Friday, 28 December 2012

The Age of Consent: A Manifesto for a New World Order




New Press, The

Review by
Ronald J.
Glossop, November 18, 2010

George Monbiot admits that as of 2003 he and the Global Justice Movement to which he belongs and to whom this book is addressed have misdiagnosed the cause of the current global sickness and consequently have offered the wrong prescriptions (p. 2). The problem which needs to be confronted, he says, is not economic globalization but the lack of democratic political globalization.
His thesis is spelled out in the first two paragraphs. "Everything has been globalized except our consent. Democracy alone has been confined to the nation state." "This book is an attempt to describe a world run on . . . the principle of democracy. It is an attempt to replace our Age of Coercion with an Age of Consent." He later restates the point. "As everything has been globalized except democracy, the rulers of the world can go about their business without reference to ourselves. Unsurprisingly, therefore, many—perhaps most—of the decisions they make conflict with the interests of the majority, and reflect only those of the dominant minority" (pp.83-84).
This book aims to redirect the thinking and actions of the mostly young people who protest against the power of multinational corporations and the World Bank and the IMF and the rich and powerful generally. They mistakenly think the problem is globalization. Consequently they tend to overlook the possibility of political globalization, of democracy at the global level, which is the only thing that can defeat the existing unjust economic globalization. Monbiot wants to correct this lack. To do that he needs to make the case for democracy as "the least worst political system," which he aims to do in chapter 2. He provides an incisive critique of Marxism (pp. 26-30) and anarchism (pp. 30-40). Monbiot recognizes that democracies can experience some difficulties such as the tyranny of the majority but concludes that a democratic political system is a "self-refining experiment in collective action" (p. 46). At the national level the superiority of a democratic system is generally recognized. What still needs to be recognized is the superiority of democracy at the global level.
In chapter 3 Monbiot critiques the ideas that the way to undercut the present power of transnational corporations is to localize activities or to practice voluntary simplicity. Such approaches are available only to the fairly well off and are not going to help the poor of the world because they do nothing to check the power of the powerful. Monbiot rejects the approach of "realists" like George Soros who confine their proposals to what the authorities who control the world "are ready to consider." If we so restrict our thinking, "we may as well give up and leave the authorities to run the world unmolested" (p. 63). It is characteristic of every revolution that it was "described as ‘unrealistic' just a few years before it happened" (p. 65).
The challenge is how to create a world parliament. The first step is to realize that the U.N. as presently constituted isn't democratic and can't be made democratic. The same is true of the Inter-Parliamentary Union composed of members of national parliaments. A parliament of representatives from NGOs also wouldn't work because someone would need to decide which NGOs get to participate and which ones don't. Monbiot concludes that a world parliament must consist of directly elected representatives from 600 districts of 10 million people each and with no regard to national boundaries. The meetings of the World Social Forum provide a model. An election commission to draw district boundaries could be established. Monbiot outlines how obstacles such as funding and resistance from national governments, especially nondemocratic ones, could be overcome. He notes that "building a world parliament is not the same as building a world government" (p. 93) because the world parliament he proposes would, at least at first, have only moral power. But history shows that popular groups exercising only moral power have exerted much influence. Monbiot discusses at length various difficulties that a world parliament would likely encounter and gives his proposals for how to deal with them.
In the fifth and sixth chapters Monbiot argues that we can move from nationalism and inter-nationalism to globalism "only when nation-states cease to exist" (p. 139). [That is a point which world federalists would not accept. The creation of the United States did not require the elimination of the states but only their subordination to the new central federal government.] The huge and growing gap between rich and poor in the world is due to the trading system set up by national goverments and subsequently by the inter-national institutions created by them. The International Monetary Fund and the World Bank have coerced the poorer countries into adopting policies such as reducing public expenditures on education that are harmful to themselves. In order to repay their debts these poor countries are forced to sell raw materials at artificially low prices. In 1944 Keynes proposed an international Clearing Union which would have stabilized currencies and equalized trading between rich and poor countries, but the U.S.'s Harry Dexter White rejected the idea.
Given the existing international system, the one option available to the poor nations is to just refuse to pay their debts unless the international institutions are changed. The huge inequalities in the world can be corrected only by trade rules which help the poor countries rather than a free-trade system based on the notion that the trade rules must be the same for all, rich or poor. History shows how the developed countries all practiced protectionism for their infant industries, but that possibility is being denied to the presently developing countries because of the demand for "free trade." International regulation is needed, but by a Fair Trade Organization whose policies would enable poor countries to advance economically while protecting workers' rights and the environment.
In the final chapter Monbiot urges members of the movement for social justice to join in collective nonviolent revolutionary action. Work together, he pleads, to build a world parliament, a Free Trade Organization, and an International Clearing Union. It is obvious that "governments will not act on our behalf until we force them to do so" (p. 261).
This book is a well-documented, well-reasoned plea for revolutionary action to change the existing global system by which the rich and powerful not only maintain but can even increase the discrepancy between the haves and have-nots in the world. Monbiot adroitly analyzes what is happening and why, and he astutely notes the places where changes need to begin. But it remains to be seen whether the people are able to make a difference if and when they take the actions he recommends.

Ronald J. Glossop is Professor Emeritus of Philosophy and Peace Studies at Southern Illinois University at Edwardsville and author of Philosophy: An Introduction to Its Problems & Vocabulary (1974), World Federation? (1993) and Confronting War (4th ed., 2001).  Ref Global

Jesus is My Economist

In conjunction with Union Theological Seminary in New York, INET has created an Economics and Theology lecture series that brings the deeper insights of theology to bear on economic issues. Reverend Dr. Serene Jones is the President of Union and a panelist in the Economics and Theology series. She recently published this piece at Equity News reflecting on the series and offering her own insights into what religion can say about economics.
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Originally posted on Equity News
By Serene Jones
As our nation focuses on economic issues such as fiscal cliffs and tax rates, it is odd to see the topic of faith, underlying election issues just six weeks ago, recede completely from sight. It’s odd because in contrast to hot-button topics like gay marriage, gun-control, and reproductive rights, Christian scriptures have much to say about economics. In fact, few topics are more important.
Granted, Jesus was no economist. But open any Bible and within a few seconds of reading, economic matters surface. Its teaching is unambiguous. Page after page of Gospel accounts of Jesus’ life are filled with his fierce denunciation of gross inequality and his unequivocal condemnation of those who turn their backs on the poor. He wanted society to be better for everyone, particularly the most vulnerable. And he demanded that faithful people make it happen.
If this is true in Jesus’ time, why, then, is it not part of our shared conversations about economic life today? What are we missing? This is the ground covered in the new lecture series on Economics & Theology co-sponsored by the Institute for New Economic Thinking and the institution I head, Union Theological Seminary. Two Nobel Prize winning economists, Joseph E. Stiglitz and George Akerlof, delivered the first two lectures, to packed audiences, eager for fresh thought and guidance.
What has emerged? Two lessons. One, Economic theory is replete with theological and moral assumptions about human nature and society. And two, economics is too important to be left to the economists.
Economics has many assumptions about the purpose of life and about how “good or bad” people are. These judgments rarely catch the attention of our economic theorists … but they nonetheless condition and shape everything that economists say. In their work, both Stiglitz and Akerlof discuss these values and their implications. Both challenged the rosy economic notions that preceded the collapse of 2008, among them the idealized belief in the stability of unfettered capitalism. They also have challenged the idea that free markets were somehow inherently capable of self-correction and don’t need government regulation to function fairly. Given human nature and given our present system, they both point out that it’s no wonder that the economy went off the rails.
Stiglitz is correct when he says that government policies favoring the America’s top 1 percent are morally indefensible and ultimately undermine the well-being of everyone, including the rich. As it is, the top 1 percent control 40 percent of the country’s wealth. In addition, the 1 percent has overwhelming access to policy makers who rig the rules in favor of those with the highest incomes. America’s rising inequality at the top means an increasing number of people in the middle and at the bottom have fewer opportunities, which challenges the fundamental moral values of fairness and equality that most Americans have traditionally taken for granted.
Akerlof also weighs moral issues. He talks about so-called “animal spirits” in economics, analyzing the manner in which psychology, emotions and even “irrational exuberance” influences capitalism. Akerlof was one of the very few economists who foresaw the housing bubble before the collapse. He combines the science of economics with a clear-eyed vision of the fallibility of human beings.
Listening to both of these expansive thinkers makes it clear that understanding economics must not be treated as if it is beyond the moral competence of ordinary people. The subject is complex, but not unintelligible. Just as war is too important to leave to generals, it’s clear that economics is far too vital to leave solely to the economists.
Thinking critically about economics requires that we question our underlying values and their impact on society. For example, I would argue that rather than being merely faceless economic units, we all have a moral responsibility for the care of each other. At the same time, I also have a profound faith-based belief that people are inescapably motivated by greed and self-interest and can (and inevitably will) act in deeply harmful ways. And people, with all their flaws, run markets. Why, then, could anyone believe that they were above manipulation — or error? Given this, we should support regulations that constrain our greed and protect our neighbor. Although we are incapable of creating Utopia, we are morally bound to create a world in which all people have a chance to flourish.
Since it is the holiday season, I’d like to end up with this timely image. If the current economy were the original Christmas scene, the innkeeper — in the form of the wealthiest among us and the economic theorists supporting them — would turn away the 99 percent. The result? It would be a mighty crowded manger. Does that seem right?
Shift the lens slightly …
We live in a democracy in which we supposedly share of work of innkeeping. This nation is our shared living-space, and its up to us to see that there are healthy clean rooms for everyone.

The Future of Economics: Bruce Caldwell on History and the Dismal Science

Your average economics textbook presents the neat image of a discipline with many useful conceptual paradigms for viewing the world. But it almost never gives any sense of how these ideas developed.
And as it turns out, the actual history of economics, like that of every science, is much messier.
That was Bruce Caldwell’s message in his recent address to the Southern Economics Association in November. (Click below to download a PDF of the speech as prepared for address).
Caldwell – an INET Advisory Board member, Director of the Center for the History of Political Economy at Duke University, and one of the world’s foremost Hayek scholars – makes the case that the study of the history of economics should be an essential part of training future economists.
“Ideas matter,” he says. “They have consequences for how we see the world and organize our practice.” And understanding how those ideas developed should be an important part of the program.
Caldwell uses the case of the a long-discredited philosophy of positivism and it’s still-lingering affects on economics to demonstrate his point.
Many economists in the 20th century claimed the mantle of a positive science, Caldwell suggests, “to defend the proposition that the social sciences are, really truly are, scientific,” even though positivism was no longer accepted in philosophy of science.
And even worse, many staked out positivist positions without knowing they were doing so. The lack of self-awareness and historical perspective were both a symptom and a cause that still persist in the discipline today.
The problem with the positivist approach was one that Hayek himself identified in his criticism of economics. “For Hayek,” Caldwell says, “scientistic doctrines (the adjective was a pejorative for him) claimed the mantle of science, but were in reality unscientific.” And positivist economics was no exception.
Over time the influence of positivism has faded in economics as more diverse approaches to the dismal science have been accepted. But economics’ positivist residue remains evident as it has kept one key part of the discipline out of the citadel: economic history and the history of economic thought.
Caldwell argues that this omission is a serious mistake, especially in the wake of a financial crisis that economists missed despite the obvious historical precedents. And this mistake can’t be attributed to a lack of demand, as economics students are now practically beating down the door to have access to courses in the history of economics.
The future of the profession, Caldwell suggests, lies in a return to these more context-sensitive approaches that understand history is essential. And at Duke, he is leading the charge.
The good news is that more and more of the economists of the future seem to agree.
Of Positivism and the History of Economic Thought.pdf211.72 KB

Monday, 24 December 2012

The Next (Regenerative) Industrial Age.....

                   Ref    Capital Institute Blog

The Next (Regenerative) Industrial Age: The Story of the Manufacturing Renaissance Campaign

 Our First Digitally Enhanced Field Guide Story Just Released! 

The Next (Regenerative) Industrial Age: The Story of the Manufacturing Renaissance Campaign, is the Field Guide to Investing in a Regenerative Economy initiative's first eBook. With the eBook format we hope to engage you in a more immersive way in the regenerative economy storytelling experience. Our free eBook is available in its most digitally enhanced format as an iBook for the iPad. The iBook includes photo galleries, videos, and extensive hyperlinking to external resources.  We also encourage you to access the direct email links in the eBook to share with us your own regenerative economy stories and reflections. For those who don't have access to an eReader we have also published the eBook on the Vook web-based platform. Free Nook and Kindle versions will be released soon.

About the Manufacturing Renaissance Campaign

After bearing witness over the past three decades to a relentless stream of plant closings, jobs off shored, and communities devastated by industrial accidents, it is little wonder that Americans are likely to describe what they once considered their vibrant domestic manufacturing economy in three words: dirty, dangerous, and dead-ended. Over those same decades the Center for Labor and Community Research and its visionary founder Dan Swinney have been studying the root causes of manufacturing’s fall from grace. What they began to chronicle, beyond the obvious globalization pressures, was the untold story of otherwise healthy, small- to medium-sized private companies that had failed to effectively plan for either management or ownership succession, and as a result had no alternative but to sell out to Wall Street LBO engineers and industrial consolidators who had no commitment to the long-term stewardship of their businesses. Equally troubling was what they uncovered of the public sector’s (and in particular, public education’s) failure to respond to the changing nature and requirements of American manufacturing.
At the same time CLCR has been attempting to frame a discussion around the regenerative role manufacturing can and must play in a new industrial age. CLCR’s initiative, the Manufacturing Renaissance Campaign (MRC) and its Polytechnic Career Program, now incubating at Austin Polytechnical Academy in inner city Chicago, is now scaling up into a national effort. The MRC is forging partnerships among leaders of government, organized labor, public education, the private sector and civil society who have put their differences aside to rally around a shared belief: that manufacturing, in its current advanced evolution, can and must be mobilized to restore the damaged societal and biophysical systems that represent the dark side of its legacy.

Read the eBook of "The Next (Regenerative) Industrial Age: The Story of the Manufacturing Renaissance Campaign"

Friday, 21 December 2012

The Economics of Abundance

photo of Michel Bauwens

Michel Bauwens
20th December 2012

Republished from Wouter Tebbens:

“Now let me intent to summarise Wolfgang Hoeschele’s book:
* Wolfgang Hoeschele. The Economics of Abundance: A Political Economy of Freedom, Equity, and Sustainability. Gower Publishing, 2010

The creation of scarcity

In the first part of the book, Hoeschele addresses the production of scarcity. The mechanisms designed to create artificial scarcity he calls “scarcity generating institutions”. This concept proves a strong guide to analyse the root causes of social wrongs, or in his words: “the economic concept of scarcity as a window on the entire political economy of today”.
While mainstream economics defines economics as a science about the allocation of scarce resources, most resources are considered scarce in the light of unlimited human wants. Instead we can observe that human wants are in fact not unlimited, but capitalist institutions seek to continuously generate new forms of scarcity by creating ever new needs. “Once scarcity has been generated, it can be exploited to ccumulate power and yield profit.” Scarcity is a means toward the end of profit maximisation. In order to counter this vision of the economy, Hoeschele brings together alternative approaches, which challenges the most basic current suppositions, and aims at putting an end to scarcity by creating abundance.
First of all we can take a critical look at human wants: instead of asking whether our needs are indeed unlimited, we could revise which wants are real needs. The multiplication of desires leads to unhappiness. “But contemporary economic discourse discourages from considering any methods to increase happiness that do not maximise consumption. Modern economic thought is the first system of thought to support the idea that greed is good, or at least that it is universal among our species, and that it can be used as a force for “progress”. While greed maybe widespread among our species, it is also a trait that makes it more difficult, if not impossible to be happy. The greedy person deludes herself into believing that acquiring the next thing will make her happy, and it is this very powerful delusion which is exploited by the forces that promote economic growth. The aim of this exploitation is not happiness, but profit, which is itself a delusion, because the greedy person grabbing the profit has come no nearer to happiness herself.”
About the radical monopoly of the car: once most people own a car and public transport is destroyed or limited, neighbourhood shops disappear because they cannot achieve the economies of scale enjoyed by the big stores that can attract customers from large distances. The downtown declines, because it becomes difficult to access, instead, suburban towns take over. After a point, it becomes impossible to reach many destinations without a car. In short, car ownership is enforced, even for people who must go into debt to buy a car. The same can be observed with mobile phones. Once most people own a mobile phone, those few who don’t, get isolated. Similar with Internet access. In many social contexts certain levels of consumption are considered obligatory in order to “belong”. Thus, constantly escalating consumption is enforced. This represents a loss of freedom for those people who either do not want to buy these things or cannot afford them. However, increased consumption is always represented as pure progress…
About the depletion and degradation of natural resources Hoeschele observes that fossil fuels have been treated as more abundant than renewable energy resources. They are however only “abundant” in the sense that, once they have been located, mined, and transported, very large quantities can be used at any given place and time. They are ultimately scarce, because they cannot be regenerated within a timescale relevant for human civilisation.
Scarcity can be generated in three ways: a) by reducing the total amount of a good or service ; b) by placing barriers between people and a good (a bottleneck), c) new wants or needs can be creaed, or existing ones modified, so that demand for a commodity exceeds supply.
Religion and ideology places barriers between people and spiritual development. They act as a bottleneck between people and their own peace of mind. Additionally, most religions and ideologies have created hierarchies, distinguishing people who are considered superior from those considered inferior. Privileging of men and subordination of women ranks surely as one of the most ancient forms of hierarchies in human society and create dependency releationships, and thus scarcity.
Some form of violence is involved in arguably all modes of scarcity generation. Oppressed people will resist if they can, which is however suppressed in many cases. The means of violence are controlled by a small group, constituting another “scarce” commodity: security.
About property: Hoeschele discusses public, private and common property and observes how unlimited wants in the West deplete fishing waters in other regions. At the same time, a commons, or common property, as governed by its own members can constitute a practical form of abundance, in the case of fishing, with fishing seasons and rules set to manage the fisheries despite the commercial pressures.
When private ownership is more or less equally distributed, a private property regime can lead to abundance. However “a highly unequal distribution of property allows for the emergence of monopolies and oligopolies. If only a few sellers (or a few buyers) dominate a market, they can create botllenecks and therefore scarcities for others by manipulating prices, and therefore secure extraordinary profits.” And that is what we see in many of the most profitable economic sectors.
As we have observed elsewhere, patents are one of the most used legal instruments to create oligoplies (see also Michel Boldrin and David Levine: Against Intellectual Monopoly). Hoeschele discusses the damage patents have caused by creating artificial scarcities in many industries. Initially he handles the issue of patents with caution, presenting it as a “two-edged sword: excessive patent protection will enable the creation of overly powerful monopolies that are extremely difficult to destroy, but insufficient patent protection would slow technological progress.” This is indeed the rationale behind patent rights as they were initially designed. However, in the Age of the Internet, innovation has shown to evolve much more rapidly when developers and inventors can freely build on the ideas of others, leading to dynamic, accelerated innovation. It has been argued by a growing numer of researchers that with the increasing complexity of high-tech products and production processes, one can easily infringe on an idea of others, and a legal minefield has grown, which tends to slow down innovation and leads to stark market concentrations. Cf. the mobile phone market or software. Software patents in particular have been fiercely resisted by small companies and civil society in Europe (FFII/software patents) and also in the USA, one of the few countries where software patents are instituted. As Hoeschele correctly points out: “more research may be needed to find out whether one’s own innovations violate some patent or copyright, than to develop the software itself”.
On a more critical note he points out the geography of scarcities, “..if patents either did not exist or provided far fewer privileges for patent-holders, it would be extremely difficult for any group of countries to retain a monopoly over the technologically advanced industries of the world, and hence it would not be necessary to discuss the “problem” of technology transfer. Far more people all over the world would be enabled to make use of new techologies, and technical knowledge would be used to empower rather than to control.”
Development: if the goal is to end poverty, it is primarily necessary to redistribute productive assets to the people who actualy use them (by such means as “land to the tiller” agrarian reform, for example) and to provide for comprehensive basic education and health care, deploying teachers, doctors and nurses from within the country who can be paid in local currency. This goal requires practically no foreign currency (as happened in Kerala, India). If the goal is to promote domestic industries geared towards producing affordable goods for ordinary people, a modest degree of protectionism plus a disregard of foreign patents will also be quite effective, while requiring little finance from abroad. Such policies will produce no miracles, but neither will they produce long-term debt dependency, nor require governments to be responsible to foreign sources of finance rather than to their own people.
Let us analyse the conditions for monetary transations in a market that can create abundance for all parties involved:
a) both parties to the exchange must be free to withdraw from the exchange if they wish;
b) both buyers and sellers have good information about the market and the goods offered,
c) no outside force (such as a State) imposes prices or somehow manipulates supply and demand,
d) there is little fraud, e) there are means available to resolve conflicts and enforce contracts.
These conditions were first expressed for a “free market” by Adam Smith and were later further developed by many others. It is clear that in many actually existing markets these conditions are not fulfilled or not completely and they create scarcity for some of the participants. Or to put it more bluntly: no real free market has been observed ever. In the book “Markets not Capitalism” edited by Gary Chartier and Charles Johnson (book), the concept of the Freed Market is introduced, to signify a non-capitalist market that adheres to the above mentioned conditions. As markets can contribute, and have done so for millenia, to enhance the freedoms of its users to exchange their produce, maybe we should indeed talk about freed markets (or liberated markets) to avoid confusion with neoliberal “free market” discourse.

Is there an alternative?
TINA: “There Is No Alternative” was Margaret Thatcher’s slogan in the 1980′s (“es lo que hay” in Spanish, “that is what there is”). In other words, people believe there is no freedom of choice about how we are to organise our economy and society. We’re trapped in the belief that real change is not possible.

Paths towards Abundance
Hoeschele points out several important aspects of the path towards abundance. In order to escape from the cycle of ever new scarcity generation, we need to create abundance-generating institutions and break down or reform scarcity-generating institutions so that they work towards abundance generation.
First of all, we should adapt our lifestyle to want what we really want. In line with the degrowth movement, he suggests to change from consumerism towards “wholeness and the art of living”. While this may sound a spiritual exercise, it is clear that we can’t go on to always want more; as Maslow showed with his pyramid of human needs, after material needs are covered, we can focus on self-realisation. But this can only be realised if income and GNP are much better distributed. Both social democratic reformism and communist revolution tend to regard increasing equity of income distribution as a zero-sum game: resources need to be redistributed from the rich to the poor; the gains of the poor are the losses of the rich. In both ways, state intervention is needed, which by doing so, reduces individual freedom.
Wholeness, or “life as art” contrasts with “life as profit maximisation”, which depends on others failing to make profits, in a regime where the desire for “freedom” is played against the desire for social justice, while ignoring that any freedom that not be enjoyed by everybody at once is merely privilege.
Imagining a society that revolves around life as art, Hoeschele foresees public action to reduce scarcities to enable people to practice life as art, even if one has little income, and by ensuring that everyone has access to the resources they need. To show the changed attitute he mentions: “The phenomenon that ssome people cannot be happy even at a high level of material consumption will not be seen as a justification for more consumption, but rather as a pathology akin to alcoholism or overeating.” He calls them the “pleonexics” or “consumptives” (the ancient Greeks called this the “malaise of the soul” or pleonexia).

Civil Liberties
The first requirement for an abundant life is that all individuals are free to live life as art as they see fit. This requires strong foundations for the civil liberties and human rights, like freedom of expression and well, in short, the founding principles and values we defined for the Free Knowledge Insitute: diversity, equity, solidarity, transparency, …

Resource-Use Rights
Resources can differ in several forms, like whether its usage depletes the resource, has no effect or improves it, whether it is renewable or not, whether a resource can be effectively managed in case it is divided into parcels or small or bigger lots, etc. Hoeschele has designed a flowchart that helps to choose the most suitable property regime for different cases, be it Open Access, with or without incentives to further expand the resource (e.g. medical research), Common property (e.g. air, water, oceanic fisheries), Common or State Property (e.g. petroleum), Local Common Property or Private Property (quarries, aquifers).
Stakeholder trusts

In line with the ideas of David Bollier and Peter Barnes (Capitalism 3.0), Hoeschele argues for a commons trust that owns and protects our air. “… keeping air to breathe as an open-access resource demands air pollution be strictly limited, at the cost of the polluters.” Barnes proposes the set up of a commons trust that owns all the air of a country. Each citizen owns a non-transferable share and is represented in the management. The trust would auction a set number of permits to pollute the air on an annual basis. Oil and coal companies would have to buy these permits and pass on the costs to the consumers. The revenue of the trust would be paid out to everyone equally, providing a kind of Basic Income. On the one hand such system would make it expensive to deplete or degrade natural resources, and on the other it would provide a basic income. The latter in turn could liberate the labour market in unprecedented ways, if the income from the shared ownership of the natural resources would be sufficient to survive on, assuring that individuals would be free to withdraw from the labour market either fully or partially, if they would prefer so.
Stakeholder trusts could also be set up for other common property resources, such as municipal water infrastructures. Such customer-owned corporations would have an interest in minimising costs and maximise efficient service provision. Public regulation would however still be needed, “to ensure that these water companies maintain river water quality, but there would be no need to regulate prices.”

Anti-trust and policies to favour small over big companies
This is one of my favourites: instead of helping the big organisations, we could reform certain policies and legislations to help the small companies by hindering the big ones. After all, market dominance is one of the core problems of actually existing markets, and reduces the freedom of all other participants. A company’s economy of scale is only of social benefit if it is forced by its competitors to pass on the benefits to consumers. Hoeschele suggests three techniques: 1) reduce barriers to entry for new competitors, while weakening other mechanisms that favour market concentration; 2) transfer scarcity-generating mechanisms from the control of the monopoly to the control of a public institution, and 3) deprive the company of the scarcity-derived profits (rents) after the fact.
He makes a case for Open Access in research and the avoidance or limitation of patents: “if governments insisted that results of publicly supported research be made part of the public domain and generally restricted the scope of patent potections, new technologies would become available to many more new and existing businesses.”
With respect to the third point, he suggests that inheritance laws could be modified in such way that passing on a company to its employees would be burdened with far fewer taxes than passing it on to the owner’s descendants. Taxation could also help to reduce the size of companies: to make near-monopolies pay higher taxes in the benefit of smaller competitors, “thus gradually leading to a deconcentration of the respective economic sectors.” “Simply reforming the policy environments so that they hinder, rather than facilitate, the creation of monopolies, could have major positive impacts.” We should revert the current “small is beautiful, big is subsidised.”

Reclaiming self-reliance and cooperation
The last chapter of the Economics of Abundance deals with cooperation. Hoeschele mentions local exchange and trading systems (LETS), parallel currencies and even a different monetary design, with negative interest, such as suggested by Silvio Gesell and Lietaer. Furthermore the Tobin Tax is discussed. But the big absent in the book is the forms of cooperation that have emerged through the Internet, in particular digital commons, based on free and copyleft licenses. I would have expected the abundance generating mechanisms so clearly observed in free knowledge, free software and free culture projects as one of the building blocks towards abundance. Futhermore the third mode of production, peer production, as extensively discussed by Michel Bauwens and Yochai Benkler. Other authors who inspired Hoeschele or gave him feedback include Roberto Verzola, Lawrence Lessig and David Bollier, all of which describe clearly the emergence of commons-based peer production and free knowledge communities. Hopefully this part of the equation is included in other (or future works). I would suggest the inclusion also of the free hardware movement and its potential for a commons-based industrial production, very much in line with the abundance economics.
For the rest it was a very good read and impressive list of references Wolfgang Hoeschele has integrated into a coherent and sensible vision for a more sustainable and freedom respecting future for the world population. Let us hope more people can work on making important parts of this vision a reality.”

The Future of Money

The Future of Money is a book written by Bernard Lietaer, published by Random House in 2001, and currently out of print. It was written as an overview of how money and the financial system works, the effects of modern money paradigms, especially relating to debt and interest, and how it can work to everyone's benefit to solve a wide range of problems, especially with the use of complementary currencies.[1] The book is meant to be written for the layperson, while bringing light to subjects that only relatively few are aware of at all levels of society.
Lietaer gives examples of different currencies that have been used in the past or are being used, and the positive and negative effects they carry. He writes that while the modern money paradigm has both positive and negative consequences, e.g. that it induced industrialisation, these currencies can exist in complement at the local, regional and international levels, as well as there being currencies for various sectors, such as healthcare. Lietaer writes that in order to optimally solve problems and create a healthy society, the world needs a variety of currencies in our "toolbox", and that otherwise we are "painting with a screwdriver".


[edit] Outline of Parts

Following the introduction and first chapter, where Lietaer outlines five core problems people are facing worldwide, the book is divided into two parts.

[edit] Part 1: What is Money

Following a chapter-by-chapter outline, Lietaer points to a Primer on How Money Works, which is as an appendix. He then goes on to explain the origins of our money system, and the underlying problems and benefits of it. Lietaer explains how the cybersphere is fundamentally changing money and the financial system, and what it means for us. He ends part one with five scenarios of what can happen when the five core problems mentioned in the first chapter bear down, and especially after a monetary crash.

[edit] Part 2: Choosing Your Future of Money

Lietaer devotes the latter part of the book to outlining the variety of currencies that have existed in the past and exist today, with an outline of how they can be optimized towards sustainable abundance, the most preferable outcome of the five scenarious listed in the first part. Complementary currencies are divided into work enabling currencies, such as the Worgl Stamp Scrip, Wara, and Ithaca Hour, and community enabling currencies, such as LETS, and also gives examples of corporate currencies, such as Frequent Flyer Miles. In addressing practical issues, one important solution given is the idea of a complementary clearing house to trade currencies, giving them additional value. He gives a proposal for a global demurrage currency he dubs the terra, which would be backed by a basket of goods generated on commodity exchanges and including a demurrage fee associated with the costs of storing the commodities. In his outline of sustainable abundance, Lietaer gives a scenario where people have the freedom to gain a livelihood from their work, defined as what people desire to do, as opposed to the job, which was created during, and an artifact of the industrial revolution, and wealth is sustainable, distributed, and in abundance.

[edit] References

  1. ^ Lietaer, Bernard. The Future of Money. Random House, 2001.

[edit] External links

Bernard Lietaer

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Bernard Lietaer, 2011.
Bernard Lietaer (born in 1942 in Lauwe, Belgium) is a civil engineer, economist, author and professor. He studies monetary systems and promotes the idea that communities can benefit from creating their own local or complementary currency, which circulate parallel with national currencies.
Bernard Lietaer, the author of The Future of Money: Beyond Greed and Scarcity and New Money for a New World, has been active in the realm of money systems for close to 40 years in a wide variety of functions. With the publication of his post-graduate thesis at MIT in 1971[1] (which included a description of "floating exchanges") and the Nixon Shock of that same year which eradicated the Bretton Woods system by unhinging the US dollar value from its gold standard and inaugurated the new era of universal floating exchanges (previous to that time the only "floating exchanges" involved some exotic currencies in Latin America), the fledgling management consultant suddenly found himself to be at the center of the financial world's attention. The techniques that he had developed for those marginal Latin American currencies were overnight the only systematic research which could be used to deal with all of the major currencies of the world. A major US bank negotiated exclusive rights to his approach which required that he begin another career.[2] While at the Central Bank in Belgium (National Bank of Belgium) he implemented the convergence mechanism (ECU) to the single European currency system. During that period, he also served as President of Belgium’s Electronic Payment System. His consultant experience in monetary aspects on four continents ranges from multinational corporations to developing countries.
He co-founded one of the largest and most successful currency management firms; GaiaCorp, and managed an offshore currency fund (Gaia Hedge II) which was the world's top performing managed currency fund during the '87-'91 period he ran it.[3] Business Week named him “the world’s top currency trader” in 1992.[4]
Lietaer currently lives in Brussels, Belgium. He was Visiting Scholar at Naropa University from 2003 - 2006 where he designed and implemented the University's Marpa Center for Business and Economics.[5] He studied engineering at the Catholic University of Leuven, in Belgium, and held an Assistant Professorship of International Finance at the same university. He was also a Research Fellow at the Center for Sustainable Resources of the University of California, Berkeley.
Within his books he describes and draws from the perceptions of Freiwirtschaft. He is the originator of a complementary currency called the terra.
In 2012, he was the lead author (with Christian Arnsperger, Sally Goerner and Stefan Brunnhuber) of Money & Sustainability: the missing link,[6] a publication of The Club of Rome, in which he predicted that "the period 2007-2020 [will be] one of financial turmoil and gradual monetary breakdown." The book was published in May 2012 and has been slated for release in several languages in November 2012.[7]

[edit] Bibliography

[edit] Notes

[edit] External links


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Freemium is a business model by which a product or service (typically a digital offering such as software, media, games or web services) is provided free of charge, but a premium is charged for advanced features, functionality, or virtual goods.[1][2] The word "freemium" is a portmanteau combining the two aspects of the business model: "free" and "premium".


[edit] Origin

The business model has probably been in use for software since the 1980s, particularly in the form of a free time- or feature-limited ('lite') version, often given away on a floppy disk or CD-ROM, to promote a paid-for full version. The model is particularly suited to software as the manufacturing cost is negligible, so – as long as significant cannibalization is avoided – little is lost by giving it away for free.
However, this term for the model appears to have been created only much later, in response to a 2006 blog post by venture capitalist Fred Wilson summarizing the model:[3]
Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base.
Jarid Lukin of Alacra then suggested the term "freemium" for this model.[3]
In 2009, Chris Anderson published the book Free, which examines the popularity of this business model. As well as for traditional software and services, it is now also often used by Web 2.0 and open source companies.[4]
The freemium model is closely related to tiered services. It has become a highly popular model[citation needed], with notable examples including LinkedIn,[5] Badoo,[6] and in the form of a "soft" paywall, such as those employed by The New York Times,[7] and by Press+.[8] A freemium model is sometimes used to build a consumer base when the marginal cost of producing extra units is low.

[edit] Restrictions

Ways in which the product or service may be restricted in the free version include:[9]
  • Feature limited (e.g. a "lite" version of software, such as Skype, which doesn't include features like three-way video calling)
  • Capacity limited (e.g. SQL Server Express, which is restricted to databases of 10GB or less)
  • Seat limited (e.g. only usable on one computer rather than across a network)
  • Customer class limited (e.g. only usable by educational users)
  • Effort limited (e.g. all or most features are available for free, but require extended unlocking which can be shortcut for a fee, such as some software for virtual printing on PDF)
  • Support limited (e.g. users of a "lite" version do not receive telephone and/or email support)
  • Time or bandwidth limited (e.g. Spotify, which limits the time free users can use the service for, resetting each month)
Some software and services make all of the features available for free for a trial period, and then at the end of that period revert to operating as a feature limited free version (e.g. Online Armor Personal Firewall). The user can unlock the premium features on payment of a licence fee, as per the freemium model.
Other software makes its features available for trial period, and then at the end of that period it stops working (e.g. Microsoft Office 30 day trial). This is a time-limited evaluation, and at the end of the evaluation period does not work at all. This is not to be confused with the freemium model, where the user has access to a limited free version without time restraint.

[edit] Significance

In June 2011, PC World reported that traditional anti-virus software had started to lose market share to freemium anti-virus products.[10] By September 2012, all but two of the 50 highest-grossing apps in the Games section of Apple's iTunes App Store supported in-app purchases, leading Wired to conclude that game developers were now required to choose between including such purchases or foregoing a very substantial revenue stream.[11]

[edit] Criticism

Freemium games have come under criticism from players and critics. Smurfs' Village was released by Capcom as a free game tied in with the release of the 2010 film. The game was very popular, at one point overtaking Angry Birds as the top-downloaded app on the App Store. The game had the player buy characters and buildings using in-game currency, but more currency could be purchased with real money using account details tied with the device, using Apple's store authenication prior to purchase. However, prior to changes Apple made in 2011, it was possible to use the authentication up to fifteen times at the App Store before having to reconfirm the password, and parents had soon found that their children had used this to unwittingly rack up hundreds of dollars in charges by playing the game. A group of parents filed suit against Apple to change their practice in microtransactions to prevent this from happening in other freemium games.[12]
Another freemium game, My Little Pony: Friendship Is Magic, based on the show of the same name, was released as a freely downloadable title by Gameloft under license by Hasbro. In the game, the player collects both in-game money and bits to buy ponies, houses, and other features from an in-game store to fill up a town. While several of the purchases were optional, a selected number of characters were required to be purchased to complete the story line. However, many of these required the rare gems to be used for purchase, which would take several years with constant play to collect, or otherwise have the user spend real money to obtain gems; the last such required character initially costed approximately $50 in gems,[13] but a later adjustment by Gameloft to reduce it to about $9.[14] Though Gameloft believes that these complains primarily came from the adult "brony" fans of the show who wanted to complete the game quickly, the United Kingdom Consumer Action Group worried that parents of young girls, the target demographic for the game, would be upset at having to chose between spending money on the game for their child or otherwise say "no" to them and prevent them from continuing in the game.[15]

[edit] See also

[edit] References

  1. ^ JLM de la Iglesia, JEL Gayo, "Doing business by selling free services". Web 2.0: The Business Model, 2008. Springer
  2. ^ Tom Hayes, "Jump Point: How Network Culture is Revolutionizing Business". 2008. Page 195.
  3. ^ a b "My Favorite Business Model". Musings of a VC in NYC. AVC. 2006-03-23. Retrieved 2012-08-13. "Free + Premium = Freemium?"
  4. ^ Heires, Katherine (2006-10-01). "Why It Pays to Give Away the Store". CNN Money. Business 2.0 Magazine. Retrieved 2012-08-13. "But free didn't become a serious option until the Internet gave us low-cost online distribution. Adobe (Charts) did it with its PDF Reader in 1994, Macromedia with its Shockwave Player in 1995. Both became the industry standard, and those companies were able to make money by selling the products' authoring software. Running starts: Companies like Six Apart and MySQL are following the example of MySpace and Skype by offering a free basic product and charging for premium service. More from Business 2.0 Live chat: your new online salesperson The hijack-proof truck Server farm goes solar Fastest Growing Tech Companies Current Issue Subscribe to Fortune In these days of Web 2.0 services that rely on quick customer adoption, the strategy has become so common that VCs have coined a term for it: freemium."
  5. ^ Barr, Alistair (2011-09-11). "‘Freemium’ approach attracts venture capital". The Montreal Gazette. Postmedia Network Inc.. Retrieved 2013-08-13. "While it’s been around for a while, the model is gaining more notice because some companies have become profitable growth machines with its help. LinkedIn Corp. may be the highest-profile freemium story. The business-focused social network went public earlier this year and is valued at about US$8-billion. This month, the company reported its first quarterly profit, while revenue more than doubled. It is free to join LinkedIn, but the company charges for premium subscriptions. Revenue from paying members jumped 60% to US$23.9-million in the second quarter."
  6. ^ Rooney, Ben (2012-01-24). "A Very Social Network". The Wall Street Journal. Retrieved 2012-08-13. "Badoo today allows users to post profiles of themselves, including photographs. When you log in it will tell you who is near you, so you can do whatever it is you want to do. It is a natural for the mobile, although Mr. Andreev says it still obtains about 50% of users from the web. It is a freemium model with a basic free service, and extra features for a price. In addition you can pay to have your picture given extra prominence. The realignment has transformed the company. It has 7 billion page views a month, and on average there are around one million users online at any time. The company is profitable and has only done one round of funding, raising $30 million from Finam for 10% of the company. It has more than 200 full-time employees."
  7. ^ Chittum, Ryan (2011-07-22). "The NYT Paywall Is Out of the Gate Fast". Columbia Journalism Review. Retrieved 2011-12-07. "But at The New York Times itself, revenue actually increased by 0.3 percent from a year ago. Compare that to the previous quarter, when the paper’s revenue slid 2 percent. Year-over-year revenue had been negative for eleven of the previous twelve quarters. What happened this time? The Times put up a paywall on its website and asked readers to pay for its expensive-to-produce news. And they did, in large numbers. Digital subscriptions to went from zero to 224,000 in three months. Add in the 57,000 tablet subscribers on Kindles and iPads and the paper already has 281,000 new paying customers. The new online subs helped push up the paper’s circulation revenues by 1.6 percent, where they had fallen 2.9 percent in the first quarter."
  8. ^ Owen, Laura Hazard (2011-09-06). "Three More Papers Put Up Paywalls, With Some New Twists". Gigaom. Retrieved 2012-08-13. "The paper is launching a “new membership program that will offer unlimited access to its website,, including its premium online and mobile content,” going into effect on September 14. Associated Press content will remain free; non-”members” can read 10 staff-written articles per month before the paywall kicks in, and non-subscribers also can’t comment."
  9. ^ Kincaid, Jason (2009-10-24). "Startup School: Wired Editor Chris Anderson On Freemium Business Models". AOL, Inc.. Retrieved 2012-08-13. "Anderson than started talking about the very popular game Club Pengiun, which is free to play. Parents are used saying no to credit card purchases for stuff on TV. But if they’re on Club Penguin, they see the child has built an igloo, and has their friends, etc. But if you pay, you can get into the cool igloo, etc. It’s easier to hand over the credit card that way, because it’s clear that the child isn’t just reacting to what they saw in an ad. What will people pay for? They will pay to save time. Younger people have more time than money. Older people have more money than time. Anderson then outlined some of the models he’s seen for Freemium models."
  10. ^ Dunn, John E. (2011-06-07). "Free Antivirus Programs Rise in Popularity, New Survey Shows". PC World (IDG Consumer & SMB). Retrieved 2011-06-12. "In its quarterly analysis of the security software running on 43,000 computers around the world between March and May 2011, OPSWAT found that well-known brands such as McAfee, Symantec and Trend Micro are continuing to be pushed down the popularity tables by mostly European rivals marketing on the basis of either a free-to-use or "freemium" (free with paid upgrades available) model. Globally, the two most commonly encountered brands were Czech companies Avast Software and AVG, tied with being detected on 12.3 percent of systems each, ahead of Avira of Germany on 12.2 percent, Microsoft on 11.2 percent, and ESET Software, also of Germany, on just under 10 percent. Traditional security brand leaders, Symantec, McAfee and Trend Micro were found on only 8.77 percent, 4.5 percent and 2.15 percent of systems respectively."
  11. ^ "iOS Game Developers Must Choose: Sell Digital Currency or Lose Money". Wired. 26 September 2012. Retrieved 27 September 2012.
  12. ^ Stern, Joanna (2012-04-20). "Parents Sue Apple for In-App and In-Game Purchases Made by Kids". ABC News. Retrieved 2012-12-06.
  13. ^ Starr, Michelle (2012-11-19). "Gameloft, My Little Pony and rampant greed". CNET Australia. Retrieved 2012-11-21.
  14. ^ Starr, Michelle (2012-12-06). "Gameloft issues My Little Pony 'fix'". CNET Australia. Retrieved 2012-12-06.
  15. ^ "My Little Pony mobile phone game in-app payment row". BBC. 2012-12-06. Retrieved 2012-12-06.

[edit] Further reading

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