. I do hope that we do not have to address this distressing subject again.

* For instance some values have low Quality and others have high Quality.  An example of a low Quality value is to despise the achievements and efforts of your ancestors. A high Quality value  for instance may be spiritual harmony with the astounding fact of your existence.

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
values and capital

Arthur, your commentary on values is nuanced and deep--what is the foundation of values? As you suggest, relativism is not a solid foundation, yet to some degree relativism is the core of Modernism.

Quality is precisely what's been lost: the quality of physical tools/appliance, and the quality of time, which is now scarce for those trying to keep up with multiple devices/tasks/duties.

I suppose my point is that values--(no asterisk, heh)--are to some degree built or torn down by the incentives of whatever system we're participating in.  If the system encourages deception, cheating, free-riding, exploitation, etc., then participants will either join the party or they will choose not to participate. For example, the mortgage origination /MBS packaging industry circa 2002-2008.

Systems that encourage collaboration, transparency, productivity, etc., and that disincentivize deception, exploitation, free-riding, etc. encourage a much different set of values. People tend to assign the blame for failed systems to human nature, but it's the system that generates behaviors and choices based on what the system incentivizes.

As for capital being abundant--Chipshot, your point is well-taken--what we might call "real" wealth/capital is eroding. Much of the 'wealth/capital" is phantom wealth--assets whose value has been pumped up or is kept on the books at inflated levels.

I think Spence is referring to credit as capital, because to the owner of a business buying robots, cheap credit is almost as good as actual cash. The cost to use cash is zero, but if the cost to borrow capital is 1%, hey, that's almost as good as cash.  This is the logic of stock buy-backs--since credit is so cheap, let's borrow a ton of money and boost our stock price, which is an asset we can sell.

the bottom line is capital (cash) earns nothing, which is why people like Warren Buffett are buying railroads, canned food companies, etc.--real enterprises with income streams. That's what scarce: reliable income streams...

jandeligans's picture
jandeligans
Status: Member (Offline)
Joined: Dec 21 2011
Posts: 23
How refreshing - a solution to our money problems

I just finished reading the e-book and first of all - thank you Charles so much for pointing out a problem and THEN SUGGESTING A SOLUTION! How rare is that? We read so many books about our incredibly deep and systemic problems these days and they author's give the obligatory "hope" message at the end that equates to "well, maybe it's not as bad as I say." 

So first, I hope PP will do a follow-up podcast on the essence and details of your CLIME system. I was very excited to read about it and especially that "money" creation could be based on work done and not just capitalist profits and financial engineering of the Elites. I immediately thought of my local community and several of us who have some land to farm and have irrigation but we don't have the labor to do it and we can't afford and don't want giant machinery or chemicals. We want to work the land the way Mother Nature intended with human labor. But given the world we live in it appears to be impractical. Your CLIME system as I understand it could pay the workers with Largents. This food grown would be sold or distributed locally and would also sequester carbon and clean water systems. Largents would have to be able to meet most of the workers' needs so initially it would be necessary for local stores like our local farm supply store to accept largents. This would be a barrier until it became widespread enough to be acceptable to the worker that the largents would be worth things they need to live. 

I would love to see a meeting of some of the groups that already are trying to cut down on carbon emissions and live more sustainably and see if they could use this CLIME monetary system using the organizations that already exist as the community groups. Transition Towns, Post Carbon Institute, whatever Naomi Klein is doing, Permaculture leaders, ecoagriculture leaders, Quivira Coalition, all the Farmer's Markets, etc etc. could be the initial community groups. Heck, maybe the Pope would join in! And of course international leaders like Vandana Shiva. The movement is already out there and adding an umbrella over it that allows for funding basically, that is really an exciting concept.

So I think the biggest problem will be it's democratic nature which as you say is messy and prone to chaos. And if it begins to succeed I can't imagine that TPTB won't come down hard and try to tax it to death or something. It's the first thing I've ever seen that is a potential replacement for our disastrous debt based money system and it seriously threatens the existing system if it could become widespread. So I hope you will do another podcast on just the financial aspect. 

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
thank you, Jandeligans

thank you, Jandeligans, for reading the book and giving it a chance, and for sharing your thoughts about how it could be implemented (or suppressed). I am very honored by your praise and completely agree with your assessment of its potential to reduce carbon/waste/resource depletion at the ground level. 

You are right--if we don't change the way money is issued and distributed, we can't really change anything.

I tend to think the CLIME system is most likely to be tried in places where the currency has evaporated and the elites have lost control of the money. An existing NGO or faith-based organization might have the wherewithal to start enough CLIME groups in one campaign to get the project launched. Once a critical mass of CLIME groups are up and running, the system self-organizes as local leaders emerge to organize and launch new groups.

Nothing breeds success like success. If members of CLIME groups have better lives and opportunities than those depending on the existing status quo, people will naturally be drawn to opt-into a CLIME group just out of self-interest.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1231
One factor not mentioned

You guys painted a lot of ugly pictures (that typically have been addressed with revolution across millennia).   One factor not mentioned: Is Man of Nature or Not?  It seems humans think the latter and that is the core of the problem.   Look at Nature to see what works.  I don't see guaranteed income out there.  It seems Charles system would have no throttle on human procreation, and isn't that one of the main problems we have today?  Please read "Fiat Money Inflation in France" to see how well government-printed money worked.   Not well in the mid-term.   Politics corrupts.  I personally want to get rid of credit cards and move to an equity-based monetary system.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1231
"What is Money?"

"What is Money?" essay by Bastiat https://mises.org/library/what-money

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
human procreation

KugsCheese, I understand your point about human population growth. All available evidence (to the best of my knowledge) definitely points to two and only two factors that dramatically lower human birthrates: 1) improving the education of females 2) improving the opportunities of females. My system offers both to anyone who cares to opt in, and in this way I think my system offers the most effective means of reducing human birth rates without coercion.

As a bonus, it also reduces the primary motivation of immigration, which is lack of opportunity in one's home region.

My money system is 'fiat", but it's based on the production of scarce goods and services in local communities. The only guarantee my system offers is paid work for doing useful work that the community has selected as the most needed at that time.

The problem with any asset-based money is it ends up in the hands of the already-wealthy. My system distributes paid work and thus money to those creating the goods and services at the bottom of the wealth/income/power pyramid. This links work and money issuance directly. Without such a causal link, every money system will follow the one we now have--the wealthy accumulate the assets and money and the poor are left with scraps.

I realize this is outside the bounds of conventional money theory.

Dwig's picture
Dwig
Status: Silver Member (Offline)
Joined: Mar 5 2009
Posts: 141
Related references

Charles, an interesting proposal, and well commented on by the "tribe". 8^)

Here's a few references that can deepen the issues, and maybe influence the proposals put forth:

  • One of the best current writers on money systems is Bernard Lietaer.  His recent books give a deep history of currency systems, and he has a good argument for an "ecology of money" -- any single monetary system will be too fragile to meet all the requirements on it.
  • A problem that was tangentially mentioned above is population.  Check out Catton's "Overshoot", and various of Greer's books.  One way or another, the human population of the earth will be reduced dramatically by the end of the century -- can you devise a monetary system that will reward voluntary population reduction, while still supporting the necessities of life and maintaining social coherence during the decline? 
    (As an aside, it's worth noting that the population of many European countries has been declining over the last few decades, and the US population has only been growing via immigration.)
  • I find Wendell Berry's essays on the effects of industrial civilization very much worth reading.  Over his lifetime, he's seen the agricultural society of rural Kentucky degraded by industrialization, automation, and industry's destruction of soil and community.  He has an interesting perspective on community: it must be based on a deep relation with place and land (essentially being part of the local ecosystem).  Here's an interesting example: compare a farmer-owner using a horse with another using a tractor.  We know the advantages of the tractor, but consider this: the horse was likely born and raised locally, its "inputs" come from grazing locally, and its "outputs" return to the local ecosystem, as does the horse itself when it dies.  Everything about the tractor, however, must be imported at a cost of money that leaves the local economy -- independent subsistence farming becomes impossible, and crushing debt all too common.  (And of course, what the tractor "leaves" locally is far from beneficial.)

Yes, this is a grimmer picture than what Charles proposes, but I don't consider it hopeless.  What it's going to require, however, is communities characterized by courage, compassion, and a long-term view.

Here's some "Rules for community survival during the decline" that occurred to me some time ago; they still look reasonable to me:

Rule 1: Don't try to go it alone, or even with a small group of family and/or friends. You need enough people to create a society.
Rule 2: Social cohesion is a crucial factor for success; put differently, you need to create a true community (or leverage an existing one).
Rule 3 (law of requisite variety): You'll need a variety of roles, skills, viewpoints, and personality types. It's true of communities as well as biomes: a rich web of relationships among diverse entities is more survivable than a sparse one or a “monoculture”.
Rule 4: No matter how well you plan for your future, you're going to be surprised. Build a capacity for continuous learning into the community (in Peter Senge's terms, become a learning organization)
Rule 5: In particular, learn to see whole systems, and to understand/perceive cross-time trends, relationships, etc. As an example of the latter, understand the interplay between normal change and revolutionary change; learn to be good at both.
Rule 6: As for individuals, so for communities: don't try to go it alone -- form communities of communities within your region.
Rule 7: In particular, you need enough people within the region to provide a viable breeding population, and to avoid genetic stagnation. Exogamy is good for the genes and, by enriching the web of relationships, for the society.
Rule 8: Aim to thrive, not just eke out a survival. Pessimism and despair have negative survival value. Consider yourselves not refugees from a doomed civilization, but founders of a new one.
Rule 9: That said, allow yourselves occasional time to grieve, to mourn, to remember, and to honor those lost. This will keep them from becoming “elephants in the room”, an unspoken burden on your spirits.
Rule 10: Develop an understanding and acceptance of the role of death in life. {Need more on this}
    (From Terrence Des Pres, noted in his book about death camps, The Survivor:: “Western civilization is the negation of biological reality; and unavoidably, since life and death are inextricable, the denial of death comes finally to be a denial of life... There is terrible irony in this, for whereas awareness of death generates firm care for life, death-denial ends in a fury of destruction.”)

The above certainly isn't original with me, except for the form in which I've listed them.  Oh yes, don't take the word "Rules" too seriously; they're really just my best guess.

charleshughsmith's picture
charleshughsmith
Status: Gold Member (Offline)
Joined: Aug 15 2010
Posts: 494
rules 1 through 6

Dwig, excellent post, thank you. I think my system enables and incentivizes rules 1 through 6 from the ground up.

Robinson's picture
Robinson
Status: Bronze Member (Offline)
Joined: Apr 29 2009
Posts: 34
We agree with Everyone and CHS.
We agree with Everyone, and what say here CHS.
 
Our book, free download http://mutualwelfare.org/ Describe a blue print for a new society almost exactly what CHS described here, we like to read his book.
 
We also, we have designed a very practical transition from today's society, to this new society. In a few weeks it will be published in http://sbmlibre.com/  Educating people in this important matter, while offer a service of real value to the public, while making money to make this transition. You are invited to participate as Co-Creator, Investor or activist.  Feel free to contact us.
Robinson's picture
Robinson
Status: Bronze Member (Offline)
Joined: Apr 29 2009
Posts: 34
We need new energy source
We agree with you.
 
The final nail to bury this society, is moving into a new energy source, and LENR, seems to be the answer, although there may be other black horses in this race to replace fossil fuels.
 
For a total change of society, we also need a change of its primary energy source.
 
Our book, free download http://mutualwelfare.org/ Describe a blue print for a new society almost exactly what CHS described here, we like to read his book.
 
We also, we have designed a very practical transition from today's society, to this new society. In a few weeks it will be published in http://sbmlibre.com/  Educating people in this important matter, while offer a service of real value to the public, while making money to make this transition. You are invited to participate as Co-Creator, Investor or activist.  Feel free to contact us.
Robinson's picture
Robinson
Status: Bronze Member (Offline)
Joined: Apr 29 2009
Posts: 34
Yes, we have to eliminate this elite, but

Yes, we have to eliminate this elite, but the best course of action is Educate all the people in this matter.

Educated people will eliminate this people, not by violence but by obsolescence.

Robinson's picture
Robinson
Status: Bronze Member (Offline)
Joined: Apr 29 2009
Posts: 34
We also agree with you CHS.

The point of Mark, It is that we must include the idea of taxing the accumulation of wealth, and not let this new system without taxes.

In our 2013 book, free download http://mutualwelfare.org/, we propose to pay tax on wealth accumulation and not on the flow of money. So who has more, pay more.  Also only pay tax above the normal richness decided by your locality. Thus, if in your locality decide than normal, is to have a boat, you do not pay taxes on your boat. But if your locality says that's not normal, then you pay taxes on your boat, your plane, etc. The same for businesses. The locality should coordinate with their state goals, and the states with the goals of the country.
 
And it is also correct that capital can fly, but if the new system is implemented throughout the world, nowhere to escape, as the current failure of tax havens must be addressed. This new system should think, to boot locally, but to work in a global, integrated world.
 
You also are right about "meet the new boss, same as the old boss" , the solution is the right education model, to create intelligent and sensible people.  The current education system don't work. We propose a new education model in our book.
Robinson's picture
Robinson
Status: Bronze Member (Offline)
Joined: Apr 29 2009
Posts: 34
Yes, the value system is broken.

Yes, the value system is broken.

We can fix that changing the education system, to create intelligent and sensible people.  we have a proposal for a new education system in our book, based on the best systems in the world and history. http://mutualwelfare.org/

The first step to this new society is the change of educational system.

SingleSpeak's picture
SingleSpeak
Status: Gold Member (Offline)
Joined: Dec 1 2008
Posts: 473
More Kudos CHS

I've just finished reading the book. There was so much covered, so many new concepts and new approaches to work and money creation, etc. I'll surely have to reread parts or all of it to better grasp the workings, but learning to think outside the box, way outside, appears to be a healthy approach to the future we face.

The best aspect of the system you describe IMO is how it is not an all or nothing approach. You've addressed many of the pitfalls of existing money systems and community systems by allowing free flow of membership/agency, welcoming creative destruction, simultaneous parallel money systems,etc.

I would imagine there are others, many others, like me, that are ready to experiment and likely fail a few times in the effort to get a system such as CLIME viable and up and running. People that understand the unjust nature of the current currency system and work system are ripe for embracing a system that cannot be gamed by the Elite or the something-for-nothing's.

I remember it mentioned in the book that a percentage of work would go to children, those unable to work, etc. in the locality. Deciding the percentage and who qualifies as "in need" and which group is responsible for who seems like a daunting task and another area where fraud would likely arise.

Still, I want to join the others here that applaud and support your efforts Charles. The amount of thought that went into your book and outlining a new, more fair, more healthy, more positive result generating system is incredible. So, thank you.

SS

PS- I also want to applaud he fact that you monitor the comment section here at PP. Very few of the guest contributors and interviewees make the effort. It easily doubles the value of the article when the guest "stays around" to clear up or add to the discussion.
 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments