Charles Eisenstein's writings on Money and the Crisis of Civilization

Charles Eisenstein, a Yale graduate, has some fascinating writings on money, the crisis of civilization and who will collect the garbage in the future.

They are profound, and I am still digesting them, but I believe they have some fallacies. For example, he writes that:

1. More for me is less for you (in civilization as we know it). That's not always true. When I invented and Tim and I developed QLess, for example, we created more time for end-users, which creates more profits for merchants, which creates profits for us. There was a net win.

2. He writes "Essentially, for the economy to continue growing and for the (interest-based) money system to remain viable, more and more of nature and human relationship must be monetized. For example, thirty years ago most meals were prepared at home; today some two-thirds are prepared outside, in restaurants or supermarket delis. A once unpaid function, cooking, has become a "service". And we are the richer for it. Right?".

Let's see. If I invent and develop QLess, people get time when they used to have to stand in line. During that time they can make beautiful things valued by others. When they exchange those beautiful things, and do so via money (representing past or future production of goods or services), the economy has grown. So while you could claim that this indeed "monetizes more of human relationship", I disagree with the implication that that is bad in this case or that we are exhausting limited natural resources. If, tomorrow, someone invents a way for people to make twice as many desirable beautiful things in the same amount of time, and those things are exchanged via money, the economy will have grown, and no natural resource will have been depleted.

3. Eisenstein writes "Half the world starves while the other half wastes enough to feed the first half. In the Third World and our own ghettos, people lack food, shelter, and other basic necessities, but cannot afford to buy them. Other people would love to supply these necessities and do other meaningful work, but cannot because there is no money in it. Money utterly fails to connect gifts and needs.".

Why is there no money in feeding the poor? Is it not because they cannot or do not know how to do something that the rich people who could feed them want in exchange? It seems it's that asymmetry: the fact that the poor people want stuff the rich people have, and not vice-versa, that drives the sad and true observation of Eisenstein.

4. Eisenstein claims in Money, a new beginning that interest is an evil that leads to inflation, growth or bankruptcy. I think that interest is the natural reward for the uncertainty that a lender will be paid back. While a small society might have been able to do without it, for a debtor would be forced to pay by societal pressures (and in the case of death, the debtor's family would settle the debt), in a large society this gets harder to enforce, the risk of default ensues, and interest becomes necessary for credit.

Now if interest exactly balanced the risk of default, there would be no inflation or growth, for interest would be balanced out by unpaid debts. Yet risk-aversion means that people would not engage in lending if there was not a reward above and beyond compensating for the expected default probability. This is not usury: it's human nature dictating supply and demand at work. For this reason, interest does indeed force the growth of the economy (or inflation). Luckily, due to population growth and constant discovery and innovation, this is not difficult, but rather the natural condition. When and if population stops growing and desirable inventions and discoveries cease, a fundamental change in our economy will occur. But we are far from this.

5. Eisenstein writes in the same essay that "Your 13th-century peasant ancestors rarely paid money for food, shelter, clothing, or entertainment (much less in a hunter-gatherer tribe). People were self-sufficient in all these things or, more likely, depended on elaborate gift networks, sharing, and reciprocity. Of these things is community built. Today, we pay strangers to meet most of our physical and cultural needs. You probably don't know the person who grew your food, wove your shirt, built your house, or sang the songs on your iPod."

True. Yet Eisenstein fails to mention that the average 20th century person has more food, better shelter against the elements, warmer and more varied clothing and more variety of entertainment, not to mention better health and a longer lifespan, than the average 13th-century peasant. I for one would not want to live in the 13th century: so little of the world I could get to see, so few books I'd get to read, no movies, ...so many of the things I find enriching in life were absent or impoverished.