Article/Interview

March 2010 / Feature Articles

How Money Changes the World
An Interview with Author and Integral Economist

by Jordan MacLeod

macleodILR: Tell us about your process for writing New Currency.

JM: Well, it’s been a work in progress for a few years, but it really wasn’t until the onset of the financial crisis and other geopolitical factors that really provided the context and impetus to finish the book.

ILR: What other geopolitical factors are you speaking of?

JM: Well, the most significant was learning that Iran had mastered the ability to detonate missiles at high altitudes from (commercial) naval vessels. The only plausible purpose for such capability is launching electromagnetic pulse (EMP) attacks by detonating nuclear warheads at high altitudes overseas.

ILR: How is this connected to economics and money?

JM: Problems like Iran and North Korea are wicked in nature. Tyrants with nuclear weapons—I mean, people with an active disdain for their own people, let alone for Western civilization—it just doesn’t get any tougher than that. I certainly do not envy any world leader charged with protecting his or her own people and then having to face regimes with no interest in integrity or negotiating a reasonable outcome. The alternatives are limited if not bleak in both cases. So ultimately, I agree with Freud that in the long run the only means to counter the death instinct and destructiveness is to further the process of civilization.

ILR: Can you tell us more about what you mean by that?

JM: Well, when you have as many seemingly wicked problems as we currently do, ranging from exploding national debts to terrorism to nuclear tyrants, we’re reaching a point where the complexity of the problems are far exceeding our abilities to resolve them. In my view, containment and holding things together, often at unsustainable costs, is the most one can hope for until we’re able to make enormous breakthroughs—a quantum leap if you will—in our social capacities. This is what Freud meant. We need to dramatically evolve civilization’s capacity for sublimating the death instinct into more creative outlets. And in my interpretation of history, nothing has been more effective in doing so than the evolution of increasingly free and sophisticated economies and markets. By sophisticated, I mean more conscious and creative.

ILR: So, you are saying that you believe we need to evolve our global economy to provide an alternative to destruction and war?

JM: In the long run if not sooner, that’s precisely what I’m saying. If you are against war and conflict, you better have more than wishful thinking and anti-war demonstrations in your arsenal! You better have a handle on the need to co-create the grounded means to make war and conflict obsolete. Where else but from a more integrated and creative economy are real alternatives to war and egocentric identities going to come from? It’s categorically not to suggest six to ten billion humans are all going to dance around the maypole as a happy, global family. This is about creating conditions that allow people to work, to find a sense of dignity and purpose, to be rewarded for constructive behaviours—economically, socially and culturally—that do not undermine human civilization. And, God forbid, when such events do happen, we need an economy that is highly resilient to its impact. We have a long way to go.

Of course we’re talking about only a part of the challenges we’re facing. Our global economy will also have to evolve if it is to transcend myopic decision making and resource allocation–to get more people working–to stimulate sufficient investment in alternative energy and to generate wiser cultural stories and identities that give meaning to our lives and reverse the unravelling of our social fabric and shared prosperity.

In my view, co-creating a powerful and attractive global economy is the sole means by which we can generate effective responses to our interconnected and increasingly complex challenges. Each of us may resonate more strongly with different parts of our global challenges and emerging solutions, but it’s vital to collectively recognize how critical a new economy is for making our solutions viable.

ILR: Tell us more about the book. How can our global economy evolve?

JM: New Currency establishes money as a leverage point for economic and broader social transformation. It examines the historical evolution of money and economic systems and their interdependent co-emergence with novel subjective stages of development. The evolution of our values, or of what Robert Kegan calls subject-object relations, is constantly altering our capacity to relate with the external world. And at the heart of this relationship—at least for civilized society—is our relationship with money. So what’s key to understand here is that how we hold money sets in motion the properties and propensities of our whole economic system and what’s possible in the broader social system. We are not in some final end state in monetary theory that is perfectly objective and scientific in nature. There is an indispensable subjective dynamic that means money is fully in our power to change in accordance with our evolving values, life conditions and aspirations. But I cannot emphasize enough that this change is not at all arbitrary.

ILR: Why is that so important?

JM: Because each economic stage transcends and includes what preceded it. Therefore, the currencies we create must reflect not only our values, but provide very tangible solutions to preceding problems. It is very tempting to take one part of the problem—say inflation or arbitrary, centralized power–we’re facing and design a currency that addresses that specific part. Yet, unless the monetary design addresses the whole of our problems and opportunities, it is necessarily going to lead to pre/trans fallacies. Or to say it another way, we’ll solve one problem only to suffer unintended consequences that make the overall problem worse!

So, as we take into account the evolutionary patterns of money and economic systems, we notice a couple of critical trends. First, there’s the dematerialization of money—which is well documented. What this means is that we’ve gone from our first currencies being cows (yes cows!) and found objects such as shells, stones and so on to increasingly abstract currencies such as coins and paper money and now to digital currencies.

The second trend is the dematerialization of value. The earliest currencies were the most dense, with cows being the most obvious example and then later we see the emergence of coins made out of precious metal. Over time, we see a clear process of money increasingly relying less on material stuff (such as gold) to guarantee its value and more on its function as a medium of exchange to ensure its value. These processes have been what have enabled money to become increasingly relevant, standardized and accessible to an increasing depth and span of humanity over time. Money, imperfections notwithstanding, has evolved to become compatible with more value systems from more parts of the world than at any point in human history. And there is no question that this has helped align international interests and co-operation to an unprecedented degree, as we’ve seen with the global response to the financial crisis and emergence of the G20. Money is increasingly becoming a universal language.

Today, it is the very fact that a dollar is needed to buy commodities that primarily ensures its value stays in tact. So it is this dematerialization of form and value that has enabled it to function, albeit imperfectly, as a global reserve currency for most of humanity.

ILR: Yet it also appears to be highly vulnerable.

JM: Precisely. Since Nixon took the US Dollar off of the Gold Standard, there’s been a widespread perception of an evolutionary wrong turn towards a kind of worthless paper. Yet, that step was necessary to enable the money supply to grow to meet the booming global demand caused by economic growth. At the same time, it is indeed vulnerable to inflation, sell-offs, and so on. So we’re really within an economic stage that is half-baked. The global economy is too integrated and large to go back to commodity based currencies without sending those materials into the stratosphere and thereby making them inaccessible to most of humanity. So we need to go forward. And that means designing currencies to be far more elastic and responsive to changes in demand to ensure stable value and to account for the number of paradigmatic problems currently coming to the fore such as unemployment, growth in a finite planet, discounting the future, income inequality, inflation, boom and busts, and so on. This is what the book attempts to address, along with the complementary subjective understanding that is so necessary to make sense of it.

ILR: This is where you speak of the connection between narcissism and money?

JM: Yes. The book shows this connection and how money is essentially designed to represent an idealized self, fundamentally separated from nature. This manifests in the economic sphere as a devaluing of nature and an absence of limits on economic activity and production. Quite literally, I propose that the antidote for cultural narcissism is realizing humility in our collective relationships with money and economic processes. There are very specific tools that make this possible and they are discussed in detail.

ILR: How do you think these tools might gain currency in our contentious societies?

JM: That’s a great question. I think they’re only likely to be valued when we collectively realize that this economic system is failing on so many levels—despite the enormous and unprecedented contributions it has made. Money and finance happens to be where we collectively have the most ego-investment and resistance to change so I don’t see it happening any other way. Yet, we see already on Main Street that people are actively looking for alternatives to leaving their money with those they perceive as having acted irresponsibly. As the system fails to solve problems and meet our needs, there’s no doubt that we’ll all have an opportunity to put our money where our mouth is, if you will. There will be a tremendous need to restore trust and to get money flowing again into the hands of entrepreneurs and small businesses and we now have the tools at hand capable of making this happen.

ILR: Can you tell us what’s next for you?

JM: Right now, I’m writing a follow-up book called Onement. This will be the second book in what we’re calling the ”New Currency” trilogy. This book looks at how a new currency could enable the creation of what Kevin Kelly calls the “One Machine;” and also the potential implications of that on consciousness and our economic and political processes. It’s an exit strategy from the current financial crisis and also an entrance strategy for realizing an emerging stage of development. The third book is called Ego, Money, Empire…

ILR: That’s a loaded title!

JM: (laughing) It is. The book examines the interdependent and evolving nature of these three worldly vehicles. I strongly feel that it’s critical to contextualize all three in such a way that we can recognize their historical value and transcend emotionalized relationships with all three that are prone to demonizing or (often unconscious) worshipping. All three have to do of course with our animal nature, our limited identities and mediating our sense of separateness…None of which we have fully transcended as much as we would like to! The desire and wish to transcend these worldly aspects leaves us prone to naiveté and shadow. The reality of course is that only a handful of human beings have actually done so.

This is something that needs to be taken very seriously, as our yearning for evolution and ascendance can leave us highly vulnerable and naive to the abundance of destructive forces on the planet. I am certainly trying to bring in what I call an evolutionary realism that puts into context the emerging breakthroughs in economic theory and geopolitics. But hopefully it also reminds us to keep our feet on the ground and stay real about the persistence of regressive forces that really would like nothing more than to see humanity’s evolutionary project fail. So as we learn to respect the vital evolutionary functions of each to sublimate and immunize our social systems against destructiveness, we can increasingly see them as impersonal objects and tools rather than identifying with them as subjects, as who we are or who I am. And the more we do that, the more we’ll be able to integrate them collectively into the service of our higher Selves and create the conditions for flourishing as a species.

About the Author

Jordan MacLeod is the author of New Currency: How Money Changes the World as We Know It. He is a co-founder of Elevator Software Corp., the New Currency Institute and Cornerstone Global Associates. He can be emailed at jm@newcurrency.org

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