Business Creation in a Global Recession: Opportunities to Explore New Horizons in Entrepreneurship

4th Asia Pacific Conference on Business Incubation
August 6-7, 2009
Coimbatore, India

Keynote Address by: Dr. David E. Martin
Executive Chairman, M•CAM Inc.

Batten Fellow, Darden Graduate School of Business Administration,
University of Virginia

Honorable Delegates and Friends,
Few occasions could be imagined that would serve as greater evidence of the unquenchable spark of the human spirit than holding an event organized around the genesis of value creating business against the backdrop of systemic global economic volatility. It is appropriate, at this juncture in the story of modern social evolution to take an honest stock of where we’ve been, where we are, and where wisdom invites us to craft a more ethical and suitable future. Regrettably, when words like “economic crisis” are invoked, we respond with rather unsophisticated reflexes. Reflexes, by their very nature necessitate rapid, unconsidered, hyperactive responses short on the consideration of consequence or collateral damage. Reflexes do not seek, nor do they function with, considered consequence. So it is, that when we hear talk of “recovery” or “market resilience”, we fail to ask whether the pathologic condition that precipitated the current instability is a condition to which we should aspire. Do we want to return to a nostalgic view of a few years ago?

Who among us wish for a return to the optimistic days of 2007? Which one of us long for days when financial innovation involved placing bets – in the form of derivatives and credit default swaps – at 5 times the face value of the global GDP hoping for the failure of our fellow man and the taking of monies from the gullible public? Which one of us longs for the “wealth” that was created by hedge funds generating in excess of 10 times greater returns by betting against the performance of industry rather than investing for a more fruitful future? Who among us would like to see the public and private sector continue to abuse pension funds by leveraging them for short-term usury, failing to consider the social and political upheaval which now looms when the illiquidity of entitlement programs and pensions are evidenced? While we pursued ever faster bit rates to transmit data across the globe, we saw a record number of humanity enter severe malnutrition without a bite to eat. While we obsessed about speculative market returns, we saw a record number of humanity fall deeper into poverty. While we gained efficiency with unconsidered labor outsourcing, we saw a rise of human trafficking. While we spoke of global stewardship and the environment, we saw unchecked expansion in devastating mining and the growth of metals markets which supported paramilitary violence. We celebrated the iPod but turned the seed pod from food into ethanol to charge the batteries for our energy consumption addiction. I, for one, don’t want a return or a recovery. Rather it’s time for reconsideration, reconciliation, and renaissance.

We did not arrive at this point in our economic history by accident. This was not an unanticipated shock that “no one saw coming”. To the contrary, the present conditions were wired into the system from its birth and came to full bloom almost two decades before the spoiled fruit was plucked. While many economists debate the mechanics of the failures – which are many and rather simply discerned – I would like to address three issues which don’t enjoy frequent consideration.

First, we saw unchecked capital disequilibrium where ignorance arbitrage was the rule of the day. For the past two decades, capital migrated from receivables financing and dividend returns from profitable operations to speculative equity with returns from a carnivorous market food-chain where most died and the moderately successful were cannibalized by the few. This condition worsened when the few at the top of the food-chain, lured by “cheap” capital decided to leverage their insatiable desire to consume ever more. Public accountability and its surrogates turned a blind eye to untold abuses in every sector.

Second, under the politically correct construct called “Free Trade”, those framing the schemes removed the very utilities that they used to arrive at their powerful positions insuring that poverty could serve as the outsourcing energy of last resort at all costs. We will revisit this item a bit later.

Finally, greed simply eclipsed rational consideration both for self-preservation and for ecosystem survival. Returns of 30-50% were justified because the knowledge economy was full of risk, we were told. However, what we were not told was that “risk” was a mask used to cover careless due diligence, value chain assessment failure, and opaque dealing.

We now have an opportunity to pursue an alternative path – one that is not foreign to humanity but rather draws on some of the greatest models from the distant and proximal past. This new path involves the perpetual interaction between three macro dynamics which serve as both organizing principles and metrics of performance. They include Innovation Literacy – rightly understanding the core of innovation and its deployment; Gross Innovative Output – linking innovation to commercial consequence using all requisite economic tools and with the customer consumer precedent over the capital source; and, Innovation Recycling – using the fossils of the excesses of the past thirty years as catalysts of new growth.

Some of you are familiar with the epistemology of innovation but it’s worth reminding ourselves that we live with an ever more confused sense of what innovation is and what it is not. There are three distinct dynamics that are too often blended in conversations about innovation. They are:
• Invention: The creation of something entirely new, without precedent or anticipation;
• Innovation: The assembly or contextualization of components and knowledge for a new purpose; and,
• Incrementalism: The nuanced modification of a thing or utility for a specific market purpose.

Most of what we see called invention and innovation isn’t. Most of it is incrementalism and serves only finite, unsustainable purposes. By building civil society structures and proprietary frameworks around it, we afford it consequence that it neither deserves nor does it stimulate “sciences and the useful arts” to use the phrase on intellectual property from the U.S. Constitution.

Innovation is not synonymous with intellectual property. In point of fact, while its purveyors would love to find some shred of data to suggest otherwise, IPR is seldom the core or even the catalyst for successful venture formation and sustainability. In fact, the majority of innovation lives a rather unremarkable life. It is found in internally funded and contracted research, academic pursuits, commercial responses to market demands, and internal enterprise optimizations. Those who wish to say that IP is core to attracting capital need to admit that to date, no effective collateral position exists for IP to be counted as an investment grade asset and in the global market, no jurisdiction on the planet has a reliable treatment of IP in bankruptcy. More dramatically, while subject to general intangible liens, only a fraction of all intangibles are even correctly transferred when enterprises are sold or liquidated.

Innovation illiteracy is prevalent largely to serve as a protectionist utility for multi-national corporations to manipulate and control markets. Therefore, when we consider venture creation, we must address Innovation Literacy. In most of the world, the notion of turning ingenuity into profit is antithetical to local or regional values. The growth of the “Commons” model in the free and open source software movement and the expanding use of the general purpose license or GPL are wonderful examples of the growth of commons stewardship even in markets like the U.S. and Europe. When one focuses on innovation arising from a network – the nature of most endeavors now – one understands that it is the fusion of contributors to that network linked to markets which is the core of enterprise creation – not the access to restrictive, usurious capital seeking its rapid return. Programs like the Heritable Innovation Trust and the Peace Trade initiative have been established to formalize market accountability for programs that engage communities and networks – focusing on the dynamics of value in clusters of entrepreneurial endeavors rather than seeking the isolated lottery winnings for the few. In these and other programs, engagement of the full supply chain in every element of the commercial pursuit not only enhances the opportunity for more ethical treatment of people and their environments but also raises the value of production to include social benefit premiums.

Innovation literacy, put simply, is fundamental to engaging actors within communities around business and market models based on genuine conditions and market dynamics rather than holding out wistful models that are neither true in their telling nor reproducible in their promotion.

This cannot be more clearly critiqued than in the telling of the story of the last 60 years of entrepreneurial activity in the U.S. What the world has never been told is that we didn’t start our economy with angel funds and venture capital. We didn’t have a Constitutional right to an IPO. Rather, the U.S. and Europe deployed protectionist government procurement, aided by expropriated knowledge from enemies and allies, to create pockets of excessive capital that, when fully satiated in their own market hegemony, started capturing other pieces of industry in an ever expanding reach first in our own borders and then around the world. Holding out the false aspiration that others could follow suit, the U.S. promoted the fallacy of its model for others to replicate and without fail, countless nations have followed blindly into models which have left their populace disillusioned and more impoverished. It was government purchasing and preferential purchasing of everything from cars to chemicals to silicon chips that built American wealth – not fair trade. In fact, in the early 1980’s it was our fear of Japanese technology that reinforced our modification of patent laws and investment policy to artificially enhance our innovative position in the world.

In India alone, hundreds of U.S. Patents from thousands of labs have been filed with virtually no commercialization in any fashion. Meanwhile these pieces of property have served to inspire thousands of commercial projects for which no benefit has returned to India. Thousands of plants, heritable knowledge elements and know how has been taken from India with no concerted program to repatriate it or the profits derived therefrom. And all the while, India’s government and those throughout the world, are forced to accept fraudulent patents on medicines and technologies which have been granted in error without any access to equitable relief. In both IPR and trade, the U.S. and Europe utilized their market influence to generate wealth and, having arrived, then created rules forced on the rest of the world to deny the rest of the world the utilities they used in their own ascent.


I am reminded of the image carved into one of New York’s landmark buildings depicting the Auschwitz concentration camp with the inscription “Indifference to Injustice is the Gate to Hell”. Aligning with those who, having used protectionism to gain power, prohibit others from favorable purchasing and consumer dynamic enablement, is participating in an injustice that has cost millions their lives and livelihoods and cannot be tolerated. It is, in the final analysis, the case that any endeavor in business incubation must benefit from market and public policy that is willing to invest in enterprise by being its first customer, not creditor. Gross Innovative Output must be a condition adopted by, and assessed within all levels of tender and procurement and is essential for any nation to integrate if it is to create a dynamic and healthy domestic enterprise environment. The purchasing of locally supplied products and labor, at a premium, has been shown to be the fuel for the U.S., Japanese, Korean, Chinese, and European economies and it must be promoted for the benefit of all nations.

Now we come to my favorite topic – Innovation Recycling. To know me is to know that I have advocated my whole life for accountability in innovation. With over 50 million patents issued around the world covering all manner of technology, good, or service, the world is awash with disclosures of creativity and corruption, transformative enablements and imposters. However, in the past 10 years, this chaos has provided the compost – or recycling – for a new opportunity. During the expansion of the leveraged merger and acquisition markets over the past 15 years, it became quite common for larger integrated companies to acquire smaller innovative companies for one or two core products or capabilities. All in-process and non-core technologies held by the acquired company were abandoned as “non-core”. If a technology didn’t generate over $100 million in annual revenue, it was discarded outright by several major corporations. In short, the majority of acquired innovation was put in the rubbish heap for the short term exploitation of the select few. In every key environmental technology sector, for example, more patents were abandoned and expired into the public domain than all currently enforced commercial platforms. In short, the solutions for everything from distributed power, to fuel cells, to intelligent batteries, to wind, solar, water energy and purification, hydrogen fuel, and much more is available in the Open Source commons as expired and abandoned. This was not because it was useless. Rather it is because it had not yet achieved a level of commercial output to displace the incumbent – often inferior – technology. Every incubator and innovation lab should immediately put in place an active profile of this recyclable asset pool for research, development, repurposing and commercialization. In addition, the innovators, whose work was abandoned and discarded, can be re-enlisted to help bring new life to their discarded and overlooked creativity enabling new models of value creation and social network exchanges.

This type innovation network re-engagement facilitates what I refer to as “Fusion Networks” where we catalyze industrial and gross innovation output with the same restrictive properties – now in the public domain – that had precluded earlier use and adoption. By seeing what has been done and learning from barriers to commercialization, the emerging entrepreneur can pre-qualify countless resources that were once thought to preclude engagement and now repurpose these into value components. This open source innovation stewardship views innovation in the appropriate light of what it is – namely, a utility of enterprise, not the enterprise in and of itself. By right-sizing awareness of interdependency, the common impediment to incubation emanating from the innovator seeing him or herself as the exclusive enabler is mitigated with evidence sourced from numerous inputs provided by innovation recycling.

The journey towards a future integrating innovation literacy, gross innovative output and innovation recycling can begin here today. In point of fact, it has begun whether we like it or not. There will be no Silicon Valley or Bavarian economic miracle in India because it wasn’t a miracle where the legends started. Exploitative capital will not build the next economy or the next nation. By educating ourselves to see that value – and all the dimensions of wealth – manifest when we focus on humanity rather than the artifacts created thereby we can create models of providential wealth which create lasting industry with purpose rather than short term punctuated equilibriums of extractive excess. Rather than teaching our entrepreneurs how to win exclusively, we can support efforts to expand the use of and contribution to the commons. As David Bollier points out in his book Viral Spiral, the rise of social network utilities on the internet has already catalyzed the emergence of economic innovation not considered just 5 or 10 years ago. This dynamic can spread to other domains.

Specifically, we recommend that discussions of capital access be replaced with discussions of customer facilitation and value recognition. Realizing that investment is constrained to achieve a neutral effect – a dollar invested is a dollar spent – where as market validation is value accretive and capable of supporting ethical financial services, our efforts should be to map and then facilitate market access. At a public policy and NGO level, this means purchasing from local SMEs and, when larger tenders are constructed for national procurements, governments should insist on the use of innovation recycling, open source innovation and facilitate the same through the use of Global Innovation Credits. This scheme allows a government to purchase from suppliers who are ethically using open source and charging premiums only where genuine new effort and innovation is required.

Today, as we kick off the 4th Asia Pacific Conference on Business Incubation, let us commit to ourselves and the world that we will apply the same level of innovation to our thoughts and deliberations as we expect from our entrepreneurial community. Let us not perpetuate the myths and legends which have cost global economies billions of dollars in futile social and business infrastructure and at least three decades of fruitless wandering. Rather, let us rise in this occasion to the new day. A day which sees Heritable Innovation honored, that sees domestic production and innovation validated with customers, and that sees the masses rise on the innovation recycled from neglect and misuse and repurposed for a cleaner, greener, ethicological future.

Global Financial Crisis “Killed” by Unbridled Optimism

Is that like “irrational exuberance”?


The Sydney Daily Telegraph ran the 98pt font headline “IT’S OVER” this morning followed by the tagline about the crisis being killed by optimism. As Australians awoke to this news, I was struck with the irony that there were two “truths” in this hype (I’ll save my review of the falsehoods for another day).

First, for the banks who swindled American and European governments in getting dollar for dollar insurance for derivative disasters – now topped up with taxpayer funds – their crisis is over. Once again management and well informed investors have walked away with more cash leaving the gap between monetary riches even greater between the haves and have nots. Second, IT really is OVER. So there you have it. The tyranny of the past – architected by closely held interests since Bretton Woods – have satisfied themselves that they’re on sure footing… for now.

However, on this day, let me tell you about another “IT’S OVER” that’s worth celebrating. On this day, an unprecedented thing happened which will genuinely change the face of the future. Ignorance arbitrage and information asymmetry were dealt a fatal blow with the stroke of three pens today.

In a long forgotten corner of the world in East New Britain, Papua New Guinea, the three Chachet (Baining) presidents – from the Inland, Lassul and Sinivit Local Level governments – signed the first ever letter outlining grievances against the Toronto Stock Exchange listed New Guinea Gold Corporation (TSX-V: NGG) – and sent it to the head of compliance at the Exchange. People who have lived for generations without a voice and without access to justice took a stand and began a journey to bring transparency into one of the most hideous abuses humanity has tolerated – namely, the irrational lust for gold at all costs. Led by the courage of the President of the Sinivit Local Level government, the Hon. Boniface Setavo, these presidents stood for their people and their land and have moved Archimedes’ fulcrum.

Should you be interested in a copy of the letter – see the following and I encourage you and all your friends to write to the Toronto Stock Exchange and help call for accountability for those who have lived without justice. Together, we can let that which is “over” be replaced with something which honors transparency, ethical behavior, benefit sharing, and ecological harmony.


_____________________

Phone +675 983 9011 P.O. Box 1974
Fax: +675 983 9012 Rabaul, ENBP


24 July 2009

Joanne Butz
Compliance and Disclosure - Office of Enforcement
Toronto Stock Exchange
Fax: 403 234 4305
E-mail: joanne.butz@tsxventure.com

Office of Complaints or Concerns
Fax: 604 688 6051
E-mail: complianceanddisclosure@tsxventure.com

Dear Ms. Butz,

In my capacity as the President of the Sinivit Local Level Government (LLG) and in joint partnership with two Chachet (Baining) Presidents of Inland and Lassul LLG’s of the Province of East New Britain, Papua New Guinea, we are kindly requesting your consideration of a matter regarding a corporation operating within our province and listed on the Toronto Stock Exchange, namely, New Guinea Gold Corporation (TSX-V: NGG). NGG commenced production of gold from its Sinivit mine – operating in my jurisdiction – without the appropriate agreements mandated by the National Government of the Independent State of Papua New Guinea and without consummating a binding agreement with the landowners of the Sinivit Local Level Government for which I am the President. This operating condition is in violation of the Mining Act of 1992, as amended, of the Independent State of Papua New Guinea.

While this dereliction of compliance with our laws is a matter for our law enforcement to manage, my correspondence with you regards matters that relate to your own oversight and enforcement considerations. At the end of 2008, our respective LLG offices requested the services of M•CAM Inc. to assist us in the investigation of the financial reporting of the NGG operations. As we were unable to gain a clear picture of their operations directly, we asked M•CAM’s financial investigations unit to compile all of the financial statements, press releases and corporate communications of NGG for our own internal investigation. What we found was informative and presents both you and us with significant cause for concern.

First, we found that NGG has been selling gold (outside of compliance with the laws of the Independent State of Papua New Guinea) since May 2008. The company’s statements about commencing production are inconsistent in their published reports to shareholders, along with their report of sales, and may represent misleading statements under your regulations.

Second, in a report issued by NGG on May 20, 2009, the company reported that it had sold CAD$6,185,000 in gold sales to date. In the same report, they state that they have between CAD$7-8 million in recoverable gold in leaching vats as of March 2009. In their most recent audited financial statement, the company makes a reference to royalty payments obligated to undisclosed interests along with other net operating loss items including refining costs but at no point does the company make reference to, nor itemize, any of their obligations to the National or Provincial Government or the local landowners with whom they should have, but have not concluded, an operating agreement – none of which have been paid. Under their “Legal Proceedings” section of their report, the company states that they have “no contingent liabilities”.

Regrettably, one of the most troubling pieces of information from the Company’s 2008 statement to shareholders was the fact that Gold Mines of Niugini Holdings (the shell corporation owning 10% of NGG and the counter-party to the draft Memorandum of Agreement with the Uramot local landowner group) had been assessed over CAD$1,800,000 in debt for operations. So not only have the landowners and the Province received no financial benefit for this operation but rather, they are beset with the environmental damage and massive debt as a result of the “shareholder” status in a shell corporation which is assessed debt but does not currently report any intent to pay out dividends. Under the breached 1996 Memorandum of Agreement, no understanding was made between the parties to authorize the assumption of debt or the accrual of interest charges by, or obligated to, the Uramot Company Limited or any other entity associated with the mine.

Finally, on June 1, 2009, the company issued a press release stating that, “NEW GUINEA GOLD REPORTS FIRST PROFITABLE QUARTER IN Q1, 2009”. This statement included a report that the net profit was primarily attributable to “$69,162 (quarter ended March 31, 2008: $nil) of interest charges accrued on the long term debtor owed by the Company’s Mt Sinivit mine joint venture partner’s share of capital and operating costs.” Creating a majority held company, charging it interest, and then declaring the interest as income for the sake of profit, appears to be misleading and creates a cause for concern given the questionable legitimacy of the partner/debtor entity.

The company was put on notice of a Breach of the 1996 Memorandum of Agreement between it and the Uramot Company Limited on the 13th of February 2009. We have not seen evidence of this reported to shareholders. A company representative made reference to a payment due to parties in Papua New Guinea in an article in The National (one of our two national papers) and alleged that it had not yet been paid as the company was waiting to have a counter-party to which it is obligated. We have not seen evidence of the amount or the assent to obligation made by the company in any of its reports to shareholders.

While our National and Provincial grievances with New Guinea Gold Corporation are well beyond what are enumerated herein, these matters are materially and adversely impacting our confidence in the operations of New Guinea Gold Corporation and are calling into question our belief that the Toronto Stock Exchange rules on reporting, accountability and transparency are being adequately assessed or enforced. I would welcome your cooperation in an inquiry into the above-referenced matters and trust that we can work together to see stockholders’ in Canada and stakeholders’ in Papua New Guinea interests protected.

I submit for your information and consideration,

Yours Faithfully,


HON. BONIFACE M. SETAVO, MPA
President – Sinivit Baining LLG

HON. BERNARD KULAP
President – Lassul Baining LLG

HON. ANDREW KUSAK
President – Inland Baining LLG


Cc: The Honorable Leo Dion, CMG, QPM, MP
Governor East New Britain Province

The Mine Manager
Sinivit Gold Mine Project
P.O. Box 808
KOKOPO
East New Britain Province
Independent State of Papua New Guinea

Provincial Administrator
East New Britain Provincial Government

Mr. Kepas Wali
Chief Executive Officer
Mineral Resources Authority
kwali@mra.gov.pg


-

Death Tax on Stuff

The Obsolescing of Planned Obsolescence Economies

In an effort to stem the frugality of the populace during the Great Depression, Bernard London wrote a compelling piece on “Ending the Depression Through Planned Obsolescence.” His thesis ran something like this… if the public doesn’t spend, the economy can’t recover… therefore, we need the public to spend more… therefore we must punish a person who possesses or uses a product longer than its statistical life and actually begin to tax continued use after depreciation had run its course. This concept and phrase – coined in 1932 – was popularized by the great Industrial Design engineer Brooks Stevens who, in 1954, claimed to have coined the term. A tiny irony captured by the fortunate documentary work of my dear friend Chip Duncan (www.duncanentertainment.com) who had the foresight to interview Stevens before his death.

Brooks Stevens (and his ignored muse Bernard London) lived in a time when two consequences of his admonitions were either unconsidered or relegated to infinite improbability. Both men failed to realize that, in promoting a public good where consumers seek something “a little newer, a little better, a little sooner than is necessary,” the drain on natural resources and energy must be viewed as relatively infinite and of nominal cost. Further, they failed to acknowledge the axiomatic imperative that consumers actually purchase with wages, not credit. The ignorance of both of these implicit assumptions has portended the end of their reign of indifferent, immoral consumerism. In Duncan’s interview, Stevens makes the statement that no company would be so “diabolical” to actually create cheap or inferior products to pass along to customers so that they would have to constantly buy more stuff. Does anyone see an irony in the fact that Stevens made this assumption around the same time as a little retailer of cheap stuff was getting off the ground in an anonymous corner of America – Bentonville Arkansas?

On July 9, 2009, the last of my Phase I forecasts for the collapse of the current economic system came into sharp focus. The realization that credit card debt – the cloaked specter that has been luring the public and politicians alike to try to solve a faux “real estate” crisis – has finally hit the collective consciousness. Congratulations – it only took a few years from my Arlington Institute “House of Cards” speech to discover what has been known and reported since the late 1990’s. U.S. banks are acknowledging that they stand on the precipice of massive consumer credit default exposures just in time for the summer holidays. And, at the same time, the People’s Bank of China lent almost 25% of the country’s GDP in new credit issuance within China fueling a gross domestic product growth which could top 8 percent this year. The difference between Chinese borrowing and U.S. borrowing is that the U.S. debt was actually being purchased by international interests – the Chinese debt is being recycled into their economy. China, the producer of last resort for the London Stevens Maelstrom of consumption, is now inverting its economy having built manufacturing and energy infrastructure financed by the excesses of the West. They have optioned energy, agriculture, water, and other resources from Tonga to Timbuktu and have out-maneuvered the U.S. and Europe at every turn. And now, they are ready to make their next bold move…

What if their friend and gold miner extraordinaire Robert Friedland suggests that, with China’s abundance of gold reserves and mineral reserves, it adopts an actual or synthetic gold standard to back the Renminbi? Could the Asian Century that Friedland has forecast have it’s auspicious beginning this year and has the Bretton Woods dollar denominated consumerism just met its phantasmal end in accordance with the London Stevens Maelstrom? Watch Ivanhoe Mines and ask yourself, what if….?


__

To Have and To Hold Until Life Insurance Do Us Part

I was delighted to learn from today’s Wall Street Journal that next Tuesday, at AIG’s annual meeting, the U.S. taxpayers will be represented as they are now the largest shareholders. As a taxpayer, I surveyed my mail and found that apparently my proxy statement must have been lost by the U.S. Postal Service so I’m writing to ask the rest of you to “Vote No” to the board and its plans. Here’s why.

In what is clearly a Ponzi scheme by any definition, the Fed is about to receive, unless interrupted by shareholders “bonds valued at up to $8.5 billion backed by life-insurance policies, which could cut the Fed debt,” according to the WSJ and corporate statements. The Fed, for all of our benefit is NOT an organization which benefits the U.S. taxpayer and placing life insurance annuities into the Fed’s hands is an extremely bad idea. The Federal Reserve does not have any business benefitting from life insurance annuities and income ahead of the taxpayers. And, equally challenging, those beneficiaries who have policies which now are being leveraged to manage AIG’s balance sheet, my not be excited to know that the liquidity that is called upon at death is now leveraged by an insolvent financial institution which hasn’t been able to manage hundreds of billions of dollars that have been minted by the Treasury. Using funds from one investor to pay off another is the core of Ponzi scams and this one is epic in proportion. Come to think of it, if the three government trustees representing our interests want to have qualified expertise to execute their current plans, we should see about getting Bernie Madoff on the board candidate list and select R. Allen Sanford as an alternate.

It would be a great idea to have all AIG life insurance policy holders and beneficiaries, to look carefully at their contracts to see if they actually authorized the assignment of their funds for use in this fashion. Wouldn’t it be fun if the fine print – that nemesis of transparency – actually rendered AIG and U.S. government actions impossible or illegal? Wouldn’t it be fun if someone actually woke up and realized that the taxpayer’s interests are not only being overlooked but, more tragically, the fiduciary trust of life-insurance is now being gambled in a government sanctioned Ponzi scheme?

Like I said, I didn’t get my proxy statement. Maybe it was the failure of the postal system. Maybe it was because AIG doesn’t have me on their favorite shareholder list. During my frequent visits to 70 Pine St. in the financial district in Manhattan, I did not always leave having made the best impression when suggesting that accountability and collateral integrity had value. Regardless, I trust that the rest of you show up for the meeting and vote “no”.

After the vote, I hope that one person has the courage to stand up and ask for genuine accountability. In the $173 billion of “aid” (isn’t it nice to know that we’ve no longer even come to refer to this as “bailout” or “debt” but now refer to this in the same way we’d refer to providing AIDS or malaria treatments to our neighbors around the world?) we must have crossed some threshold where we as taxpayers and policy holders are entitled to have genuine accounting for this mess. Obama’s promise of transparency in government can no longer be squashed under the pejorative assumption that it’s too difficult to understand. Tell the truth. As I’ve written before, the pension exposure here is already toxic. Turning the contractual obligations on life insurance benefits over to the Fed is adding insult to injury.

In his up-coming book, The Twelve: 12.21.12 Time Is Running Out, William Gladstone concludes :

“Truth, integrity, and love are what will always matter most in life. The shift that is coming will highlight these simple values, which have been known throughout the ages. As a species and planet, we are facing huge challenges, but the first steps are to wake up to who you really are and wake up as many others as you can.”

Don’t hit the snooze button and go back to sleep. Wake up. Let your friends and colleagues know that the paradigms of contract, public accountability, vows, and trusts all need to be invited into the agora and need to be reclaimed so that commitments made for life are honored.

I will be off-line for the coming week as our family – Colleen, Kate, and Zach and I – partner with 25 others in Reynosa Mexico where we’ll be building houses with our dear friends who work to provide shelter for the displaced homeless in this land of NAFTA’s nightmare. I am deeply grateful to many of you who have contributed to allow us to take the largest group we’ve ever led. The houses and roofs that we build will have your spirit in every sweat soaked line of mortar. While we sweat under the sweltering sun, I trust that you will celebrate a new form of Independence on July 4th. Rather than toasting an event of tax revolt and violence – I trust that you will find ways to share in celebrations of independence from the consensus and tyranny of greed and fear and do so with dependent and interdependent communities wherever you find yourself.

__

For more posts… visit www.invertedalchemy.blogspot.com

__

A Flock of Black Swans Just Landed

Well friends, we have been discussing the next phase of the economic collapse for some time and I just wanted to point out that a flock of Black Swans just landed (thank you Nassim for the metaphor). In a rather inconspicuous gesture, this morning saw the announcement by The Hartford (the 200-year legacy life and property insurer) that they are taking $3.4 billion in TARP funds and selling up to $750 million of common stock. What makes this significant is what their liquidity challenges represent.

For sometime, I’ve been advising that the reason why Washington is scrambling to put bandages on the hemorrhaging patients in the economy is because there is a greater (and known to at least some of them) specter looming in the darkness. The unholy cover-up seeks to mask the fact that the much touted illiquidity of entitlements (in the form of Social Security and health care obligations) are real but the greater exposure is the significant lack of capital to meet contracted payment obligations in the private sector. Life insurers, annuity managers, pension managers, and others – all who were all too happy to scoop fat fees off of managing investments – are not only undercapitalized to meet obligations but, more unfortunately, the safety net in the PBGC is also illiquid. I seem to be alone in pointing out that the AIG bailout had nothing to do with the importance of insurance (look at the fact that AIG doesn’t want to pay for the US Airways Hudson River miracle) but it served as a money-laundering facility to push funds to banks and other financial institutions with whom AIG had counter-party credit risks. However, the laundry exercise was a smokescreen for a greater risk that The Hartford and Allianz balance sheet uncovers – namely that the pension guaranties, together with life insurance obligations – two stalwarts of American retirement comfort – are in massive trouble and that shoe is falling now.

In case you’re not convinced, ask yourself why unions wound up with so much of the automotive bankruptcies. It’s not to confuse the line between management and labor (thus causing Keynes to do back-flips in his grave) but rather it is to shield the public from seeing the degree to which pensions have been short-changed and mismanaged.

“The Armageddon-risk is off the table,” according to Hartford’s Chairman and Chief Executive Ramani Ayer in his June 12, 2009 interview on CNBC. That’s good because it never was on the table. As I discuss in my radio interview which will be broadcast Monday, June 15 on VoiceAmerica, we’ve got some serious reckoning coming and a tiny piece of tribulation and judgment may be served in the main dining room. No dark horsemen – just a few black swans!


For more encouraging reading, check out the two previous posts from the Chicago Globalization for the Common Good Conference.

_

The Chicago Declaration: An Interfaith Perspective on Globalization for the Common Good

The Eighth Annual International Conference

“Globalization: The Challenge to America”
Chicago 2009 - Loyola University

Prepared in a collaboration of James Quilligan, David Martin, Steve Szeghi, Kamran Mofid, Jim Kenney, Students of the Global College, and other attendees

We honor the spirit of the native peoples, the Pottawattamie, who dwelled here long ago on wetlands that stretched between a generative river and a great lake, calling it Chikagu, or ‘Land of the Wild Onion’. We come together in the city of Chicago, an economic and cultural crossroads, which has been a center of US and international affairs from its inception in 1833. Our conference, meeting in the Land of Abraham Lincoln, has been inspired by the vision of a new President from Chicago, Barack Obama, and the real hope for a new alignment of the common good of the United States with that of the world.

Since our last gathering in 2008, the world has changed significantly. We have entered into the most serious economic crisis since the Great Depression. Poverty, social inequality and violations of human rights have widened sharply. Under present national policies, as economic malaise, unemployment and debt continue to mount, the real cost of ‘correcting’ the market will continue to be borne by the world’s poor and the environment. Clearly, climate change is far more serious than we had believed only a year ago; and some researchers now say that without a comprehensive intervention to reverse the trendlines pointing toward species extinction, we cannot even assume that there will be future generations upon the Earth. As all of these social, economic and ecological crises heighten, international political tensions also grow more serious. Consumptive individualism and neo-liberalism are in crisis. Globalization is no longer merely the challenge of our growing interdependence, it is also a challenge of transforming human experience and values in a time of crisis. We have no choice but to face these new clouds on the horizon and to embrace real change.

Many of the world’s problems originated in US policies and yet the potential for solving them is also uniquely vested in the United States. The US must play a significant role in the determination of the new world that is emerging through this present crisis. In helping shape institutions that will take us beyond market economies committed to uncontrolled growth, the US must also join with other states in charting the pathways toward social justice and the realization of human rights. Policy must now embrace all of the participants in globalization, not only in Washington DC and the world’s capitals, but in global civil society, business, education, the media and among all other members of the global community. This entails a transition from a global social philosophy of individual rights and entitlements, excessive economic growth and ecological despoliation to one of increasing inclusiveness and responsibility. Our challenge is great. In a time of continuing crisis and polarizing viewpoints, can the United States and the world agree on a new ethical approach to the global economy?

The participants of the 8th annual conference of Globalization for the Common Good have explored many of the structures needed to move us toward the global good. As conference delegates, we affirm our inalienable rights, not only as local and national citizens, but as members of the human race and citizens of the planet. We are heirs to the whole evolution of consciousness and culture, which means that we human beings have to see ourselves as part of the Earth community and recognize that all of life is bound together. We realize that, as members of the household of humanity, we must provide security, sanctuary and constructive engagement for all of our human family.

Sustained by the bounty of all, called by the Sacred, and animated into action by the Spirit of Peace, Justice, and Reverence for All Life, we pledge to hold ourselves responsible and accountable for many commitments. We affirm the vital importance of


- non-violence, dialogue and charity in personal, ethnic and national relations,
and deplore the increasing violence in our world, acutely aware that, with the
proliferation of weapons of mass destruction, there is an increasing possibility of
‘humanicide’ which would take genocide to an even higher magnitude of horror

- the full participation of women in the work of remaking our world, recognizing the rich
complexity of the feminine dimension of the human and the creative compassion, insight
and vision that women offer

- the physical and cultural survival of indigenous peoples through new expressions of sovereignty and self-determination

- the world’s wisdom traditions, which offer living examples of the fruits of contemplation and reflection for contemporary society

- the values that all religions share, arising from their different histories, and the need for particular religions to look beyond the confines of their own dogmas and practices and recognize our common humanity in responding to the cries of those who suffer and in aiding community life through the task of rebuilding and reconciliation

- the rapidly developing global interreligious movement, which offers a radical challenge to sectarian intolerance and violence in the name of religion

- the commons, which has much to teach us about the self-governance and allocation of our shared resources – natural, social, cultural, and intellectual – as an alternative that transcends the interests of the private sector and the State sector in preserving the values of our inherited gifts for future generations

- biodiversity and interspecies ethics, and the need to recognize and legitimate the essential rights of all of Earth’s life forms

- intergenerational engagement of our elders with our visionary youth, who must no longer be ignored in the creation of new economic, technological and spiritual perspectives that lead toward action for the common good within society and in their own lives

- elementary schools, high schools and universities in developing ‘whole person - whole planet’ education – including the teaching of conflict resolution, a spiritual and ethical approach to mind, body and spirit, health, a curriculum on world religions, and the integration of ethics and economics – as a means of inspiring global citizenship

- a new global architecture for a virtuous economy, ensuring a financial system that is more responsive and fair, a trade system that is socially and ecologically just and sustainable, and a monetary system which provides equitable purchasing power for everyone

- businesses in encouraging competitive markets and economic growth, but also in embracing their intrinsic moral responsibility to democratize labor, democratic capital and preserve the natural commons of the planet for future generations

- independent media in informing, educating and representing cultures, nations
and religions in a balanced, technical and socially responsible manner

- the internet and new communications technology – an emergent social and cultural commons – which should remain open to all users for the purpose of networking, distributing and sharing relevant information


Today, we face a daunting transition as our de-centered, post-modern world gives way to an uncertain world of global governance. It is true that people will only accept change when they face necessity – and that we only face necessity when a crisis has come upon us. Such a moment is upon us now. We must engage these global challenges as opportunities for lasting transformational change. The problems of globalization need to be brought down to human scale. This can only be done by adopting global policies commensurate with the local values of people across the planet through the bottom-up process of grassroots globalization – the infusion of our local values into global decision-making.

The challenge to the United States, and to the world, is to adopt these new global standards and ensure that they become global norms. We believe that the interests of the US and the world are congruent. We ask: is the United States prepared to assist the shift of the destructive global political-economic-environmental order from one of unbridled growth to one that embraces material wealth creation yet also preserves social and ecological well-being, increases human happiness and enhances community life and meaning? We call upon the United States to embrace this new identity and legitimacy in a time fraught with global uncertainty but also rich with opportunity for the global common good.

Globalization for the Common Good, at Loyola University, Chicago
June 4, 2009
www.globalisationforthecommongood.org

___

De-nominating the Common Wealth: An Exploration into the Currency of the Commons

Plenary speech at the 2009 Globalization for the Common Good Conference, Loyola University, Chicago.


Dr. David E. Martin
Executive Chairman, M•CAM
Batten Fellow, Darden Graduate School of Business Administration, University of Virginia

Abstract
Examination of the artifacts of value exchange involves a journey inextricably linked to social, religious, and cultural myth. Imagination or invocation of alternative futures invites us to consider the archetypes built upon projections of our communal myth and hold the same in agnostic, polychromatic light. Our ability to manifest new utilitarian metaphors for recognition of value exchange will be log proportional to our willingness to reconsider the dogma woven into our discourse. In this exploration, I stand on the shoulders of Gregory Bateson’s invitation to see linguistic expression not as noumenon or phenomenon but rather as a metaphoric approximation of essence in which the impulse to denominate is subordinated to a receptivity to illuminate. The Common Wealth will manifest as much at a dinner with friends and strangers as in a ledger of accounts. Inseparable from the Currency of the Commons will be an unfettered visibility into all implicit costs and consensus benefits.


It is ideas, not vested interests, which are dangerous for good or evil
- John Maynard Keynes, 1936


We begin our exploration of the Currency of the Commons in one of the most generous examples I’ve experienced. Ironically, in the same land which has been ravaged by the unchecked greed of gold prospectors who consider the blood offerings of the oppressed inconsequential to satiate our lust for gold, one can sit around the elders’ fires and learn how Commons Currency has worked for millennia. I summarized my first experience with this knowledge in an essay excerpted below.

Hermetic Volcano: Ancient Futures of Wealth : A Consideration for the Future of Humanity

En route from and to Port Moresby to and from Rabaul, Papua New Guinea; July 27 and 31, 2008

Dualism, polarity, conservation of finitude, and metric-centricity have been the cognitive companion of Western and Mediterranean philosophers, scientists, and cognoscenti for over two millennia. Fueled by traditions and inspirations from Hermes Trismegistus in Egypt, to Pythagoras, to Aristotle, to St. Bonaventure, to Descartes, to Galileo, to Kepler, to Newton, to Kant, the liturgy of human reasoning has found itself in a constant struggle surrounding the Principles of Correspondence, Polarity, Causality, and Gender . In our present Newtonian framed obsession with objectivity (marketed under the laudatory and self-congratulatory term “science”), our minds have become enslaved to the notion that reality is a blend of the noumenon and phenomenon in an omnipresent, harmonic. Spurred on by the Adamic imperative to “name” or “denominate” – more contemporarily rationalized by Kant’s epistemology and Bateson’s Ecology of the Mind – and Descartes’ reductionistic rationalism, even our lucent minds fall prey to the temptation of believing that, to achieve transformative cognitive evolution for the transformation of human essence, our understanding of ancient wisdom requires a Hermetic dualism. Modern purveyors of quasi-Eastern metascience and metaphysics attempt to rationalize the yin and yang principles and the I-Ching into linguistic metaphors that rob them of their inherent beauty and complexity.

If we know we know (gnosis) than we can control, and with that control, we tell ourselves, comes power over – power over others, power over our destiny, power over that which must be changed to conform to our illumined projection of “should”. That which we don’t yet understand will be forced into an experimental model which we will design in our ignorance to measure that which we don’t yet know to confirm or contradict a hypothesis framed from reducing our capacity accept that which is unknown. Following our Adamic psychosis to name, without regard to what the aardvark really wanted to be called, we are deluded to believe that linguistic encoding is a moral imperative rather than seeing it as the means by which we restrict ourselves to communicating with a finite tribe in compressed dimensional code. Our lucency, in autoerotic ecstasy, celebrates past Renaissance and calls out for new Renaissance all the while denying the ever present completeness of Cognogentive Fusion through which all that exists is both knowable and known.

I sat around an ever-expanding circular breakfast table in Port Moresby this morning looking out over the wind swept heliorefractive Coral Sea with the most engaging set of companions. There were friends and colleagues sitting over coffee, eggs, and toast speaking about the epistemology of value. In our conversation, we were exploring the latent sequelae of ethnographers who, in the first half of the twentieth century, etched an image of Papua New Guinea and its people in the minds of the north and west. My inquiry was focused on elucidating the notion of “value” in the collective social framework prior to the projections of money, currency and development which followed in the wake of Western intervention. Specifically, I was interested in learning more about “shell money” and “bride price” – two ethnographically contrived terms that, I will propose, most egregiously damaged both the local self perception in context to outside influences as well as corrupted the appreciation of a complex social structure from which we could learn considerable improvements to our current mercenary imperatives.

Before outside influences infected the islands, “shell money” was called “taboo”. Depending on the location of the community, the type of shell selected to represent taboo was based on a complex understanding of the life that the shell represented. Among the Baining and the Komgi in what is now East New Britain, the shell chosen to be strung along rattan fibers was a small white shell about the size of a human tooth. This shell represented the perpetually effusive fertility of the sea – a symbol of the feminine mystery of the giving of life. With the top spiral of the shell removed, these small shells were strung onto fibers which typically measured the length of the stringer’s fully outstretched arm from finger tip to sternum. Ironically, and supporting the notion that taboo was not viewed as an absolute currency, the taboo was not adjusted against a “normative” arm length. If you had a shorter arm, the taboo had equal value despite the obviousness that there were fewer shells.

The taboo represented several important social constructs. First, it represented effort and industry – explicitly the sweat of the brow. When one had achieved great productivity of effort, the honor of taboo served as a physical memorial. Second, it represented honor. At Custom, visitors to the community would offer pieces of taboo, breaking off section by section and bestowing it on hosts based on the honor status of a person in the community. Both the generosity of the giver (as evidenced by the quantity of taboo offered) and the recognized honor of the recipient (evidenced by the quantity of the gift) were explicit symbols reinforcing the social value of leadership, wisdom, and rank. On finer examination, a profound subtly emerges. One’s taboo offering was not necessarily empirically assessed on quantity. Rather, the proportionality of the division of gifts provided recognition of the social values, not the absolute magnitude of shells. Third, taboo served as a means of sealing agreements between families and communities. Here, we can explore the second construct of the mistakenly identified “bride price”.

When a baby boy and baby girl were born, it was not uncommon for parents to begin the process of arranging, should the children reach adulthood, the ultimate marriage of the two. As the years through puberty passed, the families and even the broader community would begin assessing the consequence of such a consummated union. Given that land and its use was passed through matrilineal processes, the productivity of the land that would be entrusted to the girl would be considered as a component of the feminine homage that would be recognized at the marriage. Ultimately, the families would agree on the taboo – the forward option representation of future industry and productivity – associated with the granting of access to fertile ground and this would establish the feminine homage taboo. At the marriage, the families would give and receive lavish gifts of food – taro, pigs, coconuts, fish, bananas (and obviously more than a few betlenuts) – and the entire extended family of the man’s family would contribute taboo to offer as the gift to the bride. The bride’s family gift of food and provisions would, in some respect, evidence the bounty of the land that would now be serving the next generation as the bride’s familial land would, in all likelihood, be the future home of her children or their cousins while she would live with her husband. Rather than a dowry, the mutual exchange was reinforcing the sacredness of fertility and an escrow, of sorts, on future productivity of both family and land. Unfortunately, entranced by the artifact of shells on rattan (called “shell money”), this intimate communal confirmation of common values of fruitfulness was viewed by outsiders as a commodity transaction.

More profound still, is the recognition that taboo was not a redeemable, horded currency. To the contrary, while one received it at certain festivals, Custom, weddings, and funerals, one was also obliged to give in proportion to what one possessed. In short, to him who had been given much, much was obliged. In fact, taboo, rather than being a measure of horded wealth, was in fact a measure of honor and generosity. In small fragments, strands of taboo could be used to buy a chicken or a pig in commerce, however, the complete taboo serves as a deeper symbol of mutually held beliefs of honor, dignity, feminine fertility, and life. Taboo was and is not a currency contract in a dualistic representation of a monetary exchange. Rather it is an infinitely dimensional reminder of the fruitfulness that comes in holistic communal values.

What would happen if we invited ourselves back to a place where the past, present and future could walk on water, call sharks to play, carry the breath of ancestors in woven blankets, and walk with the forest spirits on burning logs? What would happen if we understood that the veins of rich minerals which link the energy of the sea to the mysterious productive land on the top of the mountain actually were there to sustain life, not minerals to extract, melt, hammer, and gild our pagan consumption? What if we were known, not for what we give in the name of Aid, but by our ability to insure that for everything we give, we humbly receive, with honor and dignity, an equal portion back?

I believe that we need to re-discover and be taught taboo all over again. Ironically, even that word has been corrupted by our neo-pagan christian dualism of good and evil. Taboo is the explicit, often unspoken, understanding of that which is pure, that which edifies, that which destroys, that which celebrates, and that which denigrates. It is the recognition that physical manifestations of wealth are only known in their exchange – not in their hording. It is the recognition that the creative fertility of the feminine, with all of its complexity and elegance, is what holds highest honor because, volcano, plant, or womb, the breath of life is the sacred stewardship which is that to which and from which all other things flow.


Our epistemology of economy finds its roots in ignominious inhumanities. Our modern notions of currency, market exchange, and central banking are indistinguishable to the Judeo-Christian story of Joseph in the land of Egypt when, during a great famine, Joseph and Pharaoh created the first documented commodity exchange in which currency, commodities, property rights, and futures markets were created . While frequently overlooked, this financial innovation derived from desperation and famine serve as the archetypal inspiration for even the most sophisticated market transactions today. Managed scarcity – the basis for historical and modern economic models and practice – saw humans and land as commodities for exploitation by the few for the benefit of the few. While Niall Ferguson celebrates modern financial innovation alleging it to be a crowning achievement of the modern establishment, a careful review of the Egyptian famine account contains every element of the risk-hedged arbitrage market behavior that was both celebrated and vilified in 1929 and 2007 (Aetna in the turn of the 20th century, AIG in the turn of the 21st century and J.P. Morgan, Chase, Citibank, Bank of New York, etc. and their predecessors in both).

The very word economy (derived from the Greek term describing the management of a household and first used in its current expression in France during the 15th and 16th century) emerges during a period of revolt against papal and sovereign taxation excesses in which the “house” doing the managing was the Church and the Crown. In the records of an Estates General gathering in 1484 in France, it was stated that, “Money is in the body politic what blood is in the human body: it is then necessary to examine what bleedings and purgings France has undergone.” Hale and Mallett summarize that, “the two major bleedings were papal taxation and the purchase of luxury goods from abroad. The effects of the first could be countered by political action, the second by ‘drawing gold and silver into the country.’”

The story of money as a reductionist expression of denominating value is inextricably a story of taxation – originally required to support religion and war. It may be worth noting that little has changed in at least four millennia of human history as, to this day, our fear of considering alternative, more orthogonal and humane value metrics, may have, at its core, profound angst that to question monetary and economic precepts is to menace a divine right. Five hundred years after Louis XI and Henry VII substituted luxury consumerism and terrestrial conquest for the hegemonic role of the Church’s control of wealth (set in full preeminence by Innocent III in 1199 in his financing encyclical for the Fourth Crusade), to suggest that society can operate without a single, scarce artifact of monetary exchange managed by a sovereign is still heresy. Therefore, as we consider a Commons “Currency”, we are invited to consider not only the laudatory energetics of a more human value exchange but we, at the same time, bear an obligation to consider the transition between the incumbent now and the future to which we strive. This position is seldom taken when we speak in sweeping idealisms however one of the enemies transformation comes in the form of a failure to invite the current actors into the future.

The Commons Currency hinges on a transformation from extractive finitude and scarcity management (thermodynamics) to stewardship plentitude and fruitful engagement (cognogentive fusion). To highlight this shift, it is helpful to consider the ancient future wisdom embedded in our current myths. To that end, I have selected, in one pole, John Maynard Keynes’ The General Theory of Employment, Interest, and Money (1936) which highlights the catechism that has defined and enslaved modern economic thought. Tragically, Keynes himself concludes his posthumously misapplied (though frequently invoked) treatise stating that:
“Our criticism of the accepted classical theory of economics has consisted not so much in finding logical flaws in its analysis as in pointing out that its tacit assumptions are seldom or never satisfied, with the result that it cannot solve the economic problems of the actual world”
And, while I will not reflect on the adequacy of his insights in 1936, I will make a few doctrinal observations from the Scarcity Sect which, like the indicted “classical theory” beg careful scrutiny.

First, Keynes, in his own hand, and in the current U.S. administration’s incompetent application of his tenets, builds his entire thesis on the fact that “consumption – to repeat the obvious – is the sole end and object of all economic activity.” The “propensity to consume” together with the centrality of malleable monetary friction are corollaries to every argument in his model. The natural sequelae of this foundational postulation include:
1. Labour (a euphemism for all those engaged in productive endeavors) are a commodity and are Pavlovian actors who are coerced and manipulated by fickle money-wages and interest ;
2. Natural resources supporting extraction (gold, silver, metals, oil, etc.) are free for the taking, exist for the purpose of consumption alone, and are essentially baseless in value at extraction thereby rendering them “free” for exploitation; and,
3. That entrepreneurial psychology will persist in seeking to maximize monetary profits as sine qua non giving no consideration for value metrics apart from those defined in monetary terms.

Superimpose on an understanding of Keynes’ writing the fact that one of his inspirations was Sir Isaac Newton (as evidenced in his private collection of Newton’s personal papers) and one can easily see how impersonal Euclidean reductionism was a desirable utility to build the General Theory arguments. And without irony, the University of Chicago-inspired condescension of Keynes in favor of Free Market excesses and unbridled hubris, while riding the wave of the bubbles and bursts from the Nixon-era forward to the evidencing of our present unpleasantries in 2007, equally fail both in their critique of, or effort to validate or repudiate, these inhumane assumptions.

Economists from Smith to Keynes to Friedman have been felled by the most improbable, identical stroke – the digital age. While I’m far from nostalgic about the brave new world where we’ll digitally manifest crowd sourced unity for all human needs, I am struck by the subtle coup of the digitally-empowered commons to change all the rules.

Fundamentally, the Currency of the Commons – an infinitely orthogonal value surrogate – changes all the rules. First, value can be entirely uncorrelated from consumption. In point of fact, reward and benefit can be linked to the capacity to produce. Observe in our economic transition, for example, the fact that ad revenue (not the enterprises placing advertisements) forms the basis for the intoxicating equities like Google, Amazon, eBay, and others. In a world where consumption is the raison d’être for all enterprise, we now deify the surrogates of conveyance of things, not the things. Further, by acclaim, virtual communities are now preferred venues for social interaction where electron infinitude replaces the extractive industrial complex reliance on scarcity management. And in a world where Moore’s Law has obsoleted itself, the notion of monetary surrogate depreciation-based metrics of value have become the laughingstock of irrelevance.

The emergence of the great fusion reactor that will energize and animate the next iteration of value exchange and trade will be predicated on the removal of knowledge asymmetries in recognition of the value in transparency and homage to humanity. All economic endeavors since the Fourth Crusade have been inextricably ensnared with cabals of information asymmetry. Those with the gold, make the rules and enforce the same for their hording benefit. This fulcrum control around which financial leverage has been wielded enters into auto-obliteration with the persistence of network information exchange.

The foundation of the Commons Currency renders visible the all-in costs of every trade and trade surrogate. For example, rather than the indulgence-inspired transubstantiation of environmental carnage for carbon trade credits, the Commons informs the counterparty procurer of the environmental, social, cultural, and energy components of every exchanged unit. The blood of the tin miner is seen on the box of the iPod. The cyanide-laced stream graces the cover of the gold-mining company’s annual report in London, New York, and Toronto. Similarly, the pasture, filled with llama on the terraces in the Sacred Valley in Peru, is shown with the women’s cooperative members weaving and dying cloth on the tags of designer dresses. The organic packaging from renewable grasses encases the produce from the Pacific. Transformation comes, not from violent eradication of the sirens of “efficiency” of old but rather from an Orphean sweeter song where the consumer now chooses to “value” values. In our Peace Trade initiatives, we are already seeing local enterprise flourish where this simple information utility is brought to bear.

Artifacts of the Bretton Woods hegemonic past – like the IMF, World Bank, WTO and the like – likewise are invited to transform or extinguish. A Commons Currency does not create wealth inequalities which require the self-congratulatory charity provided out of ill-gotten excess. Rather, it seeks to engage all actors in a participatory forward call option. Each person – not the euphemistic laborer – is educated – not trained – to originate or recycle innovation and industry in situ. Development and wealth redistribution is freed from the monetary resource “feasibility” hurdles and instead, the Gross Innovative Output (or GIO) is both means and metric. GIO can be scaled from the micro to the macro and can engage in Commons means-testing throughout the scale. The Commons does not lend itself to the lottery winning fervor of the past decades where the heroes are made in punctuated equilibrium while the masses are apprehended with the opiate of admiration. Neither wealthy person nor corporation nor country gains its power by manipulating scarcity. Rather, like the Komgi in our opening observation, wealth is seen as those who reduce barriers to GIO manifestation regardless of nominal artifacts.

Finally, Commons Currency is not hijacked as a surrogate for debt and taxation – rather it is a call-option for fruitful productivity. Wage labor – the bane of our employment-consumption addiction – becomes supplanted by “taboo” based on GIO engagement. The option to consume and the option to contribute are seen as equally valued and appropriately transient. The artist who wishes to share her work can be compensated in access and venue every bit as much as our current impulse to place a monetary unit value on the creation. The laborer who wishes to contribute innovation is rewarded by seeing that innovation adopted (with or without financial gain).

When John Maynard Keynes looked into the future, he actually almost saw what I’ve just described. In his conclusion, he writes,
“I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change. It will be, moreover, a great advantage of the order of events which I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden, merely a gradual but prolonged continuance of what we have seen.”
He goes on to see the day above as the day when the volume of capital increases so as to eliminate scarcity and that the executive skill of the entrepreneur will, “be harnessed to the service of the community on reasonable terms of reward.”

In East New Britain, Papua New Guinea, we are seeing the birth of the first country founded on the embrace of the Currency of the Commons. In this ancient land where humanity has engaged in enterprise for millennia, the ancient future is re-emerging. We can observe, engage, and respectfully learn the lessons from people who have cost the earth so little and rewarded us with so much. For in their lives and wisdom, we will find our Common Wealth.


__