Chapter 8 of Theology of Money is a tentative attempt by Goodchild to construct his alternative to the current hegemony of money.
Goodchild begins with a note of caution. The construction and planning of institutions is not something that comes easily to philosophers. While Marx spent much time critiquing the system of capitalism, he spent scant time writing about how his communism society would look like, other than a few fragmentary notes. Philosophers tend towards high levels of abstraction necessary to their craft, that often makes it impossible for them to imagine concrete change. Yet at the same time, certain philosophers have certainly had a major influence upon our economic life, and often a negative one. But this should not prevent us There are, of course, myriad extant proposals about how to change the current capitalist system, but none begin with the critique embodied in the theology of money. Goodchild proposes to sketch a system that begins with his own critique of the credit-money system. Doubtless, this is again a quite complex chapter, so please forgive the length of this description.
Goodchild sets out four criteria by which a solution to the problem of money, the general form of which is outlined at the end of the previous chapter, should be evaluated.
- if a proposal achieves reform that challenges the whole of the current nature of the system
- that a proposal should not damage the basic conditions needed for life
- if they achieve more prosperity and health for all
- if they align with the true principles of economic life
A reformed economy would “enable flows of credit and investment to be directed towards what matters the most” (245). There are many institutions – religious organisations, political lobby groups, charities – that produce evaluations of what matters. Yet these institutions and their evaluations cannot direct credit because they have no authority, no “social effectivity”. The common solution is one of democracy, grounding authority in reason. Yet this fails. First, since the objectivity of objective thought is never fully present, and there is not a universal assent to a value of values (think of the diversity of value of values in the contemporary world) people need to rely on argument and persuasion, rooting social authority in rough consensus. However, consensus is more easily formulated by a singular perspective (like that of money) so it tends to be disrupted by certain forces external to it: starting an inquiry by asking the wrong questions as a result of those set by the dominant system of thought (money, capital), the distraction of the individual enquirer from his or her attention to what matters by the desire for prestige in their field (the respect of peers, the gaining of virtues intrinsic within a practice for there own sake etc.), the fact that research is often directed by money-power and hence evaluation is subordinated to profit rather than investment being subordinate to evaluation. Therefore, for the most part “true philosophers” only identify what they take to be consensus as what is reflected in these three areas.
The solution is to not expect a universal, global evaluation but rather smaller, local evaluations that are sensitive to local needs, consensus only at a local level is what is only required. As well as the partition of the division of labour, that splits workers into doing specific tasks since having a single worker do every task is inefficient , there should also be a division of evaluation. No worker has the correct training to work everywhere and no democratic subject conceivably has all the skills necessary to make evaluations on all topics. Given both the failure of democracy in these respects, and the problems of the theology of money “it is vital to detach social authority that renders evaluations effective from both consensus and debt money” (246).
A partial solution is then for there to be sphere of the economy dedicated to producing and distributing evaluations, both the supply and demand for evaluations. Evaluations are, like goods and services, produced, vital to human life and require specialist skills in their production. This “second tier” of the economy already exists in the religious, political and ethical institutions of civil society that Goodchild initially mentions. What they lack is any real power to make their evaluations occur, since most evaluations are stifled by the power of money flows – hence this tier needs a “new mode of intermediation apart from discourse and apart from money” (246).
This requires an new institution, that like banks and financial institutions currently, who mediate flows of money, mediates “flows of credit to evaluative institutions so as to grant them social effectivity”. You cannot start a business with no capital, equally you cannot make an evaluation effective with no authority. Hence, something like money is needed to enable evaluations to become effective – evaluative credits should circulate with money proper, goods and services. This must be a “new fusion” (247) of credit and evaluation, that subordinates credit to evaluation. For this certain criteria must be met:
- Evaluations must actually direct the flow of money casually. Some institution is required to move from evaluation to money being directed towards what is decided and what evaluation is made.
- Effective evaluations are an intrinsic good that should be demanded, something that is already the case in the form of money. We have to create demand, as well as supply of evaluations.
- Evaluative credits should flow in a different way to money. With money, power is created by investment resulting in profit, that always trumps evaluation, since what is profitable is what is valuable. In contrast, evaluative credits should be the opposite, the care for investment should be what determines it.
However, evaluative credit is not like money in that it is not transferable, but a contract between four groups: the maker of the evaluation, the person who carries out the evaluation materially, the institution that is expert in making evaluations, the evaluative institution (kind of like a business in the current economy) and the institution that makes evaluations effective socially a bank of evaluative credit (kind of like a bank).
Who makes these evaluations? It is, for Goodchild, not a natural right, but a socially conferred priviledge to make evaluations. The bank of evaluative credit issues this power. Obviously, deciding who should be qualified as members is a complex and difficult process, since it is difficult to define who should, exhaustively be allowed to make evaluations and who should not and there are large and conflicting interests that are at play. Therefore it would be necessary to have more than one bank of evaluative credit, different banks that represent different perspectives on who should properly be able to evaluate. People would subscribe to the bank that represented their beliefs. Such banks would be international, but would also have a local understanding. There would need to be a sharp division, however, between the makers of evaluation, and the power to make those evaluations happen. What needs to be avoided, as is the case in the current system, is the situation where evaluations are both made and made effective, given authority, by the same institution – “an evaluative authority gives authority to its own evaluations”. Rather a heterogenous situation is superior, since it prevents this self-reflexive blindness. as it is open to critique.
Practically, how does this work? There are evaluators, and enterprises seeking investment. If a enterprise is deemed worthy of investment and credit by evaluators, a credit that is both “go for it” and “actual credit” (money) is given. There is no equivalent of profit that returns to the evaluating institution. The evaluation is supported by the institution “go for it”, the credit, the money to do this enterprise, is provided by the bank of evaluative credit. Naturally, the bank will need to guarantee these credits and do so by issuing loans. But these loans will be available to all institutions, not simply large corporations and governments. These loans, unlike current loans, need never to repaid, since the evaluative credits give “meaning” to a business aside from profitability and the ability to repay capital loans. Hence practically, such loans may be forever. Where though do evaluative institutions get their money to exist? Clearly, they would be invested in by other evaluative institutions, with a safe guard in place that ensures that if any “evaluative cartels” where evaluative institutions keep each other in existence are avoided.
Each evaluative institution has a certain amount of credits to invest, but clearly the “power” of each credit will vary with regard to the money form and the rules of the bank of evaluative credit.
- They will wary with the amount of money the bank of evaluative credit has in its reserves.
- credits increase in relative value in inverse proportion to the number of investors. This ensures the localism of the investment, individual evaluations are more effective than huge collective ones.
- Value of credits in monetary terms, or quantity of credits should increase with regard to subsequent institutions investing in an enterprise. This give more power to evaluative institutions that recognise what is really valuable.
- credits increase in value the more widely they are dispersed by an evaluative institution
- You can b0rrow credits from another institution.
Goodchild admits that given these five parameters likely throw up a whole slew of additional problems, that could open opportunities for people to “play” the system. But he is only suggesting outlines, a beginning, a more fleshed out system would pay attention to the effectiveness of well balanced ecological and physiological systems, making a decisive break from older systems based upon different models of thought for healthiness. One of the axioms of designing this system should be that the purpose of it is to filter harmful social forces, and foster social forces that provide “care and provision” (252). This system is attractive because it can been seen as a properly functioning economic democracy. Issuing evaluative credits is more powerful than voting and directs the course of the economy toward improving environmental, social and human capital, which may well (though not necessarily simply) improve the performance of the monetary economy.
The problem is: how can this system come about from within our current financial system? There needs to be money coming into the banks of evaluative credit somehow, otherwise it can never actually make evaluative credits effective. Certainly, profits from enterprises, where they are made, can be returned to the bank of evaluative credit. What is the important difference here is that the bank has no control over the making of profits, because it does not invest directly, only carries out investments for evaluative institutions. Therefore, it cannot invest solely to get returns of profit, because it does not select what to invest in. Equally, evaluative institutions cannot invest to return money, because they do not receive profit, but the bank of evaluative credit does. Other than profit, money for the bank of evaluative credit could come from either taxation by states, or by the bank being active in the monetary economy like a conventional bank. The bank would earn money through investments, speculation and loans on the conventional market but not disperse profit to shareholders (the bank must be owned privately/collectively or by the state) by to a fund to provide money for evaluative credits. This may seem to compromise the ethical basis of the system, yet this forgets the reasons that this speculation will be done. It will be done in order that effective evaluations can be made, that direct money, time and attention properly. Goodchild says “The issue is not whether sacrifices can be avoided in the utopian idea of a bloodless society, but what is worth making sacrifices. If the power to make effective evaluations is endowed at last on whose sacrifices underpin the global economy, only then does the circuit of evaluation come full circle. Justice only occurs when sacrifices of time, attention and devotion are effectively counted.” (253) In other words, the temporary measure of drawing from the violent monetary economy will be an attempt to make the hidden violence count, by redistributing the money to what matters, which may well be those who have sacrificed. Indeed, it will be a transitionary period. Eventually like money unbacked by gold, evaluative credits may not need to be tied to the value of money, but would cause things to happen of their own accord. Goodchild breaks out the diagrams to show the relation of the monetary economy to the evaluative economy (a move which I love). I have reproduced the diagram below as it is difficult to imagine without it.
The banks are the centre of both the monetary cycle and the evaluative circle. The important thing is that the evaluative circle bleeds through into the monetary circle. in the sense that the monetary cycle supports, ultimately the evaluative cycle, and the evaluative cycle only supports the monetary cycle inasmuch as it supports the evaluative cycle. Ultimately, because of the kind of institutions they are, ones that give out credit, banks of evaluative banks would likely attract money themselves in the form of endowments as a result of their increased credit socially. Thus evaluative credit allow people to invest in what is worthwhile, it opens the question of what is truly wealth and worth spending time on, one that is diverse, local, partial and responsive and moreover “although evaluations may be local and partial, the entire system of evaluative credit evokes a particular subjectivity. It may even evoke particular technologies and a particular theology” (256)
In conclusion, Goodchild sumarises the three great errors of evaluation invoked by the money system. First, that money pays attention not to anything that matters most, but rather only to the production of more money. In contrast, evaluative credit cares for something outside itself. The end of evaluative credit is not more evaluative credit, but rather, directed outwards, toward what matters. Second, money creates a subject that imagines it has sovereign power, that thinks in terms of what can be purchased, be profitable or subject to charity. These form the way in which the world is seen. Evaluative credit moves the decisions from these immediate and often emotional concerns, to a situation where “decisions can be educated by evaluative institutions that are based on traditions and disciplines of care in evaluation”. Care is given, therefore, to what deserves attention. Thirdly, the money system creates the political theology of the authority of money, money is object and source of credit – “Money promises all things to those who devote themselves to it, while delivering only itself” (257). As supreme value, all other values are subordinated beneath it, expressed only with its voice. Evaluative credit might seem to ascribe all value to the bank of evaluative credit, but there is to a plurality of such banks, hence always a plurality of systems of evaluative credit. The bank of evaluative credit is an institution that only has power given to it by those participating in it. Like a ghost in a machine, it only exists as long as the ghost or spirit remains, as long as it is invested in by another body. Goodchild concludes that:
The error consists not in invoking a spirit, but in the subsequent assumption that it is the only divine form. For, in this life, credit, like time, attention and devotion, has to be distributed. (258)
Questions: As with any practical suggestion, there is a slew of questions, but I will attempt to concentrate on those that seem the most pressing. There is a lot to absord, and a deal of imagination required to think what is being suggested. It is actually surprising how Platonic elements of Goodchild’s analysis are, in the sense that it tends to repeat certain tropes of Plato’s Republic. Though there is a plurality of institutions for doing so, those who create evaluations are removed from the world in a certain way (perhaps a necessary way) in the same way that the guardians are removed from common society. This removal is the most problematic aspect, since it would be very difficult to create pure evaluators while the normal economy was on going. How would one create such divisions?
What worries me the most here is that the money of the bank of evaluative credit is derived from the monetary economy. Though Goodchild does acknowledge this may be problematic, how those within the monetary economy be prevented from “playing” the evaluative bank for investments which continue the destructive cycles of capital. Moreover, some evaluative banks would likely have more funds than others, the evaluative credits would “mean” more in real monetary terms in certain banks than in others. This would lead to these banks of evaluative credit being favoured by evaluative institutions, since evaluative institutions would always seek the evaluative bank that makes their evaluations the most effective; the bank with the most money to invest. This would lead eventually to some degree of the reproduction of the old system, a competition between banks of evaluative credit, where those with most money would still win the day. Considering most money is made by the most destructive short term investments, the most successful bank of evaluative credit may be in part funded by the most destructive elements of the current system. Hence, the system will (at least initially) tend towards the precise same situation, where money-richness trumps.
Finally, how would you go about convincing people to adopt this system? Certainly, there is a persuasive argument in this book that in ecological, economic and even spiritual terms, the current money system needs to go, but this argument is unlikely to convince those who are at the top of the system, even through decent persuasion and certain ethical remonstrations, considering in part they will not accept the authority of this evaluation of global capitalism. For example, some recent economists in the mainstream have suggested that the millenium development goals set by the UN have already been met (!) or that globalisation is a definite good. These things can be assaulted by argument (indeed they are not convincing), yet the arguments from our side (as it were) are unlikely to be convincing to the opposition. In short, how do we convince Bill Gates or George Soros that giving his money to a bank of evaluative credit is a better solution than continuing his current philanthropy? Do we have to convince him at all to do something like this? Should we force the system into practice in some way?