There is a citizen-friendly solution to the global fiscal crisis

Prologue

There is a citizen-friendly solution to the global crisis! After almost five years of research I reached a point whereby the study of institutions and organisational structures was connected into a promising analytical tool. It is admittedly an unusual framework compared with mainstream institutional and historical institutionalism analysis alike. This framework creates virtual prisms that separate institutional “light” to its component “colours” which are much easier to study. Post its conception, it was inevitable that one would be tempted testing its usability against current social problems like the Global Crisis.

Escaping from the maze of obstacles, our current complex socioeconomic theories create, when one is planning for specific outcomes (i.e. reducing unemployment, control migration, reduce debt) is almost a futile exercise, as most policy makers discovered to their dismay recently. Too many external parameters influence the outcome rendering it unpredictable.

Analysing however, the same above problems using the new institutional analysis led me to viable solutions, to all of the above and much more. That said, the accuracy of my hypothesis, regarding the better solution, is in need of a peer review to become a valid theory so, here I submit my findings and, please, comment.

To be noted, that below I present only the path to the desired outcomes, for three main reasons.

A. it was not in the intention of this paper to present a new institutional theory but to offer an alternative view using relatively easy to communicate notions

B. To provoke a debate with similarly thinking scientists and activists from all disciplines without confining their rational within a limited framework and

C. To move, the inevitable, debate towards the social domain, instead of the highly technical socioeconomic or institutional analysis one.

I am happy though if one is interested to take him through basics of the actual analysis.

The Framework

We call in sociology an “institution” everything that describes a recurring social behavioural pattern. Analysing social problems, in this instance the global crisis, under their prism is similar to a brain scan but without the deterministic downside and the theoretical “noise”. You do not care what the muscles that move are, the nature of these muscles or the nutrients they need but rather the part of the specific brain circuitry that causes muscles to move and the chemistry behind it. It so much simpler then the “rational” way through the maze of the socioeconomic theories as it is currently attempted by the EU, the US, the IMF, etc. and it is my explanation why so many great minds around the globe do not have any holistic tangible theory to present (Google “solution to the global crisis” to see what I mean).

We as a society created over the millennia thousands of these institutions. Some of them were genetically programmed in our brains deriving directly from prime instincts like Foraging, Grouping or Nature-observing while other evolved from the them, examples that spring in mind, Farming, Animal Domestication or Fighting. They started to pile up and combine between them to create new more complex ones from the moment two people started doing the same thing repeatedly with the observing others following their paradigm.

As I see things, after so many years of studying the field, institutions are very similar to DNA segments or “animoacids” in their nature, they can combine in infinite ways to produce social “proteins” like Democracy or social“enzymes” like Profit that catalyse social reactions, acting like tiny social machines that alter social bonds and create new “social molecules”, all the time.

I appreciate that I used far too many “technical” terms in just one paragraph so, allow me make it simpler; allow me tell you our brief institutional story not dissimilar as you will discover to the socioeconomic ones you may heard.

Once, humans were primarily resource-seeking Nomadic with a primitive Economy, until Settlements where created wherever resources were in abundance and the consequence of which was the creation of Farming and Animal Domestication. The family based settlements became Tribes by the means of mainly an interbreeding process between settlements. The tribes expanded and settlements transformed into villages and the villages into the first towns.

That is where the first real troubles begin hand in hand with progress, as the increase in population and the depletion of readily available resources in the vicinity created conflict and War which in its turn created the people champions and Kingship and Slavery. That in combination with the inevitable Division of Labour within the towns created the Classes while the lack of locally available resources gave simultaneously rise to the Markets and Trade.

Division of labour, the markets and the trade combined with slavery gave rise to, a new form of the previously effort vs. reward, Profit. In parallel the earlier introduced Barter the markets and the kingship gave birth to Money as a Standard and that in its turn to Currency until eventually all DNA segments needed to create Capitalism, Socialism and the rest of our theories where in place.

As the story goes new institutions kept accumulating, the markets shaped Consumer behaviour which combined with the profit-driven need of the Growth-driven societies to synthesise Credit and Banking. The transition from the early markets to the primitive first banks lasted less then a 1000 years and it served us well for the last 6500 after that (or not).

Progress for as long as each one of us keep thinking in a different way is guaranteed so each and every one of the institutions (in italics), briefly described above, kept combining and evolving with the help of institutional entrepreneurs altering the overall societal DNA.

The settlements evolved into villages the villages into towns, the towns into city states, the city states into kingdoms that gave birth to empires and back into countries the countries into Unions and inevitably into one Global Union

Money started with being a simple shell, to intrinsic value currency (golden coins), to fiat currency, to fiat e-currency.

Primary Anarchy evolved into all recognised today forms of governance from Authoritarian to Constitutional Monarchy to Constitutional Republic to Democracy to Dictatorship to a very long catalogue of forms including Monarchy, Oligarchy, Plutocracy, Theocracy even Totalitarianism .

Political ideas followed a similar evolutionary path institutionalised from time to time into relatively stable forms to today’s one, with the Markets “regulated” Capitalism (and some forms of Socialism i.e. China, Russia etc.) being currently the standard that most countries follow.

Until 5 years ago, one could even suggest that this was a good ending to our story overall and an excellent foundation to build our future. But at the same time, in a yin and yang type symbiosis, poverty was at its highest point, the environment is suffering, the credit crush global events aftermath keeps policy makers and economists sleepless, war zones keep accumulating, vital natural resources are misused in an alarming rate, public anguish mutates into violent forms, the North African Nations one after the other demanded an end to the previous political forms, new reform movements like OCCUPY start to take shape…. the list is endless.

Based on recent events, it becomes apparent, more then every other time in the past, that there is an urgent need for reform. A reform obviously dissimilar to the futile one that is attempted currently, a reform that touches evenly all parts of the globalised socioeconomic environment, a rather radical one.

It is my belief that this should target the very deep root causes this time around, which is our cherished institutions described above, nothing else will suffice. Irrespectively of one’s socioeconomic inclinations there is a consensus on the fact that institutions shape our behaviour and it is these which need at long last to evolve or be even be replaced. The suffering deriving from their current outdated form becomes bigger by the day across the globe. To use a metaphor we need to rewire our collective brain circuitry and not try forcing our muscles in before the consequences become irreversible.

Even without the institutional interpretation of problem, there is a rapidly growing mass of evidence suggesting that the Global Crisis appears to be the end result of the decisions of the various political actors around the globe, the majority of which utilising a form of Capitalism or Socialism. The fact leads to the inevitable conclusion that the problem lies within the foundations of our political systems.

Based on both of the above mentioned points of view, It appears that our dear Capitalism, Socialism, and the rest of the political systems current forms are on their last legs after 6500 of evolution, with their basic constituting primary institutions the Economy, the Labour, the Capital, the Markets, the Money, the Profit and Information all in desperate need of radical reform.

I need to clarify at this point the fact that institutions may appear on first glance similar across nations, however, their governance and the artefacts we created to support and enhance them, as well as their use, depends primarily on local “interpretations”. In other words what other sub-institutions the local population combined in order to create them.This is the primary reason that localised policies (EU, US etc.) are unable to correct the problems of the otherwise interconnected world.

So, returning to the primary institutions I was referring above that are in need of reformation, I will start with the Economy, one of the most archaic institutions.

Economy in its pure form means distribution of the “household” resources. Now consider this oxymoron; everyone currently is talking about The Global Economy, pick up every newspaper or internet news channel you wish to see what I mean as if it is something real. But please take a moment to contemplate, do we really have one? Who exactly is in control of distributing the Global Resources to all the citizens of this planet, The Markets? You guessed it right NONE. Countries are too weak to impose global legislation, our formal global institutions (i.e. UN) are not empowered to do so and The Markets have no interest or the necessary mechanisms to be doing so either. The exact opposite is actually true, as The Markets have every interest in keeping things the way it is, as one of the ways they make money is by taking advantage of the scarcity of materials locally, due to the labour-wage-driven unbalanced distribution of the production centres. Bottom-line is that WE DO NOT HAVE A GLOBAL ECONOMY and we should give an end to this distorted notion.

Labour as an institution and I touched on it above dictates the measurement of value of one’s contribution to society. Work rights, employment terms, rewards, male-female equal rights, social justice etc. all derive from or contain it and by interlocking create the framework that gives definition to its wider meaning. Under globalisation though, most links within the framework have cease to exist. Think for a moment the difference of a US based singer who sells his songs through media hubs, with a farmer in Afghanistan or a public servant in Sweden. Do they really have anything like a similar labour framework?

To cut the long story short the same distorted variances and broken frameworks stands true for the Capital, The Markets, the Money, and the Profit. Every single one of them has acquired a different, mutated form across the Globe and it is influenced in a different way by local legislation. The myth that The Markets can regulate the (non existent) Global Economy is BUSTED as they would say in the popular American TV series at least from an institutional analysis perspective. Similarly all attempts from Governments, Union or the G20s are destined to fail because the foundations that should support the “corrections” are not stable but floating in a socioeconomic “swamp”. The wrong decision we made back in 1972 and the corporate greed driven fiat-money economy we created cannot sustain enforcements anymore. It would be impossible other wise for a small country like Greece to be able to affect the “Global Economy”. We need to create a new foundation structure this time on bedrock, below those of our current socioeconomic structure. It is not going to be either easy or quick. It might take years but it has to be this time a viable and long term solution.

The solution

So at long last what is the solution?

Well, as I have said above we will need to, forcefully, if need be, “reengineer” our favourite failing political systems/institutions to their next evolutionary stage as soon as possible. You want to call the emerging structure meta-capitalism, meta-socialism, meta-..XYZ it makes no difference. If I am proven right I would suggest we call it simply gaianomy (the science of just distribution of our global resources) but I am not going to insist on this either. It is the socioeconomic institution we need to change and its evolution is more important then its name. The good news is, that we do not need to invent new mathematical tools; we have all we need now!

Step 1&2

Where we can start from? Globalisation, should be the first step, we need a brand new understanding of what it means and a new interpretation of its minimum “governance” needs.

If we are going to build a really global institution pre-programmed to eventually “regulate” (remember the enzyme paradigm above) the way distribution of resources will benefit us all we need to accept and embrace the new “definition” of Globalisation. Benefit in this instance does not contain the notion of profit as stands today.

Nationalism in its current distorted form and its various local interpretations, which is one of the “proteins” within Globalisation, will have to evolve as well. The sooner we understand that there is a need for all of us, to be equally local and global at the same time in the near future, the better it will be. I am happy personally to be recognised as European and “Earthian” at the same time. What ever I call myself I still breathe the same polluted air as everyone else, use the same internet and am affected by the same global crisis. Can any country be realistically self-sustained to survive in isolation from the global community? No.

However, nationalism is an institution with very ancient roots and its resistance to change should not be taken lightly. Voluntarily changes in this institution will be accepted by its members only if they can see that the impact on the majority of their current interlocking with Nationalism institutions formal and informal will be positive hence, I am so optimistic of the outcome. I firmly believe that fanaticism-blinded rational aside (i.e. conservative nationalists that believe in the “free economy”, an oxymoron in itself), its proponents will consciously support the new definition.

From a governance perspective, we do have currently global formal institutions that can be used by the new institution of Globalisation, to become its initial gatekeepers. I refer to the UN in combination maybe with the World Bank Group. But, they will have to be empowered and manned with the best minds available. No offence was indented to the current delegates, but the men power I am referring to, will serve totally different functions in need of a different kind of scientists, institutional entrepreneurs from all social segments and legislators.

With such a governance body in place or even better in parallel with its creation, a new Global Currency can be created. This Global Currency can be a either a virtual one, that all other currencies will micro-fluctuate against in a predetermined manner or an actual one, that will replace all those wishing to adopt it as a standard from day one, or a combination of the two.

What will be the difference one may ask, why do we need a global currency?

Institutionally-wise it is easy to explain, in antithesis with the vagueness occurring if we used economic theories. The difficulty to explain its benefits is possibly why only one of the global leaders, the President of China (2010) has ever suggested it. Nevertheless we need this standard to be equal everywhere and as such to become the foundation for Globalisation to operate within, until that is, technology will be able to provide us with endless free energy to get reed of money all together. There is though the practical site of the Global Currency and the benefits will be immediate:

  • Provided that all nations accept the principals of the new currency and the regulations are in place all currency exchange markets can cease to exist as unnecessary. Micro-fluctuations based on GDP variance can be agreed in advance.

  • This will immediately give an end to the current currency wars that affect the income of us all (mainly through the currently distorted value system, see below step 6)

  • Will normalise the degree of influence fiat-money profits have on the GDPs and

  • Normalise (partly) the remuneration within the financial institutions that caused such as social anguish (i.e. OCCUPY demands)

Of course the eventual proponents of the global currency should expect an avalanche of arguments regarding the “impracticality” or the “impossibility to implement” and from doomsday theories to blackmail in order to prevent its implementation from the banks and all those with vested interests. However what ever the banks will do, the final word belongs always to the global society, us. You see banks are organisations and as such they are open systems belonging to and depending (how many of them we have bailed out currently?) on an environment. The environment in this instance is the global community, us, the necessities of which has created the banks in the first instance and the environment will decide if they are still necessary or not to retain and in what form, not the other way around.

If eventually we will need to re-engineer this institution even at this early stage so be it (see below in step 7)

Step 3 & 4

These steps contain at first the introduction of an equally suitable Standard (as an institution this time), to base the new currency on, to forcefully “mutate” it away from being fiat (the root cause of the majority of our problems) into a back-to-basics one with a positive intrinsic value. I do not refer of course to gold or any other material when I use the term intrinsic, but rather to what has been proposed already a modified form of a time-based currency.

My personal favourite is H2E which stands for Human Effort Equivalent. It is a “mutation” of the time-basedone and it stays clear of unrealistic notions like one hour’s work of a dentist, equals one hour’s work of its nurse or an hour’s work of a PM.

H2E has a series of interesting characteristics; it is universal, it is easily measurable, it is finite as it increases analogically with the Earth’s population and it cannot be misinterpreted. In addition it is all inclusive, as it can take under consideration both the physical and mental effort needed. I will come back to this later as well (see below in the paragraph referring to value of work).

For the time being you can think of it as a new standard according to which all other values (work, raw materials, products, services etc.) will be measured against. As the relatively healthy working population of Earth, at any given moment in time, can be relatively accurately measured we can agree of the amount of units (subunits and denominations) needed to be in circulation to represent all values on earth. Any global growth can be “absorbed” in this currency and need not increase the amount of units but rather its value (minus the results of inflation and debt repayments)! The idea is that every day products and services should remain almost constant in H2E equivalence!

Step 4 in this phase is a more radical one, the complete digitisation of all forms of transactions which despite the controversy that it might generate as an idea, will introduce immense benefits and the technologies to support it as well the global infrastructures are already in place. (i.e. The credit card infrastructure in combination with the mobile phones’ one)

Benefits-wise the implementation of the H2E based Global Digital Currency (GDC or a “G” with two horizontal lines if I may propose a suitable sign) will:

  • Cause the fiat-currency driven inflation to decline immediately! (leaving behind only parts of the systemic one).

  • Eliminate a big part of the discrepancy between the banking and non-banking remunerations systems

  • Interrupt terrorist group financing channels

  • Enable the equal rights charter (see below Value of Work)

  • Create the conditions to stop illegal economic migration between countries (barter in kind is not enough to sustain illegal migration and no trafficker will accept barter as his remuneration)

Finally it will become the bedrock to build a new definition of work, connecting it at last with social contribution (see below)

At the same time on a more practical side it will:

  • Reduce drastically money driven street crime (if all money is digital only objects can be stolen which again cannot be exchange for cash)

  • Eliminate bank robberies

  • Stop poaching (Black markets will find it very hard to operate by reverting to other then cash)

  • Regulate syndicate managed prostitution and illegal gambling, which primarily operates with cash

  • Reduce within 5 years from its introduction the global drug trade by at least 80%. 5 years is the maximum time before the global privately owned stock in gold, that is practically the only other means of exchange beyond hard currency for drugs, will be depleted. Simultaneously with drugs becoming less on the street by the day, all drug related anti-social behaviour will diminish rapidly (see global statistics on drugs related crime) with the effect reaching some of the route causes of civil wars (see Mexico, Afghanistan etc.)

  • Impact positively on gang cultures across the globe as the loss of their operational capital will reduce their attractiveness as alternative to work options

  • Eliminate practically overnight government corruption and officials’ briberies (current corruption statistics suggest that more then 90% of transactions are made in cash)

  • Reduce reoffending ratios in relation to non-violence crime that are primarily of financial nature

  • Last but not least, the links between enterprises, organisations, political parties, public servants and individuals with vested interest in the continuation of the existence of black markets, illegal trade, human trafficking, drug trade, weapons trade, It will immediately be unveiled. It will be easy after that to know whom not to vote in the next election.

Of course once again, a fierce reaction of The Markets, and The Banks should be expected, in order to delay its implementation as well as a monumental legislation and negotiations marathon between the proponents of the change and those controlled by the Markets and the Banks.

Drug Cartels, Organised Crime Syndicates, Black Market shadow organisations even Sovereign States in a covered way are expected to fight tooth and nail to avoid the implementation of this institutional change.

However, from the moment that people will know what to expect and why, all these “actors” will have lost the game before it begins. They cannot possibly control all politicians and all legislators, so fear not.

If on the other hand they can offer us a better alternative, a step change that can achieve all the above mentioned benefits sooner I will be the first to vote for their preferred politicians.

Step 5 .

With these four fundamental institutional alterations in place the next step should be the re-valuation of work. There have been several propositions and a lot of sociology and economic papers have been devoted to the subject (see example in www.neweconomics.com) . The major idea behind them is the migration from the current narrow definition of productivity related valuation of one’s work, to one that accounts for one’s social contribution as well.

I’m really fond of it personally and I will show below the benefits of implementing it. That said, I personally believe we need to go one step further from the existing propositions and apply to it, macro-social and meta-social criteria. These are the net value to the global society as well as the net value of its environmental contribution (I use net, as inevitably negative effects will always co-exist even if they are at a very small percentage).

Rethinking and redefining work will be a no-mean social engineering feat. This will be the biggest institutional modification in the human history.

To pre-empt questions that may be raised, it will be unwise to move this institutional change into Step 1 instead of Step 5, in order to speed up the process and bring its monumental benefits forward. I firmly believe that any such attempt will prove futile. To change this mega-institution one needs all the foundations and its constituting institutions in place and within them are all the redefined Globalisation, the Global currency and the H2E. We will need all of them before we are ready to rebuild this one.

The ways one can go about redefining work based on a universal framework of values, are not many and all, one way or another, are criteria based, criteria that carry these universal values and embed them within this redefined institution.

Until a better idea is presented I will propose that we use a hierarchical-needs points system based on weighted benefits, as appears to be the order according to crowd-sourcing internet analysis of fundamental values I attempted, namely:

  1. The environment as a whole (to what degree this is benefited or destroyed)

  2. The local ecosystems & the preservation of the species

  3. The Human Race (well being, medical advancements etc.)

  4. The Food production and Water sources management

  5. The Energy Production and the replacement of scarce resources and materials

  6. The Scientific and technological advancement

  7. The country

  8. The community (or enterprise/organisation)

  9. The family

  10. The individual

With the above list agreed (that is why we need the global institutions in place to debate such issues), all we have to do in addition is; a. to identify the net degree of contribution and b. the net degree of applicability (i.e. how many “units” will be positively impacted) to end up with the initial value of one’s work. Of course it is a bit more complicated then that and one should account for additional parameters with the list being by no means exhaustive, like:

  • The degree of mental dexterity

  • The degree of talent (inherited or acquired)

  • The degree of knowledge

  • The degree of experience

  • The time needed to reach average competency

  • The degree of dependence on external factors (systems or organism and energy needs)

  • The degree of innovation

  • The degree of ability

  • The extend of physical effort

  • The impact on one’s health

  • The risk of harming himself

  • The degree of reluctance across the population to undertake the specific duty and

Finally a parameter which will reflect the ratio between the global average and the specific country’s GDP at that point in time. (See below in step 6).

I will not propose a formula on how to calculate the above, even if I have one worked out of curiosity, instead let me offer an example of how this might work.

If we accept that the unit is an individual and the Human race equal 7 billion immediately a universally accepted climax from the first list can be agreed.

With this in place the next step will be to define for every task the degree of one or more of the applicable elements in the second list and lets name then B1 to B12 with each one able to take values between 1 and 100.

Then in order to calculate one’s contribution it will be enough to add or subtract (some of them have a negative sign) all elements that apply from the second list in their relevant degree and multiply the end result first by the (combined or not) contribution from the first list and finally by the GDP ratio mentioned above.

It is easy to understand under this system of interpreting work values and one’s remuneration, that manipulating numbers in front of a computer the actual job of an FX trader is definitely of lesser value than of the Prime Minister’s of that country!

Equally obvious is that an inventor of a device that deters 100% of all midges and mosquito from biting us should be rewarded higher then a singer with an average music global hit.

The immediate benefits of the above will be unimaginable and they are definitely in the wish list of all social movements in one form or another. Listing here only the major of them are:

  • Remuneration for the same work across the globe will become equal (gradually though as it will be influenced of that country’s current GDP) and with it

  • A new global equal rights’ charter can be at long last created

  • Low pay driven production-migration will be repatriated and with it

  • Air and sea pollution will be reduced drastically. This by itself maybe able to regulate emission levels beyond regulators dreams

  • New industries will spring next to where the resources are and with them employment education and infrastructure levels in underdeveloped countries rich in raw materials or with a farming potential will drastically increase

  • Illegal migration will cease (gradually though)

  • Human exploitation will decline drastically and with it human workers trafficking

  • Fiat money will be reduced to its final stage before total elimination

  • Patents will be unlocked and with it the open source system will be boosted

  • Organisation leaders remuneration packages will stop appearing in the news entries reducing this way the current social friction

  • Research will be given the biggest boost possible and with it scientific breakthroughs will follow

  • Non productive and parasitic functions in government level will cease to exist

  • Remunerations across the globe will be rationalised and the most important

  • Unemployment will decline everywhere

  • GDPs will be altered to a more realistic level with its absolute accuracy increasing overtime and with it the remuneration level in the country (or decreasing where the current GDP evaluation is artificial) with the people sharing a part of the added value they created

  • Inflation will be reduced further and it should become less then the currency micro fluctuations

  • National pension schemes will get a real boost

  • Country finances will start to recover as well as national debt and

  • The dream for social justice will come closer then ever before

For most countries and societies this will be a dream coming true at long last.

On the other hand needless to say that every single country, organisation (legal or illegal), social group and individuals currently enjoying benefits from the current situation will “revolt”. This move changes the institution of Capitalism into something totally different whereby human exploitation (the old institution of slavery) is not an active segment any more, so reactions should be expected.

The list of opponents will be endless and, thankfully, all effort will be futile.

You see institutions are made by the societies not their governance and in this case we can give at last the society control over the institution altering the status quo.

The rule is very simple. You vote for those only that have the path (the eight steps) into their manifesto.

Step 6

This will be the last major step, and maybe by having achieved the previous this will be considerably easier, however, one must prepare himself for some additional “hardship”. Changing Profit one of the most ancient institutions, through the redefinition of our material value system, may well equal in number the obstacles of the previous step.

Just to clarify by material value system in this instance I mean the way that, for example, we calculate; how much a company stock should be valued, how much is the net added value of an industry at the end of its production line, what is the net value of transporting goods from place A to place B, what is the actual value of a specific service of a Bank or a Consulting Firm, what is the value a mill adds to the price of wheat by transforming it into flour etc.

We need to always be mindful of the fact that what ever is produced has an impact on the environment, the ecosystems, our genes, and the society overall. It is a cost we never calculated before, with some exceptions. Can we really afford to keep ignoring all these parameters? How does it makes sense to allow water demanding cultivations to sprang in areas where water is a scarce resource, and value the product the same as one produced where the environment is impacted minimally?

Profit as an institution is really prehistoric. From the moment our ancestors start to consider the effort needed vs. the reward, in choosing what food to gather/hunt and what not, the institutional segments to build Profit where in place. With the addition of Growth and Money, Profit took a life on its own and infiltrated all socioeconomic theories developed over the millennia, even communism where it was practiced by the state, to reach in its current “selfish” form. It is exactly this selfishness that we need to alter in a way that profit, at last, takes under consideration the impact it has on the rest of us and the environment. Making profit from cutting down out fins from sharks currently is still acceptable by some societies, as is opium trade profits that sustains revolutionary movements. It is madness and it will have to stop.

So, how we approach the whole change?

First of all we need to redefine the cost of all products using the Human Effort Equivalent (H2E) principal introduced above. To do so we need to define the actual value of the raw materials and the value of the capital needed in addition to the human effort. (Changing the basic principals of our economic theories at this moment in time will pay no dividend and will not affect our decision making hence, I am using the same ones.).

Raw materials can be valued again as products, as do all other elements of any production process and consequently can be measured in H2E but in this case with an additional twist.

All non-renewable raw materials are finite (at least until we build replicators or we achieve space mining) and consequently scarce to a degree. In most cases we know for how long we can keep harvesting them based on the projected consumption trends. It is relatively easy consequently to agree how much we need to “invest” as society in research and development, in order to have an alternative or a replication mechanism ready when they are depleted. By adding this “cost” in the equation we can calculate the actual value of this material.

On the same subject, I think that, this part of the material’s value should be excluded from local taxation and the accumulated revenue be divided through a mechanism build within the processes of our global governance body, to research centres around the globe.

Eventually with all the end to end process of every product calculated based on the H2E and the capital already measured against the same standard all one needs adding is the impact to society which will always be both positive and negative to different degrees. To calculate that I am proposing that we use the same 10 elements list as above, and by accessing that as well we are done.

Services now as products are much simpler to calculate as we already have defined how much every work actually “costs” including its social impact. We know as well the material it needs and we can add that to the total cost as well. We know finally the energy consumption needed for this service to take shape, which itself as being a product in its own right is no difficult to account for and add its worth to the final total cost.

So we have all cost ingredients (capital, materials/products and services) and all one needs to do is add the applicable elements.

After that we will be ready to estimate profit and that will be a straightforward calculation to make, depending on the method we will decide to use.

This include several options, none of which need to be decided now. Examples can be:

  1. To regulate globally a min and a max profit climax depending on product desirability

  2. To connect the profit margin to the workers remuneration packages. You may recall that we calculated above with relative consistency the value of every work. I never suggested that this should be his payment, so adding to that the same margin the enterprise wants to make as a profit overall may sounds in a lot of people’s ears as fair. However, every application of this type is better to remain with the local governments as it affects taxation levels.

  3. To use a rigid min and max profit margin depending on any other parameters or a combination of them like country’s GDP vs. Global average, scarcity, poverty levels, level of unemployment etc.

  4. Or…we can devise as many as our imagination and our sense of social justice allows us.

Brace yourselves though for a confrontation with all the short sighted ones, those with vested interests in retaining the currents status quo or those that are generally afraid change.

You see, most nations in this post-industrial era with some notable exceptions, those mono-product based economies and China, followed economic services oriented paths. These were build on the belief that services offer better profit margins then industries, they offer more predicted taxation revenue, faster growth and practically no need for subsides. Even nations that could not afford to migrate away from their traditional products followed that path (i.e. Greece). Cheap labour utilisation and the numbers in which it was available fuelled the industrial migration.

Look however in today’s world, which are the strong economies under this capitalistic model, Brazil, Russia, India, Korea and Germany. What do they have in common? Their ratio between the industrial products vs. post industrial era ones is positive. Every nation that lost its balance and moved too soon into the post industrial era has suffered the consequences and currently carries disproportional debts. The notion that capitalism is all about fiat money capital, has proven disastrous and we know it now. (See the terms or banks recapitalisation the EU leaders propose, demanding an increase of the banks’ securities to 9%) But on the other hand high profit margins have been associated even now with growth and countries will find it difficult to move away from this institutionalised idea.

What I am suggesting above is a totally radical and it will force all policy makers and political theorists alike into bringing forward a white paper start again approach.

Ok enough said on the topic, so let us see the benefits of such an alteration.

Well as expected they will be almost unbelievable.

  • Drastic reduction in pollution levels will follow immediately as product prices will be connected to environmental impact. No need for any additional Kyoto like treaties will be needed

  • All non productive functions will gradually disappear boosting this way global growth

  • Unemployment gradually will hit its lowest ever level and with it the benefits cultured that fuelled anti-social behaviour in various countries will be altered for ever

  • Inflation will decline to its lowest level as new mechanism to control it will exist within the system

  • Financially driven migration will be reduced further

  • Human trafficking will become a thing of the past

  • The equal rights charter will be further enforced

  • Poverty will start to decline rabidly as decision on capital investments will alter course

  • Remunerations at all levels will reflect social and environmental contribution and with it social anger will cease

  • Poaching will stop all together

  • Drug trafficking will reduce further as new legal absorption avenues will open and people will be given realistic alternatives to its cultivation

  • Fiat money will be reduced further as profits from its use will stagnate

  • Research and the open source movements will get all funds needed

  • Pensions crisis will become a thing of the past as amount of people at work will multiply

  • Several major reasons that fuel war will be eliminated and with it weapon fuelled research will be able to contribute to society more

  • Refugee camps will diminish

  • Stability will increase globally and with it capital flow and investments in currently deprived areas

  • Countries GDP will be further rationalised to indicate the nation’s global contribution not just its richness

  • Global institutions will move a step further empowered to make this planet a better place to live

Step 7&8

Apply a new global banking operational standard: In various instances above I referred to our financial institutions and especially the Banks. Banking as an institution I still consider it as being necessary for both the global and local economy. At the same time I think it is about time we rethink what we expect of it to serve. Banks when first created was a place to store goods. It mutated into a safe of Money and eventually into a regulated (?) financial formal institution and the main cause of the wrong turn our capital-driven policies have taken. We allowed them to elevate into the biggest player of what we call today The Markets, the dictator of all economies (see resend attempts of the EU countries to control the cost of borrowing). We allowed them to create fiat money by reducing minimum capital ratio to unacceptable standards and allow them to loan, operating under the distorted idea of money as a debt principal (see Money as Debt in YouTube for a relatively accurate intro to the concept). Going forward, though, several things will need to change if we are to escape the current recession circles.

  1. We will need to separate the commercial with their investment parts and thankfully most countries tend to consider this option

  2. We will need to gradually increase their minimal capital ratio for their commercial parts. My personal favourite solution it will be for it to reach the level that reflects their declared profit margin around 94% from the 3% that it is today.

  3. We will need the banks to adopt a new type of logistics enterprises identity on top of theirs to monitor on our behalf the global transactions and, of course, be rewarded for that. This service on its own (based on the new definition/valuation of services) will be able to provide them with enough profits to recapitalise themselves.

  4. With the closure of the FX trade under the one currency principal their investment part will need to be regulated as well by introducing the same social and environmental criteria repeatedly mentioned above, in their investment choices, as an indicator of their profit margin (see profit out of services above). In other words higher profits should be connected to higher social contribution.

  5. Include in the regulation of investment all non-banking financial enterprises, funds etc. as well as the VISAs and AMEXs of this planet.

Of course, it will be a disproportional shock to the system if we try to alter too quickly the capital ratio or reducing the margins of investments or credit card operations. That said they (capital ration and margins) will need to be rationalised based on the profit principal above as fast as possible because they are the prime source of inflation globally. The speed of the exercise with the shock in the system aside may be traded against practical things countries have in need.

For example in order to reduce a country’s debt we may consider during the gradual restructuring of the Banking rules of the game to tax profit deriving from the use of fiat currency to a degree that allows only for the Banks expenses to be covered with the rest going towards that country’s debt repayments. That will hopefully incentivise the Banks to recapitalise faster until they reach 100% of capital ratio and stay there. To remind you in order to avoid confusion, with the existence of H2E as a standard it will be easy to absorb the global growth minus interest/profit-driven inflation in its value.

The new Global Bank could well be assigned to monitor such type of exercises and make sure that countries reach to a predefined debt level at the same time with country banks reaching their recapitalisation targets.

Needless to say that The Markets will not give up easily their current privileges, but with the re-evaluation of work and products as well as the introduction of social value as a regulator of the profit margin there will be very little they can do.

Additional benefits of these two last steps will be endless. I am listing only few below as indicators.

  • Further and more profound reduction in pollution levels

  • Elimination of Human exploitation

  • Redaction of Human Financial Migration to its absolute minimum

  • Minimisation to its absolute minimum of electronic crime and money laundering

  • Further resolution of the pension crisis

  • Rapid shrinking of countries debt

  • Boost research and development

  • Boost loans availability to new start ups and SME enterprises

  • Boost tax revenue and put a smile on all financial ministers’ lips.

Epilogue

I honestly started this text assuming it will be a couple of pages that can be copied pasted in online blogs but despite my best intentions its initial concentrated form, that of a matrix on a spreadsheet, it was transformed into a white paper.

I am told that the notions within it are still very concentrated and they need additional explanation so apologies in advance. To compensate please allow me to summarise:

  • The current socioeconomic framework is incapable to offer nations solutions to the present economic crisis (global growth is fading while global accumulated debt is increasing)

  • All countries by themselves alone cannot regulate The Markets and at the same time

  • The infamous Global Economy is a myth causing all efforts to influence it, a futile exercise

  • As a possible remedy I propose the creation of a global regulatory mechanism, which will manage the modifications of the institutions (not only the formal ones), that are the bedrock, the foundation of our global socioeconomic structure and theories.

  • These should for the first time in history we consciously re-engineered them as global, avoiding localisation, to support the new global socioeconomic model that I propose we call “gaianomy

  • The roadmap I propose, alter these eight institutions in turn one at a time. It is not a quick fix by any means (even if it can be implemented in a very short time if changes happen in parallel) but it offers a safe alternative before the EU and US imminent fiscal collapse.

  • The institutions I propose to be modified are Globalisation (as a meaning), Currency, The (currency) Standard, Work, Product and Services, The Profit, and The Banks. (All of the above process could be easily to become the new banner for activist and thinkers alike let’s call it the Eight First Steps).

  • The major changes I suggest refer to the connection of every “value” with its impact to the environment or the society or both, while as the intrinsic value for new digital only global currency I propose the H2E or Human Effort Equivalent.

The whole text is dedicated to the sixth sense blessed unknown OCCUPY member that knows that something is seriously wrong but do not yet have a holistic proposition to offer. Gentlemen if you agree with my approach please raise a banner for me (Gaianomy Now!) as I am unable to be there in person.

It is equally dedicated to all Greeks in hope that they will escape their self-pity syndrome and especially the generation of the 45+ that feel currently that it is their fault. Gentlemen, it is not; the institutional distortions are not of your making you just used the wrong paradigms.

Credits to: The unknown member of OCCUPY the Wall Street, Marshall McLuhan, Robert Mundell, Andre Gunder Frank, PA Hall, DW Soskice, Aristotle, Jacques Derrida, Lotfi Zadeh, The Sociology and Business Faculties of Warwick, Isaac Asimov, Hu Jintao, Mervyn King, The Green Movements around the Globe, The Global Justice Movement, All friends and family that review this text before its submission.

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