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Tyee Books

'Life Inc.'

Wanting stuff isn't the problem but money is. Douglas Rushkoff dissects our economic mess.

By Peter Tupper 26 Jun 2009 |

Vancouver-based Peter Tupper writes for many publications. Read his previous Tyee pieces here.

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Time to reimagine our currency system?
  • Life Inc.: How the World Became a Corporation and How to Take It Back
  • Douglas Rushkoff
  • Random House (2009)

General Motors is putting up a good front, smiling through the pain of declaring bankruptcy in June 2009, with energetic, hopeful commercials. A crisis is just an opportunity in disguise, right?

There's a certain schadenfreude to be had in the economic news in 2009, if you're of a certain leftist bent, or maybe just "I told you so." Each news story on a bankruptcy or bailout is a teaching moment for thinking about the economy. A lot of the discussion, however, breaks down into rather familiar right-wing and left-wing arguments, leaving one wishing for a new and deeper perspective.

Douglas Rushkoff is just such a "big picture" kind of thinker, always looking for the underlying ideas and assumptions of social phenomenon. His latest book, Life Inc., lays out his diagnosis of the current economic crisis and his historical account of how we got here.

A price for everything

Rushkoff's culprit for the current mess is not capitalism, but corporatism. Corporatism is based on two related assumptions: that humans are rational, self-interested economic actors, and that money must be lent into existence from a central authority. These are the new ideas of the Renaissance, six centuries ago, and led to states chartering corporations that had limited liability and controlled monopolies. In this account, the modern money world began long before the economic thinkers of the Enlightenment like Adam Smith.

Along the way, the dark side of those two ideas became apparent: the belief that humans are selfish and irrational, and that capital must always seek to absorb more capital. Corporations became immortal, legal persons whose power and territories often eclipsed those of the states that chartered them. Money became increasingly separate from any real good or service, just numbers to be juggled around on a balance sheet. Nothing means anything unless it affects the bottom line.

This world view trickles down, so to speak, to individual actions, particularly at the ragged edge of corporatism. Sales clerks are forced to work under commission schemes that discourage cooperation. People who have lost their jobs and homes shell out thousands of dollars to attend Learning Annex seminars on how to take advantage of other people who have lost their jobs and homes. If you think of your house as an asset, not a home, used to leverage your way to some other, better neighbourhood, there's no reason to care about the people who live next door. They don't help your bottom line.

All of this goes to serve the virtual economy of traders, and bankers finding increasingly convoluted ways to play around with money that has no relation to any real good or service. It's so hungry for new markets that there are entire sub-economies in online virtual worlds like Second Life and EVE Online, which are now part of the worldwide economy. Even when we play in fantasy worlds, we think in terms of money. The epitome of the global virtual economy are "gold farmers", people, usually in China or Mexico, who are paid pittances to run characters in games like World of Warcraft who make low grade goods to sell for the virtual currency that players in the developed world purchase with real money so they can skip the boring parts of the games.

Money, root of all evil

It's a breathless narrative that veers dangerously close to conspiracy theory in places. There's a determinism to his story that suggests an intelligent goal rather than the "invisible hand" of the market.

Perhaps the biggest flaw in Rushkoff's book is the assertion that before corporatism, society was more humane. It's the prelapsarian assumption that once there was a perfect way of life and then somebody had to eat that apple from the tree and ruin everything. It ignores just how nasty, brutish and short pre-modern life could be. Every once in a while Rushkoff takes a break and grudgingly allows that modernity has its good points, but then he goes back to cataloguing the crimes of corporatism. Much of this isn't really news to anyone who's ever picked up a copy of Adbusters, watched the documentary The Corporation or read other works of social-economic commentary like Barbara Ehrenreich's Nickeled and Dimed. It needs to be said again, particularly at this moment, but it doesn't explore new ground.

Where Life Inc. gets interesting and introduces ideas that haven't already been covered in other critiques of late capitalism, is when Rushkoff introduces the bold idea that money itself is the problem.

This does not mean that material goods are the problem. The problem is the rules and assumptions by which money operates. We take money for granted, like gravity; it can't possibly work any other way. Can it?

Rushkoff contrasts centralized currency, which is lent into existence by state-chartered banks and is always draining away because of interest, with localized currency, which is based on actual goods and labour. One suctions value out of the periphery into the centre, the other generates value from the periphery and keeps it there. Most of every dollar spent at Starbucks goes to its corporate coffers, instead of cycling back into the local economy.

Historically, market economies, as they expanded across the world through colonialism, have vigorously absorbed or destroyed other economies, such as barter economies or gift economies like the potlach.

Free book ahead

In the high Middle Ages, people used a variety of local currencies as well as centralized currencies, each for different functions. Local currencies were receipts based on grain or other goods, and were intended to devalue over time, so instead of hoarding their capital in some distant centralized bank, users would reinvest in the local economy and infrastructure. Value came from the periphery and stayed there.

Monarchs, notably Philip IV of France in the early 14th century, pushed for centralized banking and currency, and banned other currencies. In Rushkoff's narrative, the rise of centralized currencies was the original sin, creating a cascade of political and social changes that resulted, on the individual level, of lower standards of living, loss of liberty, poorer diet and health, and even witch burnings. State-chartered corporations had such an insatiable appetite for capital that they kicked off the colonization boom and Atlantic slavery, the effects of which are still being felt today. Even the Black Plague was aggravated by the poorer living conditions.

Much of this is drawn from the work of Belgian economist Bernard Lietaer. (You can read the complete text of his 2001 book, The Future of Money, online for free.)

Rushkoff paints such an idyllic picture of life in late Medieval Europe that is so at odds with perceived wisdom that it is difficult to swallow. You need a book work of evidence to justifying such a bold claim, and Life Inc. doesn't devote enough pages to supporting it.

In search of better money

If you dial down Rushkoff's rhetoric about centralized capital being Western civilization's fall from grace, there's still a sound thesis and a provocative idea in Life Inc.

In the modern age, complementary currencies can function as an alternative and adjunct to the centralized money economy. One of the most developed implementations of this idea is LETS (Local Exchange Trading System), created by Michael Linton and implemented in the Comox Valley right here in British Columbia. Linton's idea, as discussed in an earlier Tyee article, was that goods and services be traded, through a medium of credits in a local registry or printed notes, in a local area. It can be as simple as a ledger of babysitting services or complex enough for local merchants. No inflation, no interest, your supposedly ethical fund won't back child soldiers in Africa, and your retirement fund won't evaporate.

LETS-type systems have been implemented all over the world. During the mid-90s economic crisis in Japan, people organized to look after their elderly relatives, creating a credit system that is now accepted in hundreds of centres. Victoria is now home to an active LETS.

The audacious idea that we can have better money is fascinating enough to merit a book on its own, exploring how complementary currencies and local economies work in different settings around the world. It's a shame that Rushkoff doesn't get into this idea until 160 pages into a 240-page book, and even then he spends much of the remainder arguing that market capitalism is too voracious and efficient at assimilating dissent. Driving a hybrid, buying carbon credits, starting a blog or adopting the snarky cynicism of Stephen Colbert ultimately just feeds the beast. Even ideas for designing new, more humane urban space like Jane Jacobs' New Urbanism are appropriated to put a veneer on the same old shopping mall, which in turn was originally supposed to have public libraries and meeting rooms.

Bring on the breakdown?

Rushkoff's answer, somewhat oversimplified, is dropping out of the rat race, turning off the high def plasma TV and starting a community garden. Screw General Motors and VISA.

This gets uncomfortably close to the romantic primitivism of Chuck Palahniuk's Fight Club or James Howard Kuntsler's World Made By Hand, an almost gleeful yearning for civilization to collapse and be rebuilt the right way. Small scale communities carry their own baggage of conformity, inequality and violence. Sure, people used to hang out and shoot the breeze at the lunch counter at the five-and-dime; they also had lynchings. There's a hint of the the dark side of the Frankfurt School of anthropology here, a nostalgia for our pre-industrial past of society based on family and religion. If we cure modern anomie, do we also undo six centuries of liberalization?

If there's a solution to modernity, it is not to be found in turning away from the vast, complex, diverse, interconnected world modernity has created. If an election in Iran is stolen, it does matter to people in Vancouver, and not just those who have relatives back home. Should it matter more than the guy asking for change on the street outside the drugstore? Perhaps not, but neither should be ignored.

Life Inc. isn't quite more than the sum of its parts: an anti-corporate editorial, plus a historical essay that needs a lot more evidence, plus an economic primer. The most exciting and hopeful component, the idea of complementary currencies and local economies being a way out of the virtual economy, gets frustratingly few pages. For a book that urges the small-scale, do-it-yourself approach to changing the world, it stops short of giving any idea of how to start such a system.

Watching the economic news, it's hard to escape the feeling that we're watching a 600-year-old Ponzi scheme finally collapse, and we regular folks are the ones who will be stuck with the bill. But if you accept the idea that money isn't just for the Bank of Canada any more, then hope isn't just for General Motors either.