The Moral Economy Bernie Sander is Asking for Will be built on Moral Money

Today is the day of the New York primary. It is likely the day that we come to grips with the fact that the deck is stacked against the people and that the existing political machine can’t be stopped. Even as I write this the chatter of closed and moved polling places, broken machines, disenfranchised voters are clogging twitter and reddit.

Then again, Bernie might win despite the deck…whisper of a dream.

Before his movement fades, I’d like to speak respond to Senator Bernie Sanders’ speech at the Vatican this past week from a Catallaxian perspective. In the speech Sanders concludes with a profound statement that “Our challenge is mostly a moral one, to redirect our efforts and vision to the common good.” I will lay out a few points of how the Catallax system works and how it meets the call for some of the issues that Sanders puts on the table.

Before we get too deep, let’s appreciate what is happening here. A US Presidential candidate that is leading in all the general election polls is emphatically stating that Capitalism in its modern incarnation is immoral and unsustainable. This is a big thing to get over because most people in the United States see the opposite of Capitalism as Big C Communism. It isn’t. We all know that Communism as it was implemented(with authoritarian structure despite its populist rhetoric) was a Big F Failure and Big F Fragile.

No one, not even Bernie Sanders wants to go back there. We want something better. Instead of robust capitalism we want anti-fragile System X because the world is volatile and we want to thrive off of that volatility. Consider with me for a few more paragraphs that a Catallaxian framework may be System X.

So what issues with Capitalism does Sanders point to and how does the Catallax system square up with those issues?

He first points to Pope John Paul II’s definition of human freedom that in its truest sense: defends the dignity of every person and that is always oriented toward the common good.

This is a massive challenge because all the literature and study since Adam Smith laid out the invisible hand says that self-interest drives the market economy. Self-interest help set prices, it helps drive technology, it is the reason people build businesses. We have concrete evidence and examples we can point to that shows when self-interest is taken out of economic productivity the result is less productivity and even economic failure(see Big C Communism).

So let us try to flip this on its head and try to find a solution where the answer doesn’t have to be common good OR self-interest but is instead common good AND self-interest. A ‘market economy’ is supposed to do this. In fact, the term Catallaxy or Catallactics comes from this idea that the common good is an emergent property of everyone pursuing their self-interests. But it has become clear that self-interest is the dominate force in OUR market economy and that common good isn’t bubbling up to the surface as we would like.

Catallax helps overcome this problem by tying economic activity to a blockchain and having the units of account flow backwards through system via a demurrage fee. The fee that flows back to me from my participation in the economy is directly proportional to the success of those that I have paid money. In essence, we take the emergent ‘common good’ of a market economy and square its effect because each actor in the economy’s future available cash is dependent on others doing well. We attempt to maintain the power of the market economy but change the follow up to transactions from ‘here is your cash now give me my good/service and go away’ to ‘here is your cash, give me my good/service and tell me how I can make you successful so I get my cash back’.

Sanders next focuses on the Pope Leo XIII’s concerns about the market economy and the issues for that economy maintaining its morality. The issue that is raised is “the enormous wealth of a few as opposed to the poverty of the many.”

Catallax attempts to address this through the demurrage(or decay) of cash and artificial and hybrid wealth. By putting assets like cash and stock in corporations in the blockchain we can devise ways that the ownership of these things decay and flow back through our system. This does a couple of things. First, it reduces the importance of holding onto wealth. Something that decays is much less valuable than something that is immortal. This tends to reduce speculation. Why would you buy a stock certificate you have no use for if your ownership of it decays over time? Secondly it accelerates the flow of artificial assets so that they can be used to convert things into real assets. Real assets are made of atoms and require economic activity to maintain. If you have a field, you need to maintain it. You probably hire someone to cut the grass and tend to the trees. If you own a tractor you pay the mechanic to keep it from breaking down. We want to drive this kind of economic activity and eliminate the idea of ‘idle wealth’.

Sanders then points to an example in the Centesimus Annus that Society and State must ensure wage levels adequate for the maintenance of the worker and his family, including a certain amount for savings, the requirement of training and regulation to blocks the exploitation of the poor.

Catallax implicitly provides many of these things because employers have more to gain from training their employees and ensuring their future success then taking advantage of them and pushing down wages. Under our system stockholders will demand that companies train employees and help them make more in the future than in the past because employers will come to own a significant interest, and often the primary interest in the decay of their employee’s future wages.

We now see Sanders point to the reasons that the market economy has failed:

Profits dominate
Workers become disposable cogs
Vast inequalities of power and wealth lead to marginalization

We’ve already seen how Catallax addresses the second two issues through the flow of decaying cash and stock through a blockchain. What about profit dominating? This is a hard thing to kick out of the equation in a market and capitalist economy. Bernie points to John Paul II’s quote that it isn’t just any profit that is immoral, but “profit that is the result of illicit exploitation, speculation, or the breaking of solidarity among working people…has not justification and represents an abuse in the sight of God and man.” The goal of Catallax is to reduce the rationality of the kinds of profits that lead to these results.

Bernie then points to some political, moral and anthropological reasons we have found ourselves in the situation that we are in. “Unregulated globalization based on speculative finance burst through the legal, political, and moral constraints that had once served to protect the common good.” Our contention is that the existing system has evolved to a place that makes it impossible for the system to fix itself. Sanders speaks to this by using the US’s reaction to the 2008 crisis as an example. We have an economy that is operated for the top 1% and unless we fundamentally change the economy we will stay in this situation where we are rapidly losing faith in our institutions and where money rules.

Institutions are very important to our democracy and as they fail we have to prop them up. Francis Fukuyama points this out in his series on Political Order. We try to help maintain and create great institutions via our system of voluntary taxation. Catallaxy drastically reduces the complexity of collecting taxes and thus allows anyone to create quasi-government like institutions that can be focused on all sorts of infrastructure and causes that benefit the common good.

We should be clear here, we are calling for a revolution, but we hope we are putting in place an infrastructure that will bootstrap itself in a structured, bloodless, and productive way.

All of this gets done by creating the system that Sanders’ talks about that is a “financial system that servers rather than rules.” He goes on to quote Pope Francis: “the role of wealth and resources in a moral economy must be that of a servant, not master.”

How do we “overcome the globalization of indifference?” Is “a moral economy beyond our reach?” We don’t think so. We think that we overcome our current situation by implementing a moral economy that Bernie Sanders is speaking to. We don’t believe that it is going to happen through the existing channels. It is going to be based on a moral money and that moral money is the Catallax system because it meets the challenge to redirect our economic efforts and vision to the common good while maintaining the power of the market economy. David Graber points out many times in his Debt — The first 5,000 Years that Capitalism and the Market Economy are NOT the same thing. There will be a better system than capitalism and we think we have a good candidate with Catallax. Please reach out to us if you are interested in learning more at http://catallax.info or discuss with us at https://www.facebook.com/catallax/. Follow us on twitter at @hypercatallax