There is a citizen-friendly solution to the Global Fiscal Crisis Part 2:

In Part 1, we introduced the Human Institutions and way they influence societal behaviour, the way they combine to create complex forms and the mechanism through these forms shape our economic behaviour at a global and local scale.

Equally important was the introduction of the concepts that a. humanity and the environment are a single interconnected entity, a super-organism within which institutions operate in a similar manner as proteins within a human body and b. the manner by which the social and the economic dimensions of our society are connected, which eventually are suggesting that any economic measure will always affect the social and vice-versa.

Based on the above we concluded that in order to address the current crisis one has to modify the human (informal) institutions that combined to create the so called “Global Economy” instead of relying to pure fiscal measures or wait for The Markets to bring the “Global Economy” to order.

The solution

So how do we achieve that?

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 forthcoming Part 4)

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-based one 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.

This is the end of Part 2. In case you cannot stop reading, the whole text is available within the same blog.

Next week in Part 3 we will see how the new Currency and the new Standard allow us to implement the most fundamental institutional change ever proposed the modification of the institution of Work!

Until then have a great week and enjoy life.


One Comment to “There is a citizen-friendly solution to the Global Fiscal Crisis Part 2:”

  1. thanks, i will check back soon, have bookmarked you for now.

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