Economics for Transition: building an equitable and resilient local economy Transition Initiative

Ambitious agenda The current economic crisis and its historical context (short recap) Understanding the structure of the economic system Understanding money and the banking system Understanding the financial system Responses and Alternatives

Robert Reich summarizes Connecting the dots about the US economy Connecting the dots about the US economy

Time to understand the economic system that leads to these results… Concept of Surplus 5 types of economic systems Inherent contradiction and instability

The Concept of Surplus ◦ Who produces it? ◦ Who owns it? ◦ Who distributes it?

Five Economic Systems ◦ Ancient (self-employed) system ◦ Communitarian system ◦ Slavery ◦ Feudalism ◦ Capitalism

The Inherent Instability of Capitalism ◦ Two major systemic failures in the last 80 years ◦ In the same period 11 crises (recessions) ◦ Labor as cost vs. aggregate demand ◦ “investing the surplus” (media control - social narrative, government) ◦ C-corporations and the profit imperative

What can you buy with the surplus? How about the best government money can buy? Part one Part two

Would you like a social narrative with your Government purchase? ◦ Welfare queens ◦ The poor are lazy and deserve their lot ◦ Don’t tax the job creators (the rich) ◦ The economic crisis is due to excessive regulations ◦ If you criticize capitalism you are a traitor or a commie ◦ Raising taxes will hinder economic growth ◦ The private sector is efficient the government is not ◦ Social Security is a Ponzi scheme ◦ Immigrants steal our jobs

Robert Reich Debunking 7 economic myths in 2’ 30”

Problems with the current economic system Unstable Concentrates wealth and power Tendency towards larger entities and reduced competition Anti-democratic Socially and environmentally damaging Spectacularly wasteful

What way forward?  Localize and democratize Alternatives Strategies ◦ Defensive ◦ Pro-active ◦ Transformational

The Money System Documentary “The Money Fix” What is money? A short history of money ◦ Barter ◦ The invention of money (commonly accepted mean of exchange) ◦ Money as debt

Problems with the current monetary system Money is created with issuance of debt No money is created to repay the interests on the debt Growth imperative otherwise… Scarcity and guarantee of failures Money creation power in the hand of private elite Fundamentally undemocratic

What way forward?  Localize and democratize Alternatives ◦ Free banking system ◦ Democratic control of credit creation Strategies ◦ Expand gift exchange economy ◦ Commodity exchange economy  Expand barter  Alternative currencies and LETS  Move your money

The Public Banking Revolution

The Financial System Provides investment capital to finance economic growth Allocates investment capital The investments of today determine the world we will live in tomorrow The narrow lens of investing

Who Owns and Controls investment Capital?

Problems with the current financial system From capital as mean to capital as end in itself Holding period and stock trading Financialization of our economy Fundamentally undemocratic

Stock Trading Is About to Get 5.2 Milliseconds Faster Source: Bloomberg Business Week - March 29, 2012

What way forward?  Localize and democratize Alternatives ◦ Community Capital Strategies  Slow Money  Local Investing

Systemic intervention points Raise awareness, education Build social capital Democratize the workplace (workers owned cooperatives) Move capital ownership into the hands of the community (Land Trusts, CDFI, local government ownership e.g. public utilities, etc.) Support existing system alternatives

Responses and Alternatives (personal)  Withdraw consent and complicity ◦ Move your money ◦ Turn off TV ◦ Decolonize your mind (get your news from non-corporate media) ◦ Build trust and resilience in the community (social capital)

Responses and Alternatives (cultural and political) Challenge outdated social narratives Get educated through alternative non- corporate sources Turn off TV Stop gap political intervention at the national level Engage with the political process at the local level

Responses and Alternatives (economics and finance) Move your money! Support alternatives with purchases, employment and investments (local first!) Sharing economy (from ownership to access/use) Benefit Corporation as alternative legal structure Develop and support alternative means of exchange (local currencies, time banks) Develop gift exchange economy (Gift circles, resilience circles, pay forward, volunteering)

Joining the Great Turning Fight the system but love the people ◦ Allies can come from the most unexpected places! Keep it fun and light ◦ Make it irresistible to join your cause!