Monday, October 04, 2010

Intimations of a New Economic Story

Intimations of a New Economic Story

Given the very real tragedy of our current economy, we need a new economic story that dispels faulty assumptions about growth, the environment and our natural resources, and transforms the anti-social power of self-interested behavior along with the extractive practice of over-accumulation.

The new economic story is rooted in the incontrovertible reality of interdependence—social, ecological, and spiritual. At the same time, the new story honors cultural freedom and equality in matters political. The story embraces the value of dynamic tensions inherent in this construction. The new economic story restores to money its original purpose, to be put at the service of people who can use it to serve others, and eliminates the use of money solely to make more money. An essential part of the story is money as differentiated transactional functions—purchase, loan, and gift. Each of these functions has its own qualities that support not only the continual circulation of money, but also its renewal. The story assumes that economic activity will generate surplus capital, some appropriate portion of which will be reinvested in entrepreneurial innovation and some significant portion will be returned as gift to regenerate culture.

The story is based upon an understanding that all economic activity is actually initiated by gift, just as each of our breathing lives is supported at the outset by the gift of nourishment. That fluid gift is transformed through human development into capacities for new ideas and recognition of the needs of others. This is a snapshot of how a healthy culture contributes to economic renewal. Lending helps implement those economic ideas and the money is quickened by the use of loan (or gift) proceeds for purchase.

So the story portrays economic self-renewal through the continual flow and transformation of money through transactions. Economic life is actually managed collaboratively or associatively by representatives of all the parties affected by it. Thus, in the new story everyone’s basic needs are present, and through the circulation of money our interdependence becomes transparent and life-affirming. It is fully integrated. It is not only possible but also necessary for our survival. This is the new economic story characterized—nothing more than an intimation. It will take tremendous will, steadfastness of purpose, and an endless supply of social tact and grace to bring about this transformation. But first it is important to understand the intentions of the story itself, so it can support coherent action and be told compellingly to others.

Digging deeper into the current economic story surfaces lots of apparently disconnected pieces. The story is laden with an abundance of impenetrable shadow elements and sorely lacking in the brilliant light of the possible. The story the media tells includes, but is not limited to: free markets as the primary approach to the world’s problems; the benefit of competition regardless of its consequences; and, the inevitability of inequity and the value of accumulated wealth. The more I hear the story the more fictional, even cynical, it appears as the evidence of its rampant and unethical self-interest accumulates. I also suspect I am not alone in suffering dissonance as I live within a storied system that appears to be crumbling, while working to support the emergence of a new one, or, at least, one that operates on a drastically revised set of principles.

To see this emergence as a transformation rather than replacement of the old presents a problem. Transformation assumes an interconnected inter-influential world in which the potential new forms must lie somewhere within the existing one. To see this potential requires acceptance of it all, even the shadows. However, the economic story I tell myself is neither one of good versus bad, nor of suspended judgment. It is instead one that transforms: assumptions about to direct experience of; power over to responsibility with; and, self-interest into service to.

Most of the stories I am told about economics are based upon the dynamic of polarities, the haves and have-nots, management and labor, supply and demand, red and blue. This model of dualistic thinking has a long history in Western culture, but it no longer serves if the non-material world of thoughts, feelings, and intentions is to be taken seriously. To this day we are still teaching that our world is constructed around managing polarities. Faucets run hot and cold, batteries have positive and negative poles, gender is defined as male or female—a small sample. At a material level these dualities serve as nothing more than identifiers or locators. They really have very little to do with how we make meaning out of experience; instead, meaning emerges through the interaction of multiple polarities. When we sense temperature, or electric current, or the human psyche, we are looking at indicator-concepts that acknowledge a field created through the co-presence and movement of polarities. For example, though I am male, I am aware of both masculine and feminine qualities that operate within my character and inform my interactions with the world.

If we are to have a new economic story, it will require a shift in thinking that sees money in the same light—as an indicator-concept, an energetic field, which is not a thing or commodity but rather a circulating measure and store of value which itself arises from the relationship between unused resources and unmet needs in economic life. The essential point is: If we are to transform the current economic story to a new one, whether you agree with my telling of it or not, we are going to have to change our thinking to include the notion that every material matter has a non-material counterpart; and, further, that each of us stands as measure of the dynamic energy field that arises from their constant interactions. How we choose to act as economic beings, individually or collaboratively, can transform the economic story, and at the same time, bring positive change to culture and the processes of governance as a by-product. Such is the power of story.

John Bloom
© 2010

Monday, August 30, 2010

Money and Social Transformation

Money and Social Transformation

Money gets us what we want when we want it, if we have it. Its power seems unquestionable, dominating, and to a degree, subject to the laws of physics. It can move at the speed of electrons and in the form of waves. Cell phone technology seems destined to eliminate the friction from its transactional pathways. The economic value created through these energy fields, which we measure in money, has been compromised by the desire to accumulate. In the stories we tell about money, net worth or wealth is a metric of success that fails to indicate money’s ethical basis — one that ignores the process of how the accumulation happened and what it produced along the way. Storing money has trumped using it as an end in itself, and wealth accrues to the individual without regard to the commonwealth.

It seems absurd to accept as valid the idea of accumulating that which is inherently circulatory in nature: currency. But money, like physics, is subject to the dominant materialist world view. Despite this, a different view is emerging. Just as physicists push the boundaries of science to the metaphysical, so do we need to reframe the boundaries of economic life to include the values of spirit. Just as the stories of good that wealth has done tend to be told in the warmth of human interest and responsibility, we need a new economic story that invites and assumes the presence of our spirit, our capacity for ethical action, in our work with money and with each other — as individuals, as groups, as organizations, as communities.

I have been struggling to understand the state of ethical standards played out by those who apparently created financial instruments designed to fail, sold them to clients who bought them in good faith, then “won” big bets on the instruments failing through derivatives and hedging. Only a market economy that operates devoid of human values other than winning and greed could produce such an endeavor. This is only one of many such examples from current financial practices frequently in the news and in our lives. One good result of the unfolding saga of financial misdealings is an awakening sense that there is something wrong in the system, something deeper and more flawed than policy, something so off human equilibrium that it surfaces as flagrant inequity.

At RSF Social Finance, the way we describe the current condition of mainstream finance is complex, opaque, anonymous, and based on short-term outcomes. As antidote, we strive for all financial transactions to be direct, transparent, personal, and based on long-term relationships. This is more than just a complementary formulation; it is an approach to healing. It also represents a set of intentions that are the basis of the new economic story and a renewed ethic of social transformation.

One of the aspects of Rudolf Steiner’s work that inspires RSF is his framing of economic thinking in a broader social context that is as transformative as it is challenging to grasp. He developed this approach in response to the self-interested, competitive, and nationalistic forces that gave rise to World War I. In 1922, he proposed that all economics needed to be reconsidered as one world economy, and that political boundaries were irrelevant to the flow of economic life. He presaged the recognition of ecological limits and the altruistic notion that economic activity in any one place affects and is affected by the rest of the world. This is an imagination of circulation rather than accumulation. His version of a world economy was the complete opposite of how corporate “globalization” colonizes the local.

Steiner’s imagination of society, sometimes referred to as threefold commonwealth, divided all social life into three sectors: cultural-spiritual, rights, and economic. Steiner’s insight and innovation was to say that if the three ideals of the French Revolution — liberty, equality, and fraternity — were each rightfully applied to the appropriate sectors, social life would find its equilibrium, its life-affirming essence, not through conflict, but rather through a new kind of engaged conscious citizenship. Freedom was the guiding principle for the cultural-spiritual; equality that for rights; brotherhood (what we call interdependence or mutuality) for economics. This is a basic framework that has enormous implications for how we practice our daily lives and organize society – particularly in the realm of money. But how does one develop a sense for one’s economic self operating interdependently at the same time as one’s spirit self works in freedom? How can we see each other as equals in forming agreements and at the same moment see each other as not necessarily equal in the realm of thinking (spirit)? This takes discipline, attention, and forgiveness. Steiner was always encouraging self-development, deepened self-awareness, and interest and understanding for each other. Understanding who we are as individuals, and how we create our agreements to work together to help others thrive, is one way to put threefolding into practice.

For better or worse, money is my mirror. As I reflect on my relationship to and uses of it, I see my values (spiritual-cultural) practiced or not, the agreements I have made as between equals or not (rights), and whether I have actually added value to the economy by meeting others’ real needs (economic). Through this reflective process I can own my thoughts and actions and work to change myself. This I am free to do. I am not free to change somebody else. I also participate in our financial system and it is therefore also a part of me — like it or not. It is also reasonable to think that whatever change I can make for myself does actually change the financial system, even if the rules, laws, policies, and those seeking to control them for private benefit make it seem an overwhelming challenge. But, this is part of the new economic story.

What if we practice direct, transparent, personal financial transactions as a way of reestablishing equilibrium in social life, including all three sectors? What if we understood that direct means that we remove layers of intermediation in our economic life and actually bring producers, consumers and distributors together in association to set price and determine best use of natural resources? What if we understood transparency as a process that means all parties to the transactions are operating in full and honest disclosure and thus feel equal in the agreement process? What if our transactions were done in a spirit of interest in and a sense of long-term responsibility for each other? In doing so, might we not transform the way we work with money and bring about social transformation at the same time?

The inquiry here is purposeful beyond a series of leading questions. It is also an invitation to and proposal for a process that is at the heart of the new economic story. The old one has in many ways already failed us by the ecological disasters left in its wake and for want of speaking to our deepest humanity. The new one, threefold in nature, speaks to our longing for meaning, connection, and community in a way that is direct, transparent, and personal — and one that welcomes the presence and practice of spiritual values.

John Bloom

Friday, June 25, 2010

More on the Intersection of Money and Spirit

More on the Intersection of Money and Spirit

As I write about the intersection of money and spirit, I realize I have been conditioned throughout my biography to consider them as discrete—and it is thus a challenge and transformative indiscretion to speak of a connection. I do not think it would be fair to characterize money and spirit as being in opposition, as they often are. Such a polarity would dishonor the genius that devised money in the first place. So, let me make a bold statement: Money is an inspired invention to account for and store value in order to free up enterprising people to serve each other and communities in the realm of economics.

As a device, money circulates so that individuals (and organizations) have the resources to bring their particular capacities into the economy for the overall well-being of the community (however one might want to define that). One result is that people’s material needs are met, but that is only the tangible part of an economy. One might say the spirit of money lives on, not in the objects that denote it such as paper bills and coins, but rather in how it passes hands, with what understanding and agreements, and through what transactional rituals. For example, if I look at my economic self, I imagine that my personal inspiration, that which motivates me, adds value to the circulation of money, because of my intention of service. It is also an essential part of my process to be as sure as possible that the other party’s needs are met. This requires an additional reflective, evaluative, loop-closing step in the transaction process—all of which might come under the descriptive heading of reciprocity. This transactional process goes beyond any document commemorating the agreement to a living recognition of each other and the value of the relationship. In other words, through our transactions we become part of each other’s stories. This is a radically different construction of a transaction and we are conditioned to understand. And, the speed at which I am able to transact, to get done what I need, helps to perpetuate the conditioning.

The power of money to subjugate rather than free us was at the center of Keith Haring’s monumental mural installation entitled the 10 Commandments (1985). Haring’s genius was to communicate a lot through limited graphic means. He did not set out to illustrate the biblical commandments literally. Instead, he based the paintings on his recollected experience of them as they play out in contemporary society. For example, he rather pointedly illustrated to degree to which money had become a false idol. We see the hand from above (a reuse of the early medieval trope of referencing God through the hand) tantalizing those hands below with $0 bill. The hands from below are trembling, clamoring for the money though it has no value. The work is a direct commentary on how money has become a thing and an article of faith unto itself, devoid of spirit, and instead surrounded with projection of power, angst, and self-interest. It is no wonder that this and its accompanying paintings made people uncomfortable. The simplicity, accuracy, and directness of the critique can leave one unnerved and with two primary responses—denial, or a thorough renegotiation of one’s relationship to money. In a second panel, the notions of money and media are conflated as a kind of double currency which is exercising power over the imitative behavior of the figures. One could assume that the television (as the stand-in for all media) has assumed the role of the god-like hand in the first panel.

The question remains, how might we reclaim the spiritual in money (and in ourselves) at the intersection of the two? Let me recount a brief interlude I had with my son recently when he asked me for some money. As I gave him the bills, he asked if there were any strings attached. Before I launched into the whole derivation of the expression from the world of marionettes, I found myself saying: “The money has no strings attached, it is the string.” This was met by the usual look of consternation. What I meant by the statement is that as money circulates, it carries with it intentions, agreements (hopefully), and a glimmer of the history of human consciousness. This string image is about what connects rather than controls or (in the case of marionettes, manipulates) us. This is a picture of interdependence. Of course, one can attach “strings” to money in the form of expectations or demands, but this comes with an obligation to make those expectations transparent and for the agreements to be accepted from a place of equality. Even if we create our own currencies and exchange systems, we will never escape the necessity of multi-lateral agreements as a basis for circulation.

Reclamation can begin with asking how I can use my money in a way that increases the value to all parties in the transaction. Engaging in the reflective processes needed to know this for oneself, and then with the others will help to locate one at the intersection of money and spirit; the intangible aspects of transactions will then be enlivened alongside the ones traditionally accounted for. Keith Haring portrays the shadow side of our relationship to money. His works serve as a kind of warning. Painted 25 years ago they seem prescient. However, engaging in a transformative process is worth the effort and can help with renegotiating one’s relationship with money, to see the spirit in it.

John Bloom

© 2010

Friday, February 05, 2010

Towards an Economics of Place

Towards an Economics of Place

When the old man first came to the plains there was a rolling sea of grass, and a lone tree, so the story goes, where they settled the town. They put up a few stores, facing the west and the setting sun like so many tombstones, which is quite a bit what a country store has in mind. You have the high, flat slab at the front, with a few lines of fading inscription, and then the sagging mound of the store, the contents, in the shadow behind. Later, if the town lasts, they put through some tracks, with a water tank for the whistle stop, and if it rained, now and then, they’d put up the monument. That’s the way these elevators, these great plains monoliths, strike me. There’s a simple reason for grain elevators, as there is for everything, but the force behind the reason, the reason for the reason, is the land and the sky. There’s too much sky out here, for one thing, too much horizontal, too many lines without stops, so that the exclamation, the perpendicular, had to come. Anyone who was born and raised on the plains knows that the high false front on the Feed Store, and the white water tower, are not a question of vanity. It’s a problem of being. Of knowing you are there.
Wright Morris, The Home Place*

As humans, our character is formed by where we live even as we inherit the privilege of reshaping our place in our image and to our needs. Sometimes place is so much a part of us that our inner landscape, a quality of soul, mirrors the outer. Our physical environment is an inherent part of our individuality; it is part of our language, world view, diet, and relationships. Add to this the reality of the “we,” whether family, community, or region—and the particularities of geography. How do these factors roll into the character and economy of place?
Let’s look at the example of the Pueblo peoples and their dwelling places in New Mexico. They have continuously inhabited these places for over 3,000 years. The interior living spaces in the pueblos, such as Chaco Canyon, were very tight quarters, a kind of counterbalance to the spaciousness of the open high desert landscape. One could say that pueblo architecture itself arose out of an economy of space, the inherent structural expression of stone masonry, pole pine, and adobe—all materials in proximity. Community life was framed around the practice of culture and meeting the needs of the residents, whether that was food locally cultivated or captured, or spirit as embodied in the Kachinas. The harvest, celebrated in corn ceremonies, was an expression of spirit manifest through nature and the work of agriculture. This integrative way acknowledged the spirit in economy, the economy in community, the community in spirit. The economics of place was a reality because it would have been unimaginable for it to be any other way, and it worked. In some ways it was the work.

There was, of course, trade between pueblos. There were clear trade routes north-south and east-west connecting local to regions, yet trade was both in materials and in the spirit of gifting. The Zia, now adapted as the emblem of State of New Mexico, combines the elements of sun, the spirits of direction, the circle of culture, and the paths of trade—essence of place: spirit, organized culture, and economy.

While there is a kind of material resource logic to an economy of place, there is also a spiritual geography of place that finds its expression in how people connect to and draw strength from place, transform it according to some mysterious yet lawful interactive imperative, then proceed to create an economic life from it and in it, and are shaped by it.

However, we have so organized our economies in modern life that, especially as city dwellers, we live in disconnect from the nature that so generously provides for us. Commerce, based its market reach imperative, has worked very hard to replace all aspects of local economies, in the guise of convenience and low price. Instead, we are consumers of nature, food and landscape, while happily producing culture. We are workers in the field of consciousness, sowing and harvesting capital; our awareness of the deeper sources of our strength—natural resources, the labor of farming, connection to spirit—is fainting away. Reestablishing an economics of place has the potential for healing this disconnect, for reinstating our reciprocal relationship with the natural world that includes restorative as well as transformative processes.

Framing Questions
What is a place-based economy? Where and how does such an economy emerge? Out of what social need and geographic determinants? What is the relationship between the character of place and the character of the people that inhabit it? Is there value in being able to directly influence, and be influenced by, place-based economic activity? What kind of a regionalized or localized system results from a place-based approach? What is gained and what is lost in “relocalization.”

These questions are fundamental to an understanding of economics from a grass-roots perspective, yet are often overridden by the homogenizing effect of globalization. One might make an assumption that all economies are place-based when considered as composed of three primary aspects—natural resources, labor, and capital. The three can only come together in the specifics of one place at one moment in time. Each intersection informs our sense of present, place, and community; yet collectively, the results of these intersections are part of a fluid global aggregation of local activity.

A second assumption is that natural resources are not in and of themselves economic. Instead they belong to the commons as it has come to be called. It is not until someone begins to transform those natural resources that they move into the economic sector. In the framework of the commons (refer to the work of the 2009 Nobel Prize winner in economics Dr. Elinor Ostrom), the issue is not ownership, but rather how it is determined who has the right to use the resources. Natural resources cannot be anything other than rooted in place, and are thus a tap root for all place-based economic activity.

An Inquiry into an Economics of Place
Two recent short passages will highlight some of the issues. The first is from the New York Times [October 15, 2009, p. A3] in an article titled, “Stock Exchange Shrinks as Rivals Take Over Trades,” by Graham Bowley: “Once the undisputed capital of capital, the city [NY] is struggling to retain its dominance in finance as the industry globalizes. ‘Wall Street’ seems to be no longer a place, but a vast, worldwide network of money and information.”

The second is from an essay by Wendell Berry, “Nature as Measure,” reprinted in the recent collection Bringing It to the Table [Counterpoint: Berkeley, 2009, pp. 8-9]: “On all farms, farmers would undertake to know responsibly where they are and to ‘consult the genius of the place.’…When we adopt nature as measure [of economic life], we require practice that is locally knowledgeable. The particular farm, that is, must not be treated as any farm. And the particular knowledge of particular places is beyond the competence of any centralized power or authority. Farming by the measure of nature, which is to say the nature of a particular place, means that farmers must tend farms that they know and love, farms small enough to know and love, using tools and methods they know and love, in company of neighbors they know and love.”

The contrast between the two is intentionally stark. The point that Bowley so eloquently makes is that Wall Street has become more a reputational currency as a name for transactions that actually are happening across a decentralized global field. Of course, that reputation originated in the physical reality of activity of investment banks located on Wall Street. However, the state of market-trade technology has eliminated any need for a true physical center of gravity or action. Thus the emergence of newer smaller more flexible trading exchanges linked via the web. One could argue that something more than speed has been gained by replacing the physical marketplace with the “netspace” for conducting trade. The new media in its virtual character may be truer to the fluctuating virtual values of publicly-traded stocks and derivatives than the older broker-dealer floor transactions. E-technology has also allowed for such rapid transactions that paper trails and conventional accounting techniques are no longer adequate and, even after the fact, can shed no light on the real transaction histories. Such is the levity and opacity of virtual activity, which is also disconnected from place and the accountability that comes with place. By this I mean, that when one sees a person with whom one has transacted trades day-in-and-day out, I would hope one would feel accountable to that person or organization, and be more likely to operate ethically.

What might Wendell Berry mean by the ‘genius of place’ as a starting point for a measure of economy? To begin, there is a literary tradition around the Latin phrase ‘genius loci’ and Alexander Pope, the early 18th century British poet penned the line “Consult the genius of place in all…” in his Epistle IV, to Richard Boyle, Earl of Burlington. The indication here is that there is something of a character or being of place that plays a role, if one is open to it, in determining what happens in that place. One one hand, this may not reconcile with those who hold that nature is no more that physical substances that we can measure and weigh, or that man’s purpose and right is the control of nature. On the other hand, I would like to suggest that nature is full of life forces, a culture so to speak, that we are part of—we are within it as participant, not outside it as onlooker. We are in no way separate from the air we breathe, or water we drink. The logical extension of the participant stream would be to say that as we use up our natural resources we are also using ourselves up. As bizarre as this may sound, this is one way to grasp the phenomena of our current ecological condition.So what is the character of the culture or spirit of place of which we are a part? And, how might we know it? This character is woven of many threads each of which is a study unto itself. Place has geology, latitude and longitude, pre-historic and natural history, anthropology, ecology, natural resources, energetic or magnetic properties, meteorology, and other threads that in constellation identify a place’s particularity. Without looking at the tapestry woven of these threads, it is difficult to understand the economy of place. Place is in a many ways a permeably-bounded system and the economy within it is something of the interweaving or circulatory life force of materials and service in support of human endeavor that percolate within it. Place looks different, deeper and more compelling when considered as an exercise in phenomenology. The boundaries remain permeable because excess production or population move beyond current boundaries, and new ideas, people, and needs flow in.This approach to a picture forming, or phenomenological, process is a useful tool in understanding a place-based economy. For example, one could surmise that at its birth all economic life was place-based. Even though hunters may have traveled far to gather food, their purpose was to return home with it. Beginning in 15th century Europe, with the evolution of ever more efficient transport, sophisticated weapons, and the development of mercantilism, the dominant cultures who created them also possessed the wealth to procure and a taste for that which was foreign and not place-based at all—whether Africans to sell into slavery or spices from the “Spice Islands.” In some ways the drive to accumulate capital, and thus political and cultural power, devalued the sense of local and regional and, even, human identity. The dislocations and ruptures of the colonial project spelled the near end of place-based economies and the wisdom that was indigenous to them. The pace of this transformation accelerated even more with the emergence of the global marketplace following World War II. Long-sustaining village economies were subverted to produce for the world market. This conversion left (and is still leaving) local famine, poverty, and illness in the wake of global profiteering. Indonesia is a prime example. Nutritious red rice varieties were sacrificed for the more aesthetic but less nourishing exportable version of white rice.This is a painful and oft replicated economic story to retell, and re-awakening local or regional economies could feel like a wish to return to pre-colonial days. It is not. Instead, it is a plea to exercise our capacity to reconnect with place and its economy, to produce locally and regionally where possible, to recreate regional communication media as information exchange, to know place anew even if it is not as healthy, stable, or friendly as we might like.

What is needed is re-cultivation of human wisdom connected to and within the breadth of nature. One of the greatest challenges is human encounter; interest in the other is not much celebrated these days. That wisdom will be a guide and measure (in Wendell Berry’s term) to an economy of place, whether one’s vocation requires working in agriculture or civiculture. The natural consequence of a deep understanding of place is an awareness of living consciously within the reciprocity and interdependence of a healthy, life-supporting, and enlivening economic life. We become where we are when we know our place in it.

John Bloom
© 2009

*Wright Morris, The Home Place, (University of Nebraska Press: Lincoln, 1970, pp. 75-76. First published, 1948)

Sunday, January 03, 2010

Getting the Price Right

Getting the Price Right: The Transformative Value of Associative Economics

“The Price is Right” is one of the longest running television game shows in the relatively short history of the medium. The show’s capacity to draw audiences, I assume, is based upon the viewer’s pride in knowing the MSRP [manufacturer’s suggested retail price] of everything, and then seeing if the contestants know it too. The show capitalizes one of the essential functions of television in that products that might normally be advertised for a hefty fee are instead featured as the content and focus of the program itself. Talk about product placement! Viewers are turned into vicarious contestants, their consumer-selves tantalized and tested. Forget that assumptions about what constitutes the right price—how it was derived, what it represents, its turnkey effect in the economy—are subsumed in the afterglow of consumer desire to acquire.

Given that the program was first broadcast in 1956, it would seem that its producers took quite seriously the following dictum from the Art Directors Club Annual No. 34 of 1955: “It is now the business of advertising to manufacture customers in the comfort of their own homes.” That defined a profound intention for commerce in the emergent medium of TV. I think it is fair to say that fifty-four years later that intention has transformed culture and extended its reach into the depths of identity formation. For a consumer culture, price is queen, not just for a day, but every day.

A manufacturer’s suggested retail price, finding its source in the capitalist maxim of charging what the traffic will bear, is designed to play on the conditioned desires of the consumer. It is a positioning game-show in and of itself for which the latest manifestation is the technology driven idea of “dynamic pricing.” This behaviorist approach to price setting is charged with the need for sales, profit, and shareholder benefit. As a consequence, it tends to be devoid of concern for the costs or consequences to human and natural ecological systems.

What if, instead of being a unilaterally manipulated mystery, price setting became a social process that took into account ecological stewardship and all the needs of the people affected by it? What if a price actually could be tied to the true costs of an object’s production and distribution—including real wages, environmental restoration and other constructive supply chain practices? What might this associative price-setting process look like and how would it practiced?

One functioning and accessible example can be found in Community Supported Agriculture [CSA]. Though CSA now refers to a wide range of financial arrangements between eaters (consumers) and farmers, it originated in Europe in the context of biodynamic farming. Further, it is significant that both the farming and the economics of it were based upon Rudolf Steiner’s insights and share a set of deep core values about the presence and purpose of spirit in our practical activities. In its archetypal form, a CSA is an association created between an enterprising farmer and a community that is committed to supporting the farmer in his or her vocation, with the production and distribution of food to the “shareholders” during the growing season a by-product of the relationship. Digging into the assumptions lodged in this statement unearths some radical concepts about farming as a livelihood that are in many ways diametrically opposed to the way most of our food reaches our tables. First and foremost in the association, there is a direct and personal relationship between the farmer and the eater. Second (and central to this article), the annual (not seasonal) share price is set by the association in conversation over the needs of the farm and farmer. The budgetary outcome is to be able to maintain and develop the farm, to take care of the farmer’s personal needs like health insurance, and also cover the costs of producing, harvesting and transporting the food. The math is simple: if the total budget is $100,000 for the year and the farmer can grow enough food for 100 shares, the share is $1,000. The association can take this an additional step and ask if some members could pay more so that some could pay less. The result is that the farmer is no longer at the whim or mercy of the marketplace. There are no distributor costs added; in fact, there are absolutely no externalized costs anywhere in the system.

What is created as well is that the association serves as a community of shared risk. If there is a drought and no food can be produced in any given season, the farmer will still have the income to carry on and prepare for the next season. This is an innovative picture of sustainability in which the eater/consumer is not paying for the food, but rather providing support for the farmer so that she can both steward the fertility of the soil and grow the food. Price and pricing are no mystery in this model. Instead the price is both right and real—the result of transparency, social engagement, long-term relationship, and the collaborative process called association.

CSA is a working successful example, and the model is transportable to other arenas in which there is an entrepreneur who can provide products or services for a community. Mutuality is at the heart of the practice, and price serves everyone’s needs, not just the manufacturer. The deep value structure in associative pricing is that as we become more effective in meeting real human needs through economic activity, the benefits of that activity will be equitable. It is appropriate to mention the rise of cooperative business practices and the rapid growth of fair trade, among other innovations, as further indicators of a fundamental shift toward a more associative view. Though differing in corporate structure, they represent multi-stakeholder community-based visions. They share the challenges of scalability and have had some successes, while recognizing the primacy of human values as essential to healthy economies. I would ask: What are the limits of community and enterprise working in association? And, what are the long-term consequences of not getting the price right? I am 99 44/100% sure that associative economic practices could transform the way the world works with money.

© John Bloom, 2009

Tuesday, September 29, 2009

The DNA of Social Finance

The DNA of Social Finance

The course of social finance is enlivened by transparency and trust. These essential elements of agreements between people are central to the value of financial transactions—and are in many ways inseparable from each other. What I mean by this is that transparency leads naturally to trust and vice-versa in a constant dance through time. I would add that the healthy circulatory system of money, even on a global scale, is built or carried by the dynamic present in transparency and trust. Consider the opposite where they are not present—circulation stops, economies falter, wealth is extracted, self-interest reigns, poverty results. This may seem a stark contrast, but a poignant one given the current state of the economy in which unemployment and foreclosures are rising increasing while investment houses continue to post impenetrable values.

Transparency and trust emanate from human experience, and are therefore quite individualized in their practice or find expression in the behavioral patterns of a particular culture. They are also deeply connected to the need for accountability and dependability. Most people want to know that whatever motivated a transaction in the first place will be recognized and respected by the other party to it. For example, if I agree to lend money to you, I need to know that the money will be used as expected and returned as per the understanding. I also need to know that if the scenario does not play out as planned and there is significant change, you would come back to renegotiate the agreement or return the funds. This epitomizes the tandem connection of trust and transparency, and is a measure of a healthy financial transaction—one that frees the lender to focus on other activities and the borrower to progress with the planned project while remaining connected through the lender-borrower partnership. If you cannot find out where the money you loaned went to, or the borrower feels no responsibility to the lender, something is broken in the flow of both money and human relationships. Accountability has both a human aspect in the context of relationship, and a financial one in the context of tracking and measuring the movement of the money itself.

The salient characteristic of social finance is that these two threads, the human and the financial, are recognized and worked with as inextricably linked. Every financial transaction has an effect on human beings, and every human being affects the quality of the world through how he or she works with money. This is a fully rounded concept of interdependence as it includes the perceptual and behavioral dynamic along with the more traditional economic one of interchange and efficiencies in the production and consumption of goods and services.

If trust and transparency are central to the vitality of financial circulation, serve a bridging function between the social and the financial, then what actually is the deeper motivating force that begins, sustains or augments that circulation? What if we could consider that social finance has the double helical structure of DNA, with the major strand being human actions and needs, and the secondary strand, the creation of money in its many forms. That they come into a dynamic relationship is inevitable in economic life and is epitomized by the tension between self-interest and community-interest. Add to this, movement through time and place. In this imagination, the pulsing dance between transparency and trust bridges the two strands and naturally gives rise to a vortex-like spiraling movement. But what of the motivating force? I would argue that the prime mover is human intention. It is the element that moves with the currency, the flow of money. It represents the energetic investment of people into the circulation, the rhythmic movement of value as it is generated, destroyed, and recreated anew within the whole economic process. Of course, one can make the case for the shadow side, the adverse effect of bad intentions or unethical practice. But, if we can understand social finance from the perspective of the elegant architecture of DNA with its life-building capacity, we might also see how social finance can serve as a restorative and healing force in economic life.

John Bloom © 2009

From Prime Mover to Freedom: Spirit Matters in Giving

From Prime Mover to Freedom: Spirit Matters in Giving

If I could accomplish one change in the field of economics in this lifetime, it would be that gifts and philanthropy are understood as essential to a healthy economy, and even more so as the prime mover of all economic activity. I think I can make the case for this with two examples.

First, each of us is born into a gift economy; that is, our physical needs for nourishment and care are met through the gifts bestowed by parents without expectation of recompense. So we begin life in gift which we then develop, through education and other life experience, into capacities to serve others and meet our own needs. From a spiritual perspective this means that what we absorb as gift, we able to give back to the world through our own intentions and work. Of course, this is a reductivist picture, but pare away all we are conditioned to think about work and vocation, what, why, and how we get paid, the disintegration of experience that results from the division of labor. The result is a mega-bundle of gifts and needs waiting to be orchestrated into economic circulation through capacities, needs, and relationships.

The second argument for gift as the prime mover is its necessary role in cultivating all those human gift-capacities up to point where they have value in the world of exchange and transactions. The function of the intimate parental gift so essential to early life is taken up more broadly by a culture (it takes a village) in how it transfers wisdom across generations. Culture would become stultified if there were no research and development, no evolving story, no place for experimentation and failure, and no avenue for new ideas to percolate and find their way into daily life. Since such experimentation is pre-production, it naturally absorbs money rather than producing it. Education, defined through this laboratory function, will never generate profit. Quite the opposite is true. It depends upon gift to fulfill its mission of fostering human capacities and fomenting new ideas and insights.

In the real economy, the one that includes both spiritual and material dimensions, there is circulation of human and material gifts. Clearly both have value in economic terms—if you accept my argument—and they also have an interesting relationship brought into sharp focus in the field of philanthropy. Consider the following from Lewis Hyde’s seminal book The Gift: Imagination and the Erotic Life of Property:

Gift exchange is connected to faith because both are disinterested. Faith does not look out. No one by himself controls the cycle of gifts he participates in; each, instead, surrenders to the spirit of the gift in order for it to move. Therefore the person who gives is a person willing to abandon control. If this were not so, if the donor calculated his return, the gift would be pulled out of the whole and into the personal ego, where it loses its power. We say that a man gives faithfully when he participates disinterestedly in a circulation he does not control but which nonetheless supports his life.

Understanding the full dimension of this release of control is vital to the human part of gift circulation. Of course, there are the legal and tax issues that condition the circulation. Donors can only take a tax deduction if they have given up control to a qualified charity and have received no goods or services in return. That is one level of exchange, and relevant only to donors that can take advantage of the tax code. But, what about gift intention? Is that something that can really be given up or given over, even if the gift is truly released? Is this something of what Hyde refers to in the element of faith? And, what exactly might he mean by disinterested since most donors are anything but disinterested? Can one be disinterested and interested at the same time? The answer is—of course—if one looks at the spiritual dimension as one in which the gift actually carries the giver and receiver into a deeper destiny relationship (this is the interested part), and at the same time is given over for charitable purposes as determined by the receiver (this is the disinterested part).

So what arises for the donor by truly giving up control of a gift? When the donor gives up control, he, she, or they are at the same time released from the gift, freed by it. Sometime this is expressed as a kind of relief, a feeling of well being or buoyancy, and sometimes a kind of grief. These are all transformative moments, moments in which, as the whirling dervishes practice in the moments of halting stillness, new insights and consciousness can happen. The deep inner knowledge and process that led up to the moment of the gift giving, up to the moment of willing release of control, is also a moment of a renewed spiritual freedom.

One metamorphic aspect of money is that when a financial gift is made to a charitable entity, that gift money is transformed very quickly into purchase money. That which was “surplus” for the giver is given new life in the rapid economic circulation of the day-to-day economy. It supports the development of human capacities and a kind of spiritual freedom that is essential to the purposes of education, research, the arts, and other cultural endeavors in a free society. What a change it would be for philanthropy if it were to be practiced as an integral part of daily transactions rather than as something one does after accumulating “enough” to give away. In cultures where there is no such wealth accumulation, gift is essential to survival. Without gift, life withers; without gift, culture stagnates; without gift, economy languishes. The analysis is simple. The solution, the release of stored up wisdom and wealth—surrendering to the spirit of gift, is one critical way to recognize and engage what is desperately needed for the future.

John Bloom
© 2009

Saturday, August 15, 2009

From Transaction to Transformation: Spirit Matters in Lending

From Transaction to Transformation: Spirit Matters in Lending

It is one thing to say that money has a spiritual dimension, to speak of it as energy or a force. It is another matter to recognize and understand how important and practical this perspective is as we act within the economy. A brief inquiry into the presence of spirit in our financial transactions is a risky venture. Nonetheless, I am compelled to take the risk because of the upside potential for transforming how we see and work money.

Consider looking at experience this way: there is what we perceive with our senses, for example a color or texture, which we could call “matter”; then, there is our interpretation of that sensation, our sympathies and antipathies, which we could call “soul” activity; then, there is recognizing within that experience something of its lasting essence, such that we might recognize another occurrence of it though it may be in a different color or form, which we could call “spiritual” activity. For example, how do we know that a loan is a loan no matter whether it is called credit or investment? Given this architecture of experience, might there be a tripartite view that clarifies and integrates matter, soul, and spirit in the realm of financial transactions? What place does each of the three take in the transactional process?

For this essay, I have chosen to focus on loans and the lending-borrowing transaction, though one could equally apply the approach to purchases and giving. What gives rise to lending is a combination of lender’s available capital coupled with a need for that capital to realize an economically viable idea. One could say that the lender recognizes a borrower’s entrepreneurial capacity to make good use of the money. The money passes hands, a material matter in auditing terms, as a result of an agreement, with the transaction accounted for in debits and credits, assets and liabilities. However, the process that led up to the agreement, that is, how enough trust was established between the lender and borrower to make the agreement possible is not such a simple one. The lender and the borrower each have their conditions for trust, their deeper purposes and intentions. Of course, transparency is a critical part of this discovery process, as are intuition, character and social impact. The reality is that the lender and borrower are bound in relationship over the period of the loan; they have to take and maintain a long-term interest in each other, and support each other’s success. This mutual trust, formalized in the loan agreement is something of the soul aspect of the loan. Imagine, lenders have made loans because the constellation of people and intentions around the loan project felt right, even if the numbers didn’t quite justify the transaction.

What is the spiritual aspect of a loan? The money makes possible entrepreneurial initiative that would not have been possible otherwise—this is the essence of a healthy capital economy. The entrepreneurial initiative itself is framed upon ideas, which, though they may be inspired by material circumstances, are not dependent on them. And within the structures of those ideas, the entrepreneur recognizes and serves the presence of others’ economic needs. This capacity for perceiving what is, and what is not yet, (anticipating need) demonstrates creative, imaginative, and in some cases intuitive, capacities, and is also why enterprise so often leads cultural transformation.

In economic thinking the spiritual world of ideas is made practical through the world of physical matter. How we find value in the world of lending is a matter of the degree to which the lender’s feelings and perceptions are tuned to the intentions and capabilities of the entrepreneur. The loan transaction becomes a vessel for the shared purpose and vision of lender and borrower. Transforming how we work with loan money is catalyzed when we embrace these inter-personal relationships and recognize how the entrepreneur’s work brings spiritual activity into the world.

John Bloom
© 2009

Wednesday, July 01, 2009

From Self-reliance to Collaboration: Economic Interdependence

From Self-reliance to Collaboration: Economic Interdependence

Imagine the state I would be in if others were not growing food, making clothes, and, developing the technology to publish this post. I would likely have to dig my own Victory Garden, or live as Henry David Thoreau did at Walden Pond in the nineteenth century. I would have to become self-reliant. This American Transcendentalist value runs deep in the American identity along side the more entrepreneurial attachment to marketplace opportunities. This could be seen as a bifurcated identity until one considers that self-reliance is linked to the freedom of spirit and individuality, while enterprise is tied to an economic precept that recognizes the need to meet others’ material needs across the spectrum of social life. Thus, the individual that provides solely for herself is not economic at all. As soon as an individual begins to provide for others based upon productive capacities, she becomes an economic citizen. This does not mean that the individual leaves her spirit behind. Rather she brings her spirit, her capacity for insight and innovation with her to serve others in an economy.

The relationship between the individual and the whole of economic life is complicated. For example, if what Rudolf Steiner articulated, here simplified, in the early twentieth century as a basic economic principle is operative—that the degree to which we are working to meet the needs of others’ our own needs will be met—then Adam Smith’s eighteenth century concept of self-interest as a prime economic motivator is no longer appropriate. Smith’s theory, as articulated in The Wealth of Nations, is an economic philosophy that lives on as myth in laissez-faire economies and more recently in so-called free markets. As an evolutionary stage, self-interest seems removed from what is called for now.

From an economic perspective, we live in a completely interdependent world. We can know the global economy just by looking at the labels in our clothes, but we have not yet transformed the deeper human dimensions of interdependence that would compel us to alleviate global poverty or preclude the abuse of our financial system. In some ways, the social technology of money and financial systems, reduced as they are to electronic currents (or currencies), has evolved beyond our moral and ethical capacities to work with it in a healthy way. Competition that pits me against others in search of limited resources is basically anti-social. This is the mindset, and I would say soul condition, awaiting transformation.

Consider the research of evolutionary biologist Elizabet Sahtouris. In 1997, in “The Biology of Globalization” (Perspectives on Business and Global Change), she wrote: The Globalization of humanity is a natural, biological, evolutionary process. Yet we face an enormous crisis because the most central and important aspect of globalization—its economy—is currently being organized in a manner that so gravely violates the fundamental principles by which healthy living systems are organized that it threatens the demise of our whole civilization. What she is pointing to, based upon her research, is that organisms achieve healthy sustainability only after they have passed through the competition stage to one of cooperation, or collaboration. Yet our economics still remains fundamentally about competition. The myth of self-interest, and the cogent arguments made for perpetuating that myth seem to ring hollow in light of Sahtouris’s findings.

The technology of economic collaboration, built instinctively into the fabric of intact communities, needs to be rediscovered as part of new or emergent communities. This technology depends upon understanding the strengths and weaknesses of each community member. However, here is the challenge. Our culture has taught us well (through the constructs of self-reliance and self-interest) how to project our strengths. But, it has also taught us how to protect our weaknesses, our vulnerabilities in preparing for a competitive winner-take-all economic environment. When we see our own vulnerabilities personified in others’ poverty or homelessness, it can be a painful awakening. To truly collaborate with another person, no less one organization with another, to have power with the other partners requires that we acknowledge and embrace the full economy of strengths and weaknesses, and further recognize that it will call upon the power of compassion in a non-linear exchange process. This imagination then begins to look and feel like an economics for the twenty-first century, an economics that requires new social technologies, capacities, consciousness, and means of exchange that complement the strengths and failings of our national currencies. We are not only interdependent in our economic world, but we are also thoroughly entangled in it. We need an art of economics that imagines this complex reality, and a science of economics that can comprehend the humanity in it.

John Bloom©2009

Monday, May 04, 2009

From Expectation to Affirmation: an Inquiry into Transparency and Trust

From Expectation to Affirmation: an Inquiry into Transparency and Trust

The concept of transparency seems to be at the forefront of every discussion about our economy of late, and the majority of those discussions presume that the reader or listener knows what transparency means. I confess to being bothered by such presumptions—thus, this inquiry into transparency. It is an abstract concept, but one essential to our relationships and economic life. I hope one outcome of this brief inquiry is a deepened understanding of what is often the root cause of the call for transparency, namely, mistrust. Further, that transparency, understood in its full implications, can transform mistrust into a new and conscious trust, an essential ingredient for healing our economy and opening us up to a positive imagination for the future.

Transparency and trust are inextricably linked in human affairs, though transparency is best understood as a means not an end; and, trust is not a thing but rather a desirable multi-faceted (my assumption) state of being that guides our actions.

What does transparency mean then in the context of finances? Most of us experience transparency in simple physics terms as we gaze out our windows to see the world with varying degrees of clarity. If we are moved the clear the film away in order to have a fuller, less mediated view, we are pointing to a process based upon increased visibility. In finances, if you cannot perceive or track what is going on with the transactions and “the numbers,” seeking disclosure through auditing would be the parallel to window cleaning. The purpose and outcome would be to trust what you see.

But there are questions about finances that reach deeper than visibility and delve into the realm of assumptions. This is where transparency is no longer solely about facts or appearances, but rather about the conceptual aspects that drive the numbers and transactions. This quality of transparency is about making the invisible, visible—not what or how much, but rather the why of transactions. Of course, formulating and exposing assumptions takes us into the realm of values and judgment, and more importantly into the realm of reciprocity. By this I mean that transparency is a two-way process. We look out the window, while the rest of world can equally look in at us. Digging into the assumptions behind financial transactions, our own values and assumptions arise quite naturally as expectations about what we absorb of and reflect upon the information. Once we are comfortable with the assumptions and the resultant numbers, another level of trust emerges, one not as much tied to visibility, as it is to a quality of reciprocity. After all, the numbers represent human economic activity, and we expect to be able to see into that activity through the transactional agreement or accounting of it. This is no small feat. What hopefully becomes apparent through the reciprocal exploration is an affirmation of assumed values and intentions—a moment of deeper trust. Without this affirmation, unresolved expectations can lead to a kind of quiet conflict common to but often unaddressed in financial considerations.

Transparency and trust take another leap when there is an affirmation of mutual intentions among all parties to the transaction. This commonality of intention represents the possibility of a third level of trust that reaches through reciprocity and beyond agreement to a sense of shared vision, or appreciation of a common purpose. This level of trust engages a kind of idealism and engenders all manner of economic initiative and innovation.

In a way, there are three forms of trust that accompany financial transactions: trust in matter, or the observable; trust in others, their truth or integrity; and trust in spirit, or common intention. While transparency may on some levels feel like a right, as it is primarily treated in our current political debate on economics, it is also a vehicle for reaching trust in the three realms of matter, relationships, and common destiny. Thus the practice of transparency in finance, with full respect for the rights of privacy and safety, is an essential tool for transforming our economic future.

John Bloom ©2009

Thursday, April 30, 2009

Reimagine Money

Dear Readers,

I encourage you to check out and subscribe to the new Reimagine Money blog at I will be posting articles there along with interesting postings from others that are inquiring into the worlld of money and financial transactions. Once my postings have aged on the reimagine money blog I will be posting them here so they remain accessible.

John Bloom

Monday, December 22, 2008

I Object: Nothing Personal to My Credit

I Object: Nothing Personal to My Credit

I recently received a notification from my credit card company that my interest rate would soon be raised to prime plus 18.99%, meaning an effective rate of 24.99%. I was first furious, then insulted, then humiliated, then called to action. The current effective rate on my balance is 9.99%. Why I carry a balance is a much longer story than I want to tell here. And, to a degree it is irrelevant except that I do not think I am in any way alone in having such debt. I am sure I am one of many, many who also received this notification. The alarm letter meant I no longer have the privilege of being a detached observer of the economic news that is sweeping across the country. I could no longer hold on to the illusion that as a good bill paying citizen I was immune from the bank nightmare.

Some context may be helpful here. I pay attention to the state of fiscal affairs. I work in a financial organization (RSF Social Finance) where we pay attention to trends in the market, in the real economy, and to the world of credit, though we, as a public charity, work outside regulated bank functions. I understand the origins of credit, of debt and money, and how problematic and overleveraged the financial system is. In contrast to this broken and impenetrable system, RSF’s mission is change how we work with money and financing, to recognize the spirit in and behind it. Because of this, I also understand how valuable money can be, how real investment is effective in supporting initiative and building community, and how deeply rooted in feelings financial transactions are.

In many ways money reflects the architecture of human experience—both inner and outer spaces. This may appear a sweeping statement. But architecture, especially buildings, very much conditions our experience of space, and, the transition from outside to inside, the peristyles and portals, the light and darkness. The ancient Greek temple is an illuminating example. Usually devoted to a particular god, each temple also had a treasury at its center, the inner sanctum, the protected space. This is religion, or mythic beliefs and their statuary expressions, co-housed with sacrificial material offerings, mostly gold and other precious goods. If one can accept this structure also as metaphor for personal experience—that we house within us our own treasury of gifts and offerings which we protect and use as resource at the same time—then one can see how money, as we have come to know it in modern times, is still connected to each person’s inner sanctum within the temple of individuality. We know only too well from daily experience how money connects us to the outer world of materials, relationships, and values.

The letter from the credit card company caused an unusual rupture for me in the flow between inner and outer world. I felt as if a predator had entered and mistaken me for the wrong person. Actually, this touches on one of the central points of this article. The letter was generated as part of a bank strategy. It had absolutely nothing to do with me, my history of twenty years as a good timely paying customer, or my pride. Of course, I got on the phone to what they call customer service and entered yet another space and degree of absurdity. I asked why I would have received this letter and was told (and I am not making this up) that the bank had had numerous losses and that it was costing the bank much more than it had in the past to access the money to extend me credit. I think this script was designed to make me feel sympathetic to the bank, that it was the victim. I knew about the losses. The whole world knew and knows about the losses and the bailouts. How could it be that charging me a lot more interest on my debt would solve the bank’s financial problems resulting from bad loans and investments it had made? Why should I, an already good and long-standing customer, feel responsible? Further, I responded to the customer service provider that the line about the increased cost of funds was patently false. I also knew that she had not crafted the script. Her final position was that the bank had the right at its discretion to raise the fees. True enough. There was no argument from me on that. I explained that I would be disappointed to take my business elsewhere after twenty years.

Finally I asked if I could speak with a manager. This was an extraordinary moment, a revelation of the depth of personal objectification. She said that she could transfer me to the Balance Retention Unit. Not customer retention, or client service. I was nothing more than a balance to them—loyalty, consistency, credit-worthiness be damned. When I reached the Unit, the conversation changed, though the absurdity of the earlier phase didn’t seem to matter much to them. The fascinating outcome was an accommodating interest rate at 7.99%, or two hundred basis points lower that it had been previously, and I remain their customer. Somewhere common sense prevailed. But I have this sense of disquiet and concern about all the other people who received the same letter I had. How had they responded? Fear? Resignation? Indignation? What if they could not convince the company to forego the increase? What if they were already paying 22.99%?

This was the awakened insight. From the credit card perspective, I/we are nothing more than potential and real balances. This objectification somehow makes it okay to charge predatory rates. It makes it okay to justify the changes under false pretenses, and to somehow make me responsible for the bank officers’ irresponsible lending practices. The credit card company demonstrated to me the use of what I call “irrationalization” to maintain its totally impersonal and opaque position. I am object. I object. Balance retention masks a reality that is drastically out of balance.

This story is as much about what is wrong with our financial system as it is about my credit. Any invention of the mind (in this case money and debt) that is managed in order to dehumanize its users needs a new set of ethical practices that might take a cue from the ancient temples and the origins of money in Western civilization. There can be a quality of offering in and through every financial transaction. I can become more conscious of the intentions in my financial behavior, or more aware of the work and economic efforts of others to make the transactions possible at all. But first I, and others who have not already suffered enough, have to wake up to the pain and inequity that have grown within the system even as I have participated willingly, if not wisely, in it.

John Bloom
© 2008

Wednesday, October 01, 2008

An Inquiry into Transformation through Financial Transactions

An Inquiry into Transformation through Financial Transactions

The warbles in old windows tell a story of transformation. Looking through them, notice the distortions they create in the way the world appears, and the imperfections themselves. In our internal process of reconciling the perceptions, we are augmenting our own development. In this case, our own transformation is tied to the transformation of the medium itself.

The transparency of window glass is a given; its solidity is not. Glass is created by superheating sand (silicone dioxide) until it is liquified. Though it may then be rolled into window pane in a form that appears solid, the transformation process actually continues as its substance remains not fixed but rather as a liquid in hyper slow.

Of course, glassification occurred first in nature through volcanic activity—witness obsidian—before it became utilitarian. Such metamorphic processes are continual everywhere in nature and human nature, in the physical world as well as that of thoughts and imagination. One might consider transformation something of a phenomenon in the same way as light and other natural systems. We experience them directly, depend upon them, but cannot quantify without qualification.

So to understand transformation, to find a way to mark its presence and progress, it has to be considered from a vantage point outside an input-output or linear relationship. Instead, I propose that it be considered, metaphorically speaking, as an evolutionary journey taken through a multiplicity of pathways across the co-functions of space and time.

As has been noted in the study of plant development from seed through maturation and returning to seed, transformation may look a particular way, take on a particular shape, at a certain moment, and look different moments or many years later. The challenge, of course, is discerning the metamorphic principle that links the two moments of observational intervention. In some cases it may be obvious, in others not at all. The journey itself has a direction and purpose: some of which is evident from the start; some of which emerges through the process; and some of which can only be recognized by others affected by it and by chosen signifiers of change.

Financial Transactions—Purchase, Loan, Gift
While money is an expression of processes of human nature rather than nature as in the case of plants, observing its uses in the whole context of interactions and transactions yields a subtle imagination of transformation. Though a dollar bill’s physical nature may not change (with the exception of a bit of wear and tear) as it circulates, its qualities change according to use and according to the effects and consequences of what it makes possible by way of human activity. Thus, there is an active correlation between financial transactions and transformative process. My purpose is to outline a framework by which the phenomenon of transformation can be measured.

Take the case of financial transactions. In a purchase transaction, money is exchanged for goods or services. The input and output are immediate and in some ways inseparable. The transaction happens between two parties—buyer and seller. But a somewhat mysterious third element is present at the moment of transaction—value in the form of price. To stay with this view, suppose the same object is sold again. Another exchange happens, and while the object is essentially the same, likely a different value emerges from or drops into the transaction. Anyone who has purchased a new car and then sold it knows the reality of this picture. So, the question is: What happened to the value or price between purchase transactions? We can follow the object as it was exchanged over space and time. We can document who had it, where it was, how it was used. We can document the moment of transactions and the value at the time of the transactions, but what do we make of the change in value? The famous art historian Walter Benjamin wrote about the “aura” that accrued to works of art over time as way of explaining both the intellectual and, in some cases, the financial value of the work. Ideas have currency as do things. Is that aura attached to the work of art, projected onto the work as a function of perception on the part of the exchanging partners, or reflective of some market standard? The “price” becomes relative to perceived value weighed against what anyone is willing to pay for it.

The point of this inquiry is nothing other than a way to point to the complexity of transactional phenomena, and to say that value, while it is perhaps a great and highly subjective mystery, is also a functional indicator of transformation. Each transaction is a moment in which the material (the physical exchange) and non-material (value) come together in space and time, and are accounted for in a measurable way. The material effect, one could say, is entirely in the foreground, but residing within the non-material is the contextual background—individual, psychological, relational, social, historical, cultural, and on—in short, everything that led up to the moment of transaction and that will flow from it. One could, with adequate time and appropriate tools, attempt to look through each transaction to observe this confluence as phenomenon. This would be the peak of transparency in financial purchase transactions, a window into their interiority and exteriority, but through window that is itself in slow flux.

The essence of a loan transaction is the quality of agreement between the parties to be in financial relationship over a period of time. While input and output are clearly related—a loan is made to support some capacity, activity, or project happening—they are stretched out over time as the output comes into being. The agreement sets the ground rules and sets in motion the rules of loan performance. The transaction is based on trust which is in turn reflected in and maintained by both parties living up to the agreement and by communicating progress. There are other dimensions of transparency in a loan relationship. One is to make the source of the loan funds visible to the borrower, to bring the investor into view, and then to make the borrower visible to investor. This level of transparency increases the social value and impact of the loan simply because more people are aware or conscious of what their money is doing or where the money came from. For example, I definitely feel more responsible and accountable if I know whose money I am using, especially if I see them every day.

If transparency in a loan transaction leads to trust and hopefully sustainability of a project, and the transaction was perceived to be transparent, then what is the internal change created by that transparency for each of the parties to the transactions?
1. None
2. Increased confidence in the relationship with the other party
3. Trust in the other person

Over what time period?
1. Immediately
2. In the first year or two
3. At the term of the loan

Further, if the investor(s) becomes visible to the borrower, how does that shift the perceptions or feelings of the borrower about the transaction?
1. No change
2. More responsible to repay the loan
3. More commitment for the loan to bring about the intended purpose or impact

The gift transaction is another matter altogether. Input and output cannot be tied in any direct logical or temporal relationship. A gift transaction is usually generated by an individual with resources recognizing a need by another human being or charitable organization. Once there is an agreement to make a gift, an agreement through which the intentions of both the donor and recipient become visible, the donor is actually giving up control of the funds. While the agreement was likely created based on trust, that trust is not controlled by language in the agreement (except in context of a restricted gift). Instead it is maintained by keeping the donor informed of the actions of the receiver even though generally there is no direct tracking that can link dollar given to dollar spent. For example, if I make a capital gift to a school, the gift is used up right away to pay the contractor, but in the space created generations of children will be educated. What the gift “purchased” is predictable, but what the gift made possible is not. Who knows how long it will be before one of those children becomes a successful social entrepreneur (for example). One could suppose that this is but one, among many, outcome of the gift, along with what unfolds in all those other children’s lives. A gift has a kind of infinite and broadcast impact because its output operates outside of predictable space-time logic.

Thus the quality of transparency in a gift transaction is far more in service to what passes through the transparent substance rather than on the substance itself. The terms of transparency which are so clearly negotiated and documented in the loan are rendered irrelevant in a gift because of the release of control. The issue of control, the degree to which the gift is truly released, semi-released, or not at all, is correlated to the impact and transformation affected by the gift. Every serious development officer or gift solicitor will tell you that the control issue or expectations (“strings attached”) is often the most challenging part of any gift transaction.

If the release of control is a measure of the impact of gift, then one could ask of both parties to the gift:

1. Were the expectations of the donor/receiver transparent, translucent, or opaque?

2. For the donor:
Were you able to truly give up control of the gift?
Did you give with some reservations?
Did you give despite your doubts about the receiver?

3. For the receiver:
Did you feel that the donor made the gift without strings attached?
Did you leave the transaction knowing that the donor had some specific expectations?
Did you sense the donor was giving out of obligation?

Given the nature of the gift transaction, how could one create an agreement around that which is unpredictable, except by agreeing to the value of unpredictability itself. The value that emerges in a gift transaction is particularly complicated primarily because what motivates the transaction from the donor’s perspective does not usually arise from any direct material need of their own, but rather from recognizing the material need of another. By recognizing that need and making a gift to support it without control, maybe without being asked, the money creates potential outside of time but toward the future. Simply because it will bring into being something that would possibly not have happened without it, it will have impact and transformative power.

Conclusion­—Transparency as a Metric of Transformation
To understand the material aspect of a phenomenon, one first has to consider its non-material (or spiritual, if you will) aspects. We cannot see light; we see by it or because of it. We assume its presence by what it makes present to our eyes. Money itself is an accounting system, a measure of value woven into the phenomenon of a transactional web of circulation that could be considered global in scope.

If transparency in financial transactions is key to a deep awareness of value and the values of the participants, and this awareness is a baseline for impact and transformation, then one can assume that assessing the level of transparency in a transaction would at minimum point to whether there is potential for transformation and change in consciousness about money and its uses by either or both parties, since that is an endgame of social finance. Science defines three degrees of transparency: transparent is a level in which the vast majority of light passes through the substance being measured; translucent means that some light passes through; opaque means no light passes through. The implications for what can then be seen through the substance follow the same logic.

As the level of transparency in financial transactions leads to the awareness of the implications and lives of the parties to the transactions, their human dimensions, then awareness or interest mark the beginning of potentially transformative process. There are identifiable and measurable stages of progression through transformation which begins with awareness, moves to interest, to engagement, to digestion or comprehension, to integration. Each is an indicator of progress, thus each can be marked by a small set of questions which lead to self-assessment—after all who knows better whether I have changed than me—and the observations of the partners to the transaction. One could then use the framework of transparency as a foundation for that inquiry­. I would ask: What was the degree of transparency in the financial transaction? Then, what transformation, identified through the stages of awareness, was made possible by the transparency of that transaction? Hopefully there is a rudimentary framework for answering those questions.

John Bloom