Blog by Steven Walsh.
I get to spend each of my days organizing and helping AMI reach its goals. Along the way, I meditate on how humans can have a better life. Here are a few thoughts on capitalism, money, and par-economics – starting with a few weeks ago trip to Wisconsin.
I was at the Wisconsin Grassroots Festival in Madison discussing monetary reform. Our lead speaker for two monetary presentations was Howard Switzer (former president of the Alliance For Just Money). Howard pointed out that you can look at the word Capitalism and break it up into “capital” and “ism.” Nowadays, capital is taken to mean “money,” and “ism” is taken to mean a “system.” He stated that at the heart of our economic system is money. Howard pointed out that at the core of that system is all too often power, greed, and exploitation. A hundred-plus years ago, “national capital “referred to a country’s resources, not money.
How we define and think of money is vital for our future survival. The monetary system is not a gift from nature but is created based on human desire, customs, and laws we create. The money system belongs to all of us, and depending on your historical point of view, we have gifted it to the bankers, or they subtly stole it.
Parity in US History
Perhaps in part because I was in a small city surrounded by farm country, I was thinking about parity for all farmers – and workers. Parity had a significant meaning during the first half of the 20th century in the United States. Parity was considered the price for raw materials that the farmer needed for the survival of their business (feel free to substitute for the farmer: the rancher, miner, fisherman/woman, etc.).
The cost of living in the United States was higher than in many other countries. Farmers in other countries could often produce grains or cattle, etc., at less cost in dollars than the American farmer. In that way, the American farmer would be at a substantial disadvantage in the market. Competition from foreign goods meant that U.S. farmers and producers of raw materials would not make enough money to meet living costs.
Starting in the 1930s and especially by the growing season of 1942, parity pricing was established in the United States so that farmers would receive at least 90% of their costs at the farm gate or the point of first sale. Also, if the farmer agreed to this program, the maximum they could receive was 110%. Most all farmers agreed to this parity pricing system, which put significant regulation into the marketplace. At the base of the U.S. economy, it allowed the people to make a decent living. Parity played an important role in getting the U.S. out of the Depression and through WWII. In the early 1950s, the traders, with supporting economists and politicians, wanted to revive the Chicago Board of Trade and other trading outlets that had gone into dormancy during the previous eleven parity years. I think this was a mistake, and today we need a new parity program suitable for the whole world.
Capitalism Squeezing the Farmer
Now, let’s look at Capitalism in the United States from the marketplace perspective as revived in the 1950s. Some of the highlights will point to why we have lost 900 farms per week on average. Starting with foreign competition, the first barge of imported soybeans arrived off the port, and the price for soybeans at the Chicago Board of Trade plunged by 30% in one day.
When a food distributor turns away from buying California avocados and buys equivalent avocados from Mexico where the cost of producing avocados is less, who gains and gets more money in their pocket (the middleman/distributor) and who gets less (the California grower)? When a U.S. President visits the President of Brazil and agrees to buy so many cattle from that country, the result most likely will be the U.S. rancher loses money.
The only way for farmers in the U.S. to make it financially with all the foreign competition has been to get big and follow the Monsanto seed and fertilizer program, even if it means denuding the farmer’s soil or going huge by squeezing in as many chickens, cattle, pigs into tight spaces and give them growth hormones and antibiotics to survive long enough and kill them as demanded by the best profit.
When we give up a system of parity and choose capitalism where the marketplace creates “price discovery,” the above practices since the 1950s for U.S. farmers to survive have led to our present-day unhealthy form of success.
However, suppose we can develop a system of parity, where the farmer knows they can get enough of a price when they sell their produce. In that case, the farmer can begin thinking about enriching the soil with more minerals for healthier produce and greater pride. The goal would not have to be to cheat the standards with the lowest quality for the highest profit to better your chances of survival.
Money as the Lifeblood of Society
Now, getting back to money and coming full circle, I believe the answer is how we think about money. If we think of money as the goal, the “object” of what we need in a capitalistic system of greed, then I feel humanity and life on Earth are in trouble. If we find ourselves in competition for want of money, then we are competing against everyone for everything we need for survival.
Differently, we can think of money as the lifeblood of society. It must get around to everyone participating in the world’s economic system. In this sense, we are participating on spaceship Earth, and where on Earth would we not want to see enough lifeblood? In this sense, money is not an object to be accumulated and concentrated on for acquiring but something that needs to be passed around with sufficient buying power so everyone can have a decent life.
If we can think of money not as an object for hoarding but as something necessary for everyone to have a decent life, then we can focus on a healthy humanity on a healthy Earth.
Stephen Zarlenga would often talk about there being good markets and bad markets. I’m wondering what we need to do now to create a good marketplace for our future that includes limits to growth on the Earth, environmental degradation that gets cleaned up, and people, their children, having many opportunities to engage productively in this world.
(A thank you to Randy Cook for pushing me to think about the dangers of money being treated as an object.)