Life, Inc. Chapter Seven: From Ecology to Economy

The Market Makers

We base our very survival on our ability to use and accumulate money. So its rules and characteristics can’t help but seep into our thinking and behaviors as individuals, as businesses, and as a society.

The more we accept its use, the more we think of our centrally issued money as a natural player in the economy rather than a particular tool with particular biases. But over the centuries of its use, the influence of our money over our interactions has been demonstrated time and time again: a scarce currency designed in favor of competitive corporate behavior will promote such behavior in those who use it. This is not magic; the money is not possessed. It’s just biased toward the interests of those in a position to make money by storing it rather than spending it. It’s money for capitalists. And they had better use it as it was designed or they’ll end up on the wrong side of the currency equation themselves.

Our prevailing ignorance about the bias of the money we use undermines our best efforts at making the economy work better for the many or even the few. Businesses believe they are required to grow, and pick from among their inappropriate acquisition targets as if choosing between the lesser of two evils. Eighty percent of these acquisitions drain value and equity from both merging companies. Unions accept the false premise that the new competitive economy demands that they consent to lower wages; they fail to recognize that their wages are making up a progressively smaller portion of corporate profits, or that money paid to them circulates through the real economy, while the money doled out to CEOs and shareholders tends to stay put. As a result, with each cut to union wages, education and health care suffer, and the overall competitiveness of the workforce declines. Businesses, meanwhile, make decisions catering to the agenda of the investing shareholders who seek to extract short-term gains at the expense of a company’s long-term stability, research and development, or even basic competence. They outsource core processes, lose access to innovation, and depend on branding to make up the difference. Revenues suffer and growth slows, but there’s debt to be paid, so more acquisitions are made and the workforce is slashed or outsourced. All the while, central banks attempt to walk the fine line between stimulating growth through lower interest rates and maintaining the value of their monopoly currencies.

The Wall Street Journal, Fox News, and The Economist compete against the BBC, The Guardian, and PBS to explain the conflicting interests of workers, investors, and corporations in the new global economy. But no matter whose case they make, they all fail to consider whether the money everyone is fighting over has rules of its own that make such conflicts inevitable. They argue over the placement of the chess pieces without pausing to consider that the board beneath them has been quite arbitrarily arranged to favor players who no longer exist. Neither does the Left-Right divide ever adequately address the income disparity between people caught on opposite ends of the currency spectrum. We can argue labor’s cause all we want, add regulations to the system designed to minimize worker exploitation, maximize their participation in corporate profits, or increase the minimum wage. All along the way, management will be dragged along, kicking and screaming, while bankers and investors -- the ultimate arbiters of credit -- grow more reluctant to fund such handicapped enterprises. It’s a lose-lose scenario because it works against the either-or bias of a scarce central currency to promote central authority at the expense of the periphery where value is actually created. Yet this is precisely what the currency we use was designed to do from its inception.

Renaissance monarchs didn’t invent central currency, or even the first currency monopoly. Both ancient Egypt and the Holy Roman Empire issued central currencies. In Egypt’s case, as best we know from historical accounts, the empire had overextended itself, conquering and controlling territory eastward to Canaan and beyond. In an effort to fund the defense of its borders and the control of its population, successive pharaohs initiated increasingly restrictive and centralized monetary policies -- along with centralized religion and culture. Pharaohs outlawed local currencies and forced people to bring grain long distances to royal grain stores in exchange for the central currency. The famous famine depicted in the Bible may have been the result of natural causes or, like the one accompanying the establishment of scarce currency in the Middle Ages, of economic origins. The Holy Roman Empire issued its own currency to every region it conquered, both to extract value from its new territories and to assert the authority of the emperor. In both historical cases, central currency was a means of control, taxation, and centralization of authority during expansive dictatorships. And, in both cases, after a few hundred years, the continual debasement of currency led to the fall of the empire.