Covalent Commerce

Chemists Gilbert N. Lewis and Irving Langmuir should be household names given the degree to which their contribution to chemistry is mentioned daily in the press. And 92 years ago this month, it was GE’s Irving Langmuir – the patent holder on the incandescent light – who introduced the principle of ‘covalence’ into our understanding of the chemical structure of molecules (Journal of the American Chemical Society, Vol. XLI, January – June 1919, pgs 868-934). While we wouldn’t understand things like carbon dioxide or water without this basic understanding of the cooperation of electrons within molecules, what I find more intriguing is the wisdom contained inside the code of Lewis’ and Langmuir’s treatises. And, for those regular readers of InvertedAlchemy, you’ll recall my affection for the Coulomb Effect, described by Charles-Auguston de Coulomb two centuries ago which helped Lewis and Langmuir understand atomic polarities and helped us describe what I have called ‘Fusion Enterprise’.

A decade ago (and posted in reprise last week), I gave a speech on the ‘Knowledge Economy and the Cross of Gold’. In this address I focused on the systemic risks that I saw emerging in our delusional migration from productivity to disembodied ‘knowledge’ economic principles and practices. My concern, borne out entirely since then, was that dissociation between commerce and productivity would threaten the very core of our economic ecosystem. Further, I suggested that, as we saw the expanding chasm between productive engagement and irresponsible detachment, we would undoubtedly see a frenzy of phantasmal ‘solutions’ to our accountability failures. In short, as we found ourselves increasingly foundering in the cold dark seas of our own illusions, we would simply play ‘Nearer My God To Thee’ louder to drown out the noise of the sinking Titanic and its passengers.

The ‘knowledge economy’ is dead. Tragically, it died because we failed to learn from our Greek forbearers the difference between knowledge borne of consideration and experience and knowledge derived from passive, superficial observation. In our made-for-sound-bite world, we mistook the noise of cacophonic ‘information’ hawkers for knowledge. Inquiry and careful analysis withered with our obsession to quantify learning through standardized tests and, at its zenith, standardized knowledge became the ultimate oxymoron. We adopted a consensus and it was an illusion.

This proclamation is not a calamity in any form. It is, in fact, the cause for great celebration. It turns out that the term ‘Knowledge Economy’, attributed by Peter Drucker’s Age of Discontinuity (1969) to the work of his colleague and fellow Austrian, Fritz Machlup in 1962, was popularized by a man who also posited in 1984 that compensation inequities (CEO’s making anything in excess of 20 times the rank and file) were “morally and socially unforgivable and we’ll pay a heavy price for it.”

Preening its wings in the early dawn of the Covalent Commerce economic cycle is a red-crowned crane – historically Sinic symbols for longevity, peace, friendship, fidelity and good luck. Arguably one of the most painted life forms in China, I find the crane as an interesting metaphor for the economic cycle to come.

Covalence is a bond that is formed by the sharing of electrons. However, what makes covalence particularly poignant is not the presence of shared energy but the fact that, for the bond to work, the electrons are sharing utility in action. And what makes this principle so attractive as a commerce metaphor is the recognition that covalent bonds exist between identical and dissimilar atoms alike. The atomic nuclei in molecules that enjoy covalent bonds retain their unique identities however achieve their molecular destiny through shared energy. As with the iconic crane, each individual has grace and elegance in isolation but achieves its symbolic utility in the presence of others.

The principles of covalent commerce are quite simple. Priorities shift from divisional, defended enclosures, to marginal benefit optimized collaboration. Benefit is derived from bounded, quantified recognition of interdependence rather than extractive tariffs on intersections and intermediaries. And, above all, detached isolationism is rejected for jointly accretive associative action in which greater utility is a direct consequence of entanglement.

In a world where the captains of the incumbency have all become marionettes in an macabre dance of destruction and denial, it is appropriate to consider that, We the People, are confronted with an opportunity to take stock of our future. We can listen to the chaos of desperation as we figure out how to concoct euphemisms for default, dereliction of duty and breach of public trust or, as the red-crested crane, take flight and find our fortunes in fidelity with other covalently bound energy.

The Knowledge Economy and a Cross of Gold

The following is the text of a speech presented nearly a decade ago. Next week, I plan to publish a follow-up to this perspective.

2001 Bluffton College Presidential Leadership Lecture
Dr. David E. Martin, CEO M•CAM
October 2, 2001

“I come to speak to you in defense of a cause as holy as the cause of liberty – the cause of humanity.”
- William Jennings Bryan, 9 July 1896

Winds of change fanned flames of controversy one hundred years ago. Across the country, upheaval caused by geopolitical and economic power realignment left Americans searching for a standard, a basis upon which they could denominate their existence. With the industrial machine drowning out the sound of the plow and scythe, a revolution was brewing – one that would change the landscape of the globe for a century. Productivity, industrial might, and cash now measured wealth, once denominated by property ownership. The idle holders of idle capital vilified by William Jennings Bryan at the Democratic National Convention in 1896 were the educated industrialist elites who, according to him, turned a deaf ear to the working masses. While all acknowledged the need to establish a currency standard, fierce battle lines were drawn on the 11th meridian of the Periodic Table of Elements with impressive skirmishes in the “A” section.

In the face of this tumultuous time, another debate was growing equally rancorous. As the 20th century dawned a movement was afoot to establish the infrastructure to consolidate the movement of wealth throughout the nascent continental country. Financial panic, alleged by many to have been instigated by proponents of a central bank, provided a stimulus to create the Federal Reserve Bank by 1913. The centralization of the mode of wealth and knowledge transfer, be it tangible or intangible, has long been known to be the path to dominance. After watching the Duke of Wellington defeat Napoleon at Waterloo, Baron Nathan Rothschild was reportedly quoted as saying, “I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man that controls Britain's money supply controls the British Empire, and I control the British money supply.” While observing that, “whoever controls the volume of money in any country is the absolute master of all industry and commerce,” President Garfield provided the inspiration for today’s presentation in his words spoken in 1880. “I am an advocate for paper money, but that paper money must represent what it professes on its face. I do not wish to hold in my hands the printed lies of the government.”

One might reasonably ask, at this moment, “How do Bryan, Garfield, Rothschild, and Morgan find themselves visiting us in October, 2001?” After all, isn’t today the day most of us mourn the 1780 hanging of British Intelligence Officer Major John Andre and celebrate the President Johnson’s swearing in of Supreme Court Justice Thurgood Marshall? An appropriate question may be the most eloquent uttering of the 1992 Vice Presidential Candidate Vice Admiral James Stockdale, “Why am I here?”

Today, we will explore the realities of a crisis of humanity more polarizing than the debate of gold or banking. We will probe the enigma of the knowledge economy that has no standard – a wealth without denomination. We will address the challenge presented by President Garfield 120 years ago and resolve to valiantly seek to address the problems we encounter. What is knowledge, how is it’s quality assessed, and who controls its distribution? Informed by the debates of yesterday, we will seek solutions for the challenges we face today.

Let me begin by making the following observations. At the turn of this century, the International Leadership Forum estimated that the adult global literacy rate was 73%. That means that the written word was meaningless to over 1.3 billion adults. With many countries boasting rates of 95%, many had rates under 50%. An UNESCO report estimates that approximately 250 million children between the ages of 5 and 14 are working and going to school. Fifty percent of this group works full-time. When one considers the numbers of people trained beyond nominal literacy, the numbers are more poignant. Less than 40% of the world’s population, over the course of their lifetime, can enter tertiary educational institutions. Sixty three percent of the world’s literate population lives in economically “developed” countries with African, Central and Southeast Asian countries disproportionately illiterate. These statistics should, in themselves, hold considerable weight. However, this is not a lecture on education of the masses. No, today, I’m concerned with a far more complex topic that, while impacted by the numbers above, is far more unnerving.

We find ourselves at a point in history where considerable acclaim is cast upon those who have achieved greatness in the pursuit of corporate goals. Forbes and Fortune herald one after the other multi-millionaire whose fame is built on success in entrepreneurial imperialism of one sort or another. During the last four years of the past decade, more millionaires and billionaires (in economic adjusted terms) were created than in the cumulative running of all of human history. Are we really that much smarter and that much more productive than all civilizations that preceded us? Are our institutions of higher learning producing genius with every diploma? Do we live in Garrison Keillor’s mythical town where, “every student is above average?” Or is it possible that we have built a tower of Babel?

Let us examine three elements of the knowledge economy.

First let us ask the question posed by Mr. Bryan. In the knowledge economy, we must ask ourselves the unsettling question of basis. In antiquity, wealth was denominated by raw materials. Those who had the most land, the most gold – in short, the most tangible property – were the wealthiest. In the evolution of economies, these basic elements were replaced by the metrics of the industrial age. In industrial economies, productivity, distribution, and market share served as the more abstract surrogates for the wealth of ages gone by. Now, in the knowledge economy, we find ourselves confronted by an economic reality without basis. Prior to the dot bomb, we were told that value was measured in “eye-balls” and “stickiness”. Billions of dollars flowed into the creation of a virtual presence that conveyed virtual information virtually anywhere. Pause; let us consider what virtual means. Our faithful Webster tells us that virtual refers to a hypothetical particle whose existence is inferred; being in essence though not formally recognized. In other words – NOT. When value is ascribed to virtual reality, how is it denominated? More importantly, how is one to know whether it is real or imagined? As the educator and the educated, how can we learn to discern reality from that which is not? Revisiting President Garfield’s conundrum – we need to know that face value is based on value or it’s a lie. Is “knowledge” the presence or absence of literacy, the letters of degree conferred on an individual, the prestige of institution or commercial affiliation, nationality, race, creed? Or, is knowledge something more than these?

I would suggest the sine qua non of knowledge economy is the need for a gold standard. Copyright law of the United States established that facts have neither owner nor value. The organization and presentation of facts in various expressions have value. Our society is filled with data; our challenge is to transform that into usable information leading to wise deployment creating value. Yes, here’s where I appeal to the student populous movement – educational assessment should not be based on the recitation of facts established by U.S. law as valueless – now here comes the part where I shamelessly pander to the faculty – but in the useful synthesis and application of the same. Knowledge built on rout memorization is valueless, knowledge built on application and problem solving has value.

Second, we explore the problem of ownership. There was a time when ownership was rather unambiguous. Possession was 9/10ths of the law. Land, buildings, shipping lines and trade names were clearly defined by title. In the knowledge economy, we are confronted with the timeless problem of counterfeit. When he realized that conventional warfare was not swinging in his favor, Hitler, in an effort to decimate the United States and Great Britain economies began the process of printing counterfeit dollars and pounds. The French tried the same technique in Vietnam and the U.S. introduced 20 Peso notes in Cuba for the infamous Bay of Pigs invasion. Why is it that from Duke Sforz of Venice in 1470, to Napoleon, to Hitler, to Kennedy counterfeiting has been an integral part of war? Because savvy tacticians know that economic chaos is one of the world’s most effective weapons. Introducing counterfeit undermines all economic systems as confidence is lost in the representation of legal tender.

So too, in the knowledge economy, counterfeits are an untold tactical weapon. In a recent study made of United States patents, our company found that over 35% of all current patents are intellectual forgeries. This means that the patent claims rights already secured by another party or already existent in the public domain. One cannot help being overwhelmed in Malaysia with copies of Microsoft Office being sold for $2 in the shopping malls of Johor Bahru. Passing off as proprietary that which is not is an unmitigated disaster looming over our current economic system. For the knowledge economy to have any viability, forgery detection must be implemented.

Last Spring, the University of Virginia gained national attention when one of its faculty implemented a computer system to determine whether term papers submitted by students were plagiarized or authentic. In certain sections, as many as 25% of the papers were copied, in part or in whole from other sources – often the papers of classmates. Is it any wonder that we go on in life to copy the works of others in business, education, and other walks of life when, in high school and college, we get away with intellectual theft? I think not. However, I believe that educators and students alike must realize that these patterned behaviors establish foundations that lead to ruin.

Finally, let us consider trade. Many have proposed that with the ubiquitous nature of the internet, we are becoming a boundary-less world. Traditional geopolitical barriers are eroding. People are interacting with one another irrespective of time zone, language, tradition, or status. In real time, I collaborate with business partners overlooking Tiananmen Square, Big Ben and Tierra del Fuego. However, in these times of heady multinationalism, we must consider the often-overlooked dependency that is being created in this unrestricted world wide web. Knowledge must be transferred and shared for it to achieve its greatest impact. However, as we see the expansion of telecommunications-facilitated trade, we see an equally expanding malignancy of inadvertent isolationism.

Local vendors close their doors while we shop on-line. All the while, we lose the priceless, informal interactions with our neighbors telling us of places, people and events that once were intrinsic to the broadening of our minds and perspectives. We miss the touch of the hand, the warmth of a smile and the sharing of a friend’s tear – in our wealth, we gain poverty of soul and mind. In the midst of this efficiency, what has the knowledge economy lost? Is the local ISP the Rothschild of the knowledge economy?

We have sacrificed human interaction. In our global economic conquests we have lost the innovative impact of observation. Rather than go to places, we visit them virtually (remember, that means we DON’T). I would like to suggest that one of the greatest threats of the knowledge economy is that we will actually see a reduction in global understanding.

We will see, hear and trade with only those who are wired into the web. Rather than learning from the wisdom of the cultures that have passed before us, we will see only that which the content providers deem appropriate and, in so doing, we will see a contraction, not an expansion of knowledge. In short, we will choke the inventory of innovation and inquiry in the morass of irrelevancy. We must resist the centralization of information and knowledge. Efforts must be made to learn from the richness of indigenous knowledge that may never find its way to a web browser. We must develop multiple venues and vehicles for the exchange of knowledge so that the trade routes are not the monopolistic empire of the few.

So today, we must heed the warnings of history and listen to the voices of the past so that we build a legacy of renaissance, not repression. We need to encourage one another to add value, not volume, to the knowledge of the ages. We must commit ourselves to respect and value the uniqueness of the intellectual property of each member of the human race and decry piracy of the same. And finally, we must vigorously resist the temptation of sloth and in its place actively participate with the global community. We must resolve to move forward the democratization of knowledge and be relentless in our efforts to bear the standard of substance in the face of maelstrom of virtual value.

Let now ring true the statement made by Mr. Bryan on that hot July day in 1896, “The humblest citizen in all the land, when clad in the armor of a righteous cause, is stronger than all the hosts of error.”

Uneven Integrity

Fed Chairman Ben Bernanke has been desperate to find the linguistics to encode his self-imposed integrity paradox. This week, he referred to the “frustratingly slow” and “uneven” recovery. Thank heavens he’s not a doctor. “You may walk with a limp,” he would advise a patient prior to bilateral amputation of both legs. “Your feet will not recover as quickly as the rest of your body.” Really? When the evidence is overwhelmingly against the much heralded repair of the carnage of the debt fueled spending frenzy of the past decade, one has to wonder why, prior to the election cycle, he finds it impossible to tell the truth. The Chinese SAFE reports at the beginning of the week – so damning that the government had to censor their own transparency by removing public comments on U.S. economic instability from their own websites setting a new standard for censorship – leave no doubt that the market for more U.S. debt has soured beyond already abysmal standards.


In a ‘shocking’ and ‘unexpected’ turn of events, equities ended the week at a low that wiped over $1 trillion in market value away in 6 weeks – the longest slump since October of 2002. The financial media concluded the day on Friday with a record number of “weaker than expected” and “less than estimated” hyperbolic descriptors of the events of the past 6 weeks. Blackrock’s Bob Doll was quoted in Bloomberg saying, “We’re at the end of the recovery and the beginning of the expansion.” And, the casual reader may carelessly overlook the fact that his enthusiasm has more to do with Blackrock’s international exposure – including their massive Asian market interest – than reflecting bullishness on the U.S. economy.

I’ve frequently commented on the fact that sound-bite information is, in fact, misinformation. If a comment is taken out of context or, worse yet, presented without context, it may contain literal ‘truth’ without being contextually true. Most bank executives have basked in the comfort of this defense when they perjured themselves in Congress by ‘truthfully’ answering questions all the while knowing that they were hiding behind the error in the inquiry.

Visa and MasterCard both were appalled that Congress wouldn’t delay the imposition of new fee limits on charges to debit card transactions. In May, the Republican controlled House Agriculture Committee – yes, you read this correctly – AGRICULTURE – voted to delay implementation of transparency and regulation of credit default swaps. For those of you who aren’t familiar with CDS, you would be pleased to know that these traded bets against organizations meeting their financial commitments have ballooned to over $600 TRILLION – over 10 times the inflation-adjusted world’s GDP. To be abundantly clear, in addition to nonsensical deferrals of accountability like the Federal Reserve and U.S. Treasury Ponzi scheme – sorry, I mean Quantitative Easing or QE2 – the ‘recovery’ which has been so illusive is a hologram created by illegal and illusory utilities. And, the deferred enactment of regulation on CDS has been cued perfectly for the electoral calendar. You see, just before the Presidential elections, the Agriculture Committee, supported by the House Financial Services Committee - has set the CDS device to detonate just before the election.

To be clear, financial institutions like Bank of America, JP Morgan Chase, Goldman Sachs and Citigroup – all beneficiaries of the largesse of government bailouts and other concessions have achieved significant profitability arranging CDS trades. An estimated $55 billion in annual revenue is generated from these products and, without these bets and the speculation around the bets (yes, I know, this could seem confusing but this is what the recovery has been all based on, so you’ve all been drinking this illogical cool-aid), we wouldn’t have a recovery.

If you take one step back from the pathologic lying that passes itself off as news and analysis, you may be wondering why detonating another market melt-down on the eve of the next election would make sense. Apart from the obvious response seen in the Bush Administration’s eleventh hour ‘intervention’ which pumped billions of dollars into financial interests and the automotive industry as massive bonuses for aiding and abetting his 8 years of post-9-11 fiscal distractions, there is a more intriguing thesis that could be explored.

Over the past two weeks, the Department of Defense has decided to socialize a theme that I discussed years ago – namely, the growth of ‘cyber-threats’ against the U.S. Now, what follows is merely my musings around why one may want the CDS implosion and the DoD’s cyber threat marketing to be introduced at the beginning of the Presidential campaign season. CDS exist in digital form. They are private transactions and, courtesy of the Agriculture Committee’s crack oversight (please read the disdain-filled sarcasm) they have no regulation to speak of. As of this week, the U.S. and Europe are on track to break the all-time record for financial institution security breaches (at least the ones that are reported). Bear in mind that just at the end of this week, the IMF was reportedly ‘hacked’. Is this news or is it socializing a concept to make the actual event more plausible? Just a question.

So wouldn’t it be convenient if, long about September of next year, on the verge of a complete collapse of the government’s giant CDS – Ponzi racket, for a cyber attack to wipe out the records of CDS obligations? Rather than facing the messiness of the Greek bankruptcy predicament, a simple electromagnetic pulse (and EMP blamed on a hostile source) could wipe out all the records just in time for all of them to be on a single clearinghouse. If you could add Treasury records on the same platform, we could actually ERASE our financial obligations and, voila, get a fresh start. Best of all, we could blame the cyber attack on, say China or Iran, and get ourselves a whole new economic stimulus in the form of another war. The Department of Defense RF and EMP hardening budgets wouldn’t have anything to do with this scenario, would they? And best of all, in May and June of 2011, we could have been told the ‘truth’ of the plan and, as a society, ignored it.

Now, I’m not suggesting that this Dan Brown-style conspiracy could ever happen. Obviously our leadership wouldn’t be that nefarious. Obviously, somebody with integrity would insure that such a cataclysm of conscience wouldn’t actually happen. Nobody would seriously consider aggregating opaque financial obligations in a single place and then create a terrorist event to justify equally opaque wealth transfer. Right?

We, the People, need to stop hiding behind the complexity of synthetic financial products dismissing them as ‘too difficult to understand’. There’s been no recovery. There’s no plan in place to actually address our systemic problems. And chronic economist oracular failure is not due to complexity. It’s due to the fact that the court astrologers are being promoted to continue to sell the illusion. PIMCO’s Bill Gross has had the decency to try to set off the alarm surrounding the Treasury delusion and, for his recent activism, InvertedAlchemy applauds his efforts. Let’s hope that a few others decide to follow his lead and, together, we may avert a much larger crisis. Be informed. Put the puzzle together. It’s not hard – just sobering!

Looking for Hay in a Needle Stack

“Economists had expected payrolls to rise 150,000 and private hiring to increase 175,000 in May,” reported CNBC and all the other media outlets as they once again struck the familiar refrain on the ‘unexpected’ anemic jobs report at the end of the week. These, remember, are the same economists who have been telling us we’re in a recovery; that the markets are coming back; and, that our economic woes are the product of a real estate crisis.

Nothing, save political melancholy delusions, could justify the expectations that were off by over 100,000 jobs in May. And the degree to which we’re still reporting and responding to data that we: a) know is manipulated and incorrect; and, b) is not predictive of any modern market dynamic (same predictable political pandering) is staggering. I was grateful to Mary Engle at MSN Money who had the decency of reporting the 16.6% (or greater) actual unemployment statistics when one counts those who are chronically without gainful employment.

As I made the rounds in D.C. this past week – visits with industry lobbyists and Congressional representatives – I was intrigued by the degree to which we find ourselves uniformly beyond the edge of utility with the navigational tools which have aided our captains in wrecking our economy’s prospects. Yet we’re still incapable of cutting ourselves free from these albatrosses (or albatrossi) and re-examining fundamentals. In a rather poignant moment with a free-market conservative freshman member of Congress, I was explaining the need for Congress to consider solutions to economic challenges from the private sector that would require NO NEW legislation and NO NEW appropriations. In fact, what we were discussing simply requires enabling laws that have been around since the Lincoln Administration. Confronted with a call for transparent application of existing law, the member placed his hand on his forehead and said, “I guess I’m not sure what you’re asking me to do.”

Moments earlier, in the same Congressional office, a lobbyist was briefing staff on ‘key issues’ that were relevant to the member’s District. “You know, we can really be helpful in keeping the Congressman’s staff informed,” she gushed. When asked to provide input on said matters, she rattled off a list of her lobbyist colleagues who could help as her area of expertise was health care but she had colleagues in a number of other disciplines. “Just let us know what you need information about and we’ll supply you with experts,” she generously offered.

The Court of Appeals has a wonderful term – the willful practice of ignorance. This term is applied to people who, knowing that there could be information that is material to their concerns, elect to move forward without any due effort to inform themselves. On Capitol Hill, this principle extends to listening to those who have evidenced a detachment from reality in the past who persist in purveying their nonsensical views.

As we move into an acrimonious election cycle and we see the sabers sharpened on the whetstone of consensus ignorance, I wonder what it will take for us to start applying some performance discernment to the voices we elect to consume. Medicare and Medicaid, pensions, municipal bonds, public sector employment, and the dollar are all among the institutions which will NOT pass unaltered in the coming weeks and months. China’s inevitable re-marking of the value of Treasuries – something that they’ve already broadcast in their recent ‘hospitality’ afforded to the Treasury Secretary and the Federal Reserve Chairman – is not a forecast but a certainty. Realizing that China and other sovereign funds will be necessary clients in the future, S&P and Moody’s are making trifling negative statements about the U.S. economic situation realizing that to do any less would guarantee them status as relics next to other paleontology exhibitions of those who could not evolve when the climate changed.

It’s not that the models don’t work. It’s not that the metrics are inaccurate. No, it’s that the consciousness that decided what to model and what to measure is at its terminus and we’re now at the natural consequence of the line to which we sought a regression of our standard of living and our hegemonic self-perceptions. Now, the outlier is the new metric and the aggregation of perturbations is the new model. We’re not looking for the one variable that will fix the ‘old’ models but we require focus with new lenses on new variables. There’s no needle in the haystack that will save us. We are ready to go back to our roots and reassemble ourselves around productivity and accountability. And that voice, my friends, is truly rare!

Full Faith and Confidence

“Leadership is the capacity to inspire and motivate; to persuade people willingly to endure hardships, usually prolonged, and incur dangers, usually acute, that if left to themselves they would do their utmost to avoid.”

Sir Michael Howard

Over the past six months, I have been witness to a great crisis of leadership. Senior leaders of resource endowed countries and industrialized countries alike, when presented with incontrovertible evidence of grave financial inequities promoted by investment banks, treasuries, incumbent investors, and multi-lateral ‘development’ agencies have uniformly defended the abusers as a surrogate for not desiring reproach for ill-advised decisions.

“We’re already a long way down the road,” was a statement uttered recently by a head-of-state when confronted with a means to realign his people’s interests and benefit with their national resources. And, when pressed on public statements in which the same leader had stated that no decisions had been taken on resource development, the instant I recalled recent events which would suggest otherwise, his ire was raised as he knew that his indiscretions and misleading public statements were both knowable and known. “We know that your approach would have a good shot at stabilizing U.S. and European banks but it would require transparency that would not be accepted by corporations at this time,” was the response from a G-8 member. Lavish trade missions to Hong Kong, Macau, and Beijing for Pacific Islanders, African delegations and the U.S. Treasury and Federal Reserve. Goldman Sachs’ arranging for scholarships to prestigious universities and lucrative internships for the progeny of ministers and elected officials all reek of influence peddling – to say nothing of violations of Foreign Corrupt Practices Act violations in the case of U.S. entities. Promises of economic benefit and equity through shell corporations with neither governance control nor direct participation in cash flows. And, to add insult to injury, these illiquid equity interests are financed by allowing national treasuries to purchase their equity through operator-financed debt meaning that, in addition to gaining no economic value, countries are setting a certain course for bankruptcy and social reprisals – including high probabilities of civil violence.

If the risk of civil unrest was merely a theoretical abstraction in some far off land of disembodied despotism, one could almost understand a leader viewing self-interest expediency as an acceptable risk. But, what seems irrational is the fact that in every instance to which I have been privy, within the past few decades and in the adult memory of the leaders, civilian casualties have been the consequence of duly authorized, unconsidered, asymmetric excess. In many instances, the respective leaders who have defended the pillaging of their citizens’ futures have been buttressed with accolades on the international stage where multi-lateral agencies laud their emergence into the club of economic elites. It’s betting on the Titanic’s unsinkability AFTER the iceberg has rent open the hull. Could it be anything but greed-fed madness?

It was at a most recent meeting that I finally saw another explanation. More accurately, I heard it. “I can’t believe that a corporation would actually lie to a government to steal its national resources and destabilize a country,” a President said. “Great,” I replied, “I would hope that you don’t ‘believe’ anything I’m saying.” Recoiling from my unexpected reply, a bizarre window of truth emerged, his voice raising, “Well, why the hell are you wasting my time if you’re not wanting me to believe in you?”

And there it was. The real desperation. In a world filled with the certainty of oppression and wealth asymmetry, what was really lacking was not a genuine desire to democratically lead his people. No, what was really missing was evidence that an alternative could exist. I might as well have been standing before the Inquisitor suggesting that the Earth was merely a galactic dust particle in the expanse of infinite space, for my proposal and his response had nothing to do with observed fact and experienced reality. The objection was anchored in ‘illusory certainty’ that comes from ‘belief’.

The fact that an U.S. investment bank arranged for the country of Mongolia to indebt itself well beyond the country’s fiscal capacity while providing neither liquidity to service the debt nor any governance sufficient to insure expatriate management accountability is incontrovertible. The fact that the Federal Reserve and the U.S. Treasury have felt obliged to rename a Ponzi-scheme ‘Quantitative Easing’ is equally incontrovertible. The fact that the Chinese government sought to build an asset backed reserve based on the collapse of fiscal accountability in the U.S. government resulting in their massive resource imperialistic hegemonic drive has already been consummated. With energy and mineral asset deals negotiated in Iraq, Iran, and Afghanistan while their U.S. debt investments finance the United States’ loss of money, troops and integrity, one can easily observe that their calculus driving wealth transfer is both elementary and self-evident. If you stand at a vantage point of sufficient dispassion to observe what is, you can readily apprehend that desperation for an alternative narrative is fueling the paralysis of leaders across the globe.

Against this backdrop, one could find ample cause for seemingly rational despair. Will informed citizens rise up and, once again, return to violent revolt when faced with the failure of leadership that they’ll lay at the feet of their officials? Probably. Will such responses have equal consequence to all of the actual perpetrators? Definitely not. Regrettably, when lashing out against corruption, the easy target is the local leadership. But they were unlikely the sole responsible party. While international agencies point to corruption in countries across the globe as a scourge, what’s missing is the equivalent transparency on the companies, development agencies, and individuals who facilitated the same.

With a relentless commitment to effectuating alternative narratives based on actual experience, we can rise above vindictive responses and start demonstrating a more desirable condition. Remember it was the returning sails on the horizon which shook Spain, Portugal and the balance of power in Europe, not the impassioned pleas of an idealist navigator seeking funding.

So here’s an idea. Yesterday, Larry and I stood with community leaders on a hilltop just to the northeast of the airport in Port Moresby, Papua New Guinea. (By the way, PNG’s head of state is in the hospital in Singapore for those of you trying to guess who the identities are referenced above, so it wasn’t him, and it wasn’t PNG in my reference.) In an area of approximately 400 acres, 3,000 families are being moved into a model relocation village. The sweeping grasslands hide rocky clay that is not the rich volcanic soil of the New Guinea islands. However, adequate gardens are being planted and the place affords peace and tranquility not found in the choking settlements around the capital. The place is blessed with perpetual 10 – 15 knot winds, ample trees and undulating hills.

The only thing missing is a reliable water supply. A few windmills and a few wells would be sufficient to fill a gravity water tank that could be used to create a micro-utility. This public utility could be owned by the community and, once established, serve as a reliable micro business selling clean water at rates more affordable (and service more reliable) than the distant municipal supply. With a modicum of effort, local community members could meet their water and energy needs with the natural abundance of wind, light, and materials for suitably scaled propellers to supply water and electricity for lighting. Within the readership of InvertedAlchemy, there are enough people who could value seeing 3,000 families with fresh water that we could partner with the village and launch a partnership. Into it we could contribute technology, knowledge, engineering expertise, money, and time. From it we could receive custom & culture, knowledge, engineering expertise, money and well-being. Most of all, we could demonstrate that another path, one free from resource and power asymmetries, can blossom and flourish in a place where such an experience is not anticipated.

After all, if we are going to start addressing the systemic reflex of ‘disbelief’ we need to find ourselves in constant action. As long as we’re debating the lofty ideals of a more conscious humanity rather than knowing that we’ve actually tipped the balance in our present activities, we’re providing sanctuary to the malignancy that leads to persistent abuse. A cup of clean water sourced from a community-held utility indicts faith, belief, and ephemeral ideals. Whether it’s clean water for a settlement in Port Moresby or a community response obviating the illiquid obligations of the insolvent Medicare and Medicaid, which vie for the collapse of the U.S. economy, it is our actions which are called for, not beliefs. So, walk over to your sink, fridge, or water-cooler and ask yourself, “Would I like to share this experience with a stranger?” If you would, I’ve got a spot on Elder’s Hill waiting for you.

The Apocalypse Comes on Public Transportation

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On May 18, 2011 – just three short days before the Family Radio predicted rapture – a man and a white horse tried to board the 7:02pm service from Wrexham to Holyhead in the United Kingdom. You know, when you’re predicting the end of times from a mathematical formula derived from Noah’s flood, the Garden of Eden, and inspired texts (I reserve judgment on what precisely was the inspiration), and donor inflated prophetic delusions, forecasting the arrival of a Horseman of the Apocalypse and being off by about 3 days isn’t bad. Adjusting for leap years, the Gregorian calendar misprints, and obfuscated Papal Bulls, the only surprise is that the End of Times would come on UK public transportation. Then again, why not? If you’ve ever used public transportation in the UK, you’ve probably felt moments when the notion of hell and purgatory are quite real and possibly already upon us.

So, as the hours ticked on, I was particularly astute to pick up any subtle alterations indicative of the rapture. Different color sunrises, animal behavioral changes, you know the drill. On the 21st of May, to be clear, the world changed. The sky above the Rotunda at Monticello was bluer than I’ve ever seen it. Great visibility for inbound angels or outbound souls. The temperature was downright heavenly. And, without question, there were some ominous signs. The koi in my fish pond seemed to crawl half way out of the water to reach for the food that was in abundance on the ground surrounding the pond leading me to wonder if they’d be on at least four legs by the end of the End of Times at 6pm. Earthquakes happened – but then, again, they have been seeming to do that a lot lately. Martin Parkinson, Australia’s Treasury Secretary, exhibited the unbelievable candor of criticizing his PhD advisor Ben Bernanke’s departure from their co-authored paper published in 1990. And at the Preakness – after all, if you’re looking for an Apocalypse, what better a place to do so than at a horse race – Astrology came in third! Take that all you heathens! Shackleford was the Triple Crown spoiler and, as you all know, Shacklefords came from the “cradle of Christianity” (Northumberland, UK) known to be the centre of the Church’s greatest adherents back in the day. So there we have it. The UK, Shackleford, a white horse on a train… do you need any more convincing?

And, as you can see from this blog post, I made it. I’m writing to all of you from ‘the other side’. I am assuming, unless I hear otherwise, that I am know in the ‘after-life’ and, having awoken to another glorious day – sunny, fish still trying to walk, my lovely family being lovely – I’m pleased to report that the hereafter is remarkably similar to the here before. I feel a bit nicer. It seems that I’m a touch more tolerant. I don’t know but I think that the soft pretzels I made taste a little, I don’t know, softer or more pretzely. See, I can even make up words that you understand from the other side.

May 21 was a great day for a bunch of reasons. All of them had to do with the people with whom I spent the day. I had some of my dear family from South India in the house and we laughed, ate, and enjoyed life. I had Colleen, Katie, Zach and April around – making for a delightful family affair. Scooby was as affable and lazy as ever. I got to skype with some of my friends in Papua New Guinea. Yes, in fact, May 21 was a remarkable, transformative day. But most of all, the 21st was great because it let me reflect on the notion of an apocalypse.

You see, here’s my beef with world-enders and those pre-disposed to drink from their Kool-Aid chalices. I think that the notion of the giant reset button in the sky is an enemy of accountability. I think that if you actually have room in your head for the just-around-the-corner fire of destruction or eternal bliss, you’ll actually be far less motivated to make a difference with what you’re encountering today. By holding a plausible option that you really don’t have to concern yourself with, say, 1,000 year consequences for your actions because the world’s going to be toasted by some remote, vindictive recluse who is seriously angry with his own creation, you run the risk of exculpating yourself and others from actions which should be considered. Whether there is an existential hereafter or not is not the point. The point is what you do with the present. Are you showing up and making a difference in the lives you touch or in the places where you can affect consequence? If yes, tomorrow will be as rewarding as yesterday and you’ll have neither the time nor the motivation to obsess about some temporally defined shift, up, down or out. If no, May 21 will be the End of Time to make a difference that day and if you don’t wake up and show up, you’ll blow another day on the 22nd, 23rd, etc…

And, after you unwind the comedy and the irony of Family Radio’s fantasy, you see that the great tragedy is the hundreds of thousands – possibly millions – of people who, deluded by empiricism stacked on myth, chose to escape rather than engage. Whether it’s the advertisers who paid for the billboards, the vans guzzling gas up and down interstates, the pamphlets and brochures screaming out the warning of the End, or whether it’s the purveyors of fear who prey on the same fatalism to erode citizens’ confidence to create a ‘More Perfect Union’, the apocalyptic myth is destructive. The dissociation of people from consequence – temporally, spatially, or metaphysically – is a utility wielded by those who seek to manipulate and control. The sooner people of conscience and consciousness engage free from such influence, the sooner we’ll have a bit more bliss on Earth.

Happy tomorrow! Do something to celebrate being human, again.

State Coherence and Dissonance: Part 3 of 3

You have to give them credit for creativity, nefarious though it may be. When Monsanto realized it was riding glyphosate (more commonly known as the weedkiller, RoundUp®) into a patent sunset, it changed the game. Rather than suffering the fate of pharmaceutical companies who, at the end of a patented drug watch generics gobble up market-share, Monsanto decided to out-fox the social contract of ‘acceptable’ market incentives for effective monopolies. Using their quasi-monopoly on seed which had been genetically modified to resist RoundUp®, they began entering into contracts with growers which prevented farms from storing or replanting seed. In addition, under perpetual contracts, they rendered pollination by bees, wind or any other natural cause a crime and, in so doing, enslaved farmers in industrialized and marginalized countries alike. In a brilliant, albeit possibly unconstitutional sweep, Monsanto insured Phase Coherence (the ever-greening of their monopoly) by creating State Dissonance (changing their market control strategy from chemical patent to seed supply contracts). In doing this, they insured that they would continue to use an ever-greening contract strategy to support their incumbency on herbicide use (State Coherence) – contributing to countless, unquantified long-term environmental and soil degradation risks – and, at the same time, disrupt the economic and social evolution of agribusiness by effectively outlawing natural pollination through their cunning use of contracts. And, by the way, all this was done with the explicit endorsement and enforcement of the WTO, the U.S. government and the World Intellectual Property Organization’s industrial cabal in Geneva under the guise of ‘promoting’ innovation.

The most common form of State Dissonance is money. Money – in the form of promissory notes – is an explicit means of disintermediating trusted relationships. When I purchase something with money, I am saying that, for the consideration given, my relationship with you is over; my obligations to you are fully defeased. And in accepting money, the receiving party is equally divorcing any future obligation with a finality that says you have given all the consideration you need. Economists and social scientists alike have argued that this disintermediation is necessary because material, energy, or event State exchanges are inefficient. However, none of them have been able to address the erosion of community accountability and social values of citizenry impacted by this consensus behavior.

Say I have a gold mine. And, say, I want a chicken that you have so that I can have eggs every morning before I go to my gold mine. I could give you some gold in exchange for your chicken. But, if you didn’t have anything to do with the gold and you didn’t really care for gold, then we would potentially reach an impasse. I want something you have but all I have is something you don’t want. As a result, I have no means of engagement, the argument goes. So, the simplistic, linear, unimaginative mind concludes, ‘We must have a neutral surrogate (money) – which has no intrinsic value whatsoever – so that we both engage an exchange with efficiency.’

What I find most fascinating about the animation of a surrogate – in this case money – is that, we decouple things that we respectively do value and subordinate it to something with explicitly no value. And that’s deemed efficient.

Now remember, this ‘efficiency’ came from somewhere. And that somewhere was an unholy alliance between hierarchy and religion. The neutral surrogate of currency or promissory notes did not appear ex nihilo. No, it appeared for the purpose of financing conquests of the physical and the spiritual realm. And, quite conveniently, it became an efficient tool to use in the creation of taxation – an inefficiency imposed by hierarchy for disintermediation of social values like law & order, defense, and social security.

State Coherence is a condition in which matter, energy, or experience require no transformation for their utility or manifestation to achieve its purpose. In Part 1, we discussed the coconut which, at one point is calories for food, at one point is caloric heat for cooking, and at one point is fertilizer for, you guessed it, another coconut. When I need to move water to a field, I can place a wheel or turbine in the river and, using State Coherence, I can have the water move the water. If I wish to have fresh water on the coast of East New Britain in Papua New Guinea, I can use cold sea water passing through coils to condense water vapor from solar copra driers thereby collecting distilled, fresh water using cold salt water as my extraction medium.

I am intrigued by the number of environmental activists who run around the world in airplanes to whip out their laptops or iThingy's to project screen-fulls of information about what’s wrong with extractive industries. The State Dissonance of this behavior is deafening. What you’re telling me is that you will use Jet-A (jet fuel) which was pumped from the ground, refined at least 3 times; you will write your screed on your conflict metals-filled device; you will use electricity to project a gazillion watt bulb onto a synthetic screen; and, you’ll do all this to tell me that extractive industries are bad? I’m sorry, I was drowning in the State Dissonance hypocrisy so thoroughly I must have missed something.

One of the reasons we use Integral Accounting in our business and community ventures is because it provides a framework to understand State conditions. When I consider Commodity, for example, I find myself looking at all of the matter, energy or experience which exists in an ecosystem and, by explicitly identifying it, I consider what can be repurposed within State Coherence without requiring any State alteration. For example, if I want to start a not-for-profit activity and I know that to do that from scratch would require legal expenses, time, and custom and culture awareness; I can find existing, aligned or under-utilized non-profits and use them as a commodity by aligning my purpose with theirs. In this way, an artifact of Custom & Culture (in this example, a non-profit corporation), because of its presence in my ecosystem can be viewed and used as a Commodity and can obviate my need for two State creations (the definition of activities in Custom & Culture and the expenses – money – associated with the establishment thereof). By appreciating the State condition in which matter, energy or experience exists in my observation, I can strive to minimize the need to pass States through value surrogates thereby increasing efficiency and decreasing the need for intermediaries.

In a recent conversation with university students I was discussing the notion of entrepreneurship and was intrigued by the creativity each manifest in their ideas of how to build commercial and social endeavors. However, what was profoundly disturbing was the fact that not one of them had even contemplated the compulsive impulse for: a) the formation of a company; or, b) the financing of the same with monetary capital. Asked whether any considered using partnerships with affiliated, established organizations or assessing redundant resource capacity (office space, computers, sales networks, etc) of third parties to accelerate their efforts and minimize their novice risk, not one had done so. In other words, while creative in one dimension of State condition, no awareness was evidenced or even contemplated to evaluate the complete State ecosystem. While policy makers around the world lament the failure of ‘small business’, what none of them seem to consider is that what failed was never a business – merely in impulse starved from a sustaining ecosystem.

The more refinement or utility demand required to take matter, energy or experience from its native condition to the utilitarian purpose, the greater the State Dissonance. The more dependencies are implicit or explicit in the process thereof, the greater Phase Dissonance is either present (or at least latent) in the system.

Here in Charlottesville, famed architect school dean turned resource utilization pioneer Bill McDonough popularized the ‘cradle-to-cradle’ concept in everything from habitation to transport. Our work on State Coherence optimization – while fully embracing McDonough’s principles – encourages the extension of the concept into Phase State Coherence in which an ideal is the State Coherence persistence across multiple Phase applications. In its most crude form, a rock, remaining a rock, serves as paper weight, door-stop, counter-balance and river-crossing where Phase-inspired context is the only required alteration.

At the heart of Phase State consciousness, we see the value in intentional and explicit consideration of Phase and State where we can maximize utility while minimizing dissonance created by exchanges or transitive impulses which require surrogacy, intermediation, or consumption solely for the purpose of Phase or State alteration. Every kilowatt thought to be required to light a room or produce aluminum is considered and utilized only when such consumption is the only viable means of achieving an outcome. Every climate change conference agrees to select locations based on the minimum travel required to assemble people under shade of trees rather than air-conditioned conference centers in hot tropical resorts. Each public procurement begins by mandatory inclusion of public domain solutions wherever they already exist rather than paying proprietary premiums for faux innovation generated by willfully ignorant purveyors.

Should you or your organization wish to do so, our team has been working with a number of organizations to learn and experience the process of Phase and State consciousness. We’d be delighted to have you join us in this journey towards more constructive and harmonious endeavors.