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Chapter 5
The Disintegration of Local Economies

"The way that a national economy preys on its internal colonies is by the destruction of community."

-- Wendell Berry [23]

The Historical Progression of Control Over Economic Input Factors

Control of human affairs is achieved primarily through the control of economic factors -- economics drives politics, and economic and political realities shape the structure of society. The long view of history shows a progression of control strategies which ruling elites have employed, applying their power in turn to each of the primary factors of economic production -- labor, land, and capital. Conquest, plunder, and enslavement remain to this day the dominant mode in international affairs. Blatantly brutal and gross political subjugation has declined in popularity, at least among the nations of the "civilized" West. The favored methods have become increasingly subtle, shifting from political domination of nation over nation to economic and financial domination of peoples by supra-national institutions. The "debt-trap" is neater than direct force but no less tyrannical.

Slavery is the direct control of labor through physical coercion and threat of harm. It has been commonly practiced throughout history, even in so-called "civilized" countries, and was a prominent feature of our own "free" country until just over a hundred years ago. As "civilization" has progressed, overt slavery has become both less palatable and less practical. Typical of the transition from direct control of labor to control over land was the passage of the "enclosure acts" in England. The elimination of the commons, upon which the vast majority of people depended for their livelihood, and the deeding of the land to the lords, deprived people of their means of living free and forced them to pay rent, usually in the form of crop shares. With land access restricted, and forced to pay onerous rents, people were increasingly driven from the land and into urban centers.

With the advent of industrialization, the bulk of production shifted from the cottage and village, to factories and cities. Then, the control of capital -- the tools or means of production -- increasingly became the method of social control. Separated from their land and their tools, individuals were forced to work for money as a means of livelihood. For most, this meant migrating to the cities and selling their labor to the factory owners. These factors caused the evolution of what is commonly known as "wage slavery."

While wage slavery yet remains, the mechanisms of privilege and control have become even more subtle still, so subtle that few people have even the slightest idea of what is happening. Besides the economic factors of labor, land and capital, there is also a supra-factor which mediates and controls the process of exchange and the interchangeability among the other three economic factors -- that factor is money.

As pointed out previously, money has over time become increasingly ethereal, i.e., less substantial. For thousands of years, even up to the writing of the U.S. Constitution, the common substance of money was precious metals, mostly gold and silver. These commodities, typically in the form of coins, carried value within themselves. The only questions needing to be ascertained by traders in the marketplace were those relating to the weight and fineness of the metal tendered. The stamping of metal into coins provided a means of certifying these factors, thus further facilitating the process of exchange.

For reasons of convenience and safety, paper notes began to be used to represent ownership of metal. The exchange of paper notes in the marketplace then provided an easy way of exchanging the value inherent in the metal which was stored elsewhere. The paper had value because it could be exchanged for metal at the place where it was stored. As paper money became more common and acceptable, and as the need for exchange media began to exceed the amount of metal available, there was the temptation to issue more paper than there was metal to redeem it. This gave rise to what is known as "fractional reserve banking."

Fractional reserve banking is the practice of issuing paper notes in amounts which exceed the value of the stores of metal which they represent. Generally, these amounts were several times the value of the gold or silver held.

The abuses of paper money and fractional reserve banking soon created problems such as bank runs and bank failures. Governments, naturally enough, began to intervene to regulate and centralize banking, eventually themselves becoming the greatest abusers. They either began to issue paper money themselves or, as in the case of the United States, allowed the formation of a banking cartel (the Federal Reserve System), through which their profligate spending could be financed.

When the monetary abuses became apparent, people increasingly exercised their option to redeem their paper notes for metal, causing "bank runs" and "panics." Occasional runs on isolated banks, while disastrous for their depositors and investors, were not of great consequence to the general economy. The centralization of money and banking, however, did not end the abuses, but rather has institutionalized them to the point where the entire economy is adversely affected.

As their reserves of metal began to run low, governments and central banks had no other choices but to either stop their abusive issuance of paper money, or to rescind the redeemability feature. They have invariably chosen the latter. [24]

Through the development of a medium of exchange which can be created virtually out of nothing and allocated according to the values and objectives of those who have the money power, it is now possible for a small elite group, both in and out of government, to quietly and imperceptibly control the entire realm of human affairs. As Nobel prize winner, Frederick Soddy has put it, "Money now is the NOTHING you get for SOMETHING before you can get ANYTHING." [25]

Social Control Through Control of Money and Finance

At the same time that money was becoming more etherealized, centralized, and politicized, market mechanisms were becoming a more dominant feature of economies at all levels. From the individual level, to the community level, to the regional level, and on up, economies have become increasingly specialized and therefore dependent upon market exchange. This predominant condition is in sharp contrast with many historical (and a few current) examples of local and regional economies characterized by versatility and self-reliance. Versatility derives from a diversity of skills and resources; self-reliance is based largely upon production for use as opposed to production for market, and the use of less formal internal exchange mechanisms.

Specialization of function is beneficial up to a point, and so is the market. The well-known economic concept of "comparative advantage," which provides the fundamental argument in favor of free trade, cannot be denied. Yet, the advantages of self-reliance and versatility at every level must also be acknowledged for both individuals and communities. If they are to avoid complete loss of control over their quality of life, they must also avoid becoming overly dependent upon existing markets in which the exchange media are monopolized and abused, and the mechanisms of finance are political and undemocratic.

For people living in industrialized countries, everything has become increasingly commodified. Even babies, human blood, and body parts have become objects of commerce. We have become increasingly dependent upon external and remote sources of supply for the most basic necessities of life. Most of us, when separated from our highly developed technology and intricate mechanisms of finance and transportation, lack even the most basic skills required to keep ourselves warm, dry, and well fed. Our alienation from the land, the basic tools of production, and each other, manifests in increasing environmental and social degradation.

Social Disintegration

Along with our increasing dependence upon remote and impersonal political and economic entities has come the disintegration of traditional social structures -- the family, the clan, the tribe, the village, and the bioregional community. All these have paled into economic insignificance, and, lacking economic power, they have become politically and socially impotent as well. Now, in this atomistic society, the wage earner's allegiance must be to his/her employer -- the corporation or the government bureaucracy. The majority of those who are not wage earners depend upon some form of government-granted privilege or transfer payment, such as mining rights, grazing and timber leases, farm price supports, and Social Security payments.

The social disintegration which we see seems somehow related to both the loss of freedom and the inability to participate effectively in the process of making the decisions which affect our lives. All the rhetoric about democracy and "government by the people" notwithstanding, freedom is today constrained in many subtle ways, both politically and economically. A prime example of this in the political realm is the obvious "gerrymandering" of congressional and legislative districts. The drawing of the lines of these districts seems to be aimed, not so much at gaining advantage for one or the other of the two major parties, but at limiting the ability of various ethnic, economic and social classes to gain effective representation in government. This political homogenization limits the ability of legitimate interests to organize effective political power or even to have their issues and concerns debated in the political arena. The consequence is that only the corporate and monied interests are able to get their voices heard and influence the process of government.

Many countries in Europe and elsewhere have Parliamentary governments involving "proportional representation." They have numerous political parties representing particular interests. A party is able to gain representation in Parliament in proportion to the percentage of the votes it receives in an election. Thus, even a small minority party can gain representation with as little as 5% of the votes. Far from being divisive, this assures that various points of view will be heard. [26]

A basic factor which seems to underlie the limits both to freedom and effective participation is that of scale. As Chilean economist Manfred Max-Neef explains it:

"It is absolutely impossible to have participation in a gigantic system; it can only occur at the human scale -- in other words where people have a face and a name, where they mean something to each other and are not simply statistical abstractions."

He goes on to say that the critical size of a participatory group will depend upon its function but, "in any case, .. will never be very large." [27]

If we are to reverse the trend of ever increasing alienation, we must begin to organize ourselves into small functional social groupings which empower their members and provide a meaningful level of mutual support.

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