In his latest book, Life Inc.: How the World Became a Corporation and How to Take It Back (Random House), Douglas Rushkoff claims that currency was invented to prevent transactions and put a brake on economic growth, corporations exist to stifle competition, and banks do not fund competition–they drain it. But he’s no communist: “A true free marketeer, actually,” Rushkoff says. “I’m just trying to point out that we’re not operating in anything close to a free market.”
A well known member of the cyberpunk movement–he hung out with acid-tripping Timothy Leary–and the author of books like Media Virus! and Get Back in the Box: Innovation from the Inside Out, Rushkoff, in Life, Inc., offers a unique perspective on the economic problems plaguing America today. He offers some solutions as well, as you’ll discover in this Q&A, and the sample chapter of Life Inc. that follows.
If I understand the premise of Life, Inc., it’s that money was invented to prevent transactions, corporations were created to prevent competition, banks do not fund commerce–they drain it–and a central currency acts as a brake to economic growth, right?
Douglas Rushkoff: You understand, pretty much. Money itself was invented to promote transactions. But those were local currencies, grain receipts really, that lost value over time so people spent them. Those currencies were made illegal to make room for central currencies–artificially scarce coin of the realm–that discouraged direct transactions between merchants and people. Likewise, the first corporations were “chartered monopolies” that outlawed competition in an area or industry. And finally, central banking replaced local reinvestment with long-distance interest-based investment. Companies end up serving their debt structures rather than simple supply and demand. The speculative economy becomes dead weight, trailing real business, rather than investment spearheading innovation.
Next you’ll tell me that business shouldn’t try to grow and they should never, ever go public.
DR: Okay, to a point. Definitely don’t go public. Not until you are truly ready to leave your business. Going public means selling your business to disinterested shareholders. All they are going to care about is the short-term asset value of your shares. So if you care about any other aspect of your business–its customers, employees, industry, or even just its longevity and sustainability as a business–then don’t go public. Shareholders will demand growth at the business’s expense
I’ve got no problem with growth, as long as it’s not growth for growth’s sake. As we all know (or do we?) 80% of all mergers and acquisitions actually lose money for *both* sides of the deal. Yet we continue to pursue M&A not because its good business, but because it creates the illusion of growth necessary to keep the debt structure intact. When your business is basically a name on debt–as most of the Fortune 500 really are–then you need to grow at a rate dictated by interest rates, not supply and demand.
So what’s your solution?
DR: There are many. The first is to allow corporations to crumble under their own weight. When they really do get too big to work efficiently, our first response should not be to change the playing field to prevent their demise at the expense of all the great, smaller, more competitive and innovative companies that should be replacing them.
We tend to think of letting big companies die as being cruel to the workers – and this might be so. But these companies wouldn’t have gotten so big in the first place if we hadn’t regulated their monopolies in the first place. And unions are often complicit in this scheme as well.
The easiest ways through this are:
1. promote local commerce – of the sort Adam Smith envisioned.
2. break the highly centralized, bureaucratic liaison between government and big business for industries such as Big Agra, Big Pharma, and Big Oil. Undo protectionist regulations making it impossible or illegal for farmers to grow the crops best suited to their climates and soil.
3. develop alternative currencies (like the ones in Japan that were used to deliver hundreds of millions of dollars of healthcare to elders) and promote business-to-business barter networks (such as Itex.com , alone transferring over $100-million of b2b exchange annually).
4. learn to actually do something. the easiest way for a business to make money is by providing goods and services. since almost no one does this anymore, there’s a great opportunity here.
Do you think that’s realistic?
DR: Only as realistic as the survival of our economy on a geopolitical landscape that no longer accepts the expansion of our markets as given. We are getting significant “push back” from Asia, Africa and South America. They’re not willing to serve simply as expansions of our markets or World Bank debtors. So we may have to abandon an economic model that was based on the colonial expansions of Renaissance nations, and look towards a more sophisticated, less regulated and protectionist landscape. The rest of the world is no longer going to respect the monopolies our governments declare. So it’s time to compete again. This means America learning how to do something instead of simply outsourcing and creating debt.
It won’t be easy, but it could actually be fun. Imagine competence as a viable alternative.
Read a sample of Douglas Rushkoff’s Life Inc.
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