Hazel Henderson believes the information age
will bring an end to win-lost economics.
By Deborah Claymon
How is information technology changing global economics? Let me count the ways. At the most fundamental level, we are now at a bifurcation point. For hundreds of years, we have used money-based exchange. This system was an evolution from the earlier days when we bartered. It doesn’t matter what we call money — coins or paper or blips on a computer screen — the idea is still that we have this substance called money that embodies value and keeps track of transactions. But now we’re moving back to barter. And what’s really fascinating is that we are going to a direct, information-based exchange and trading system where money isn’t necessary. Computers and computer networks give us the capability for sophisticated barter without currencies. It isn’t just a matter of bartering a pig for a load of hay. Now we can accomplish multiple-party barter deals, and we have the technological system to keep track of the exchanges.
When do you expect that this return to barter will start affecting our everyday lives?It’s going to be a very gradual thing. Today it’s most evident in high-level exchanges, especially for developing countries, which are turning to barter to get what they need and therefore circumventing the necessity of large sums of currency.
Have mainstream economists missed these changes wrought by information technology? Yes, I really think they have. When you tell economists we are going to a new system that doesn’t use money, they get very upset because all of their degrees and skills come from a focus on money. This has been a 25-year-long crusade for me, and I’ve earned a lot of enemies in the economics profession. No one likes to be told that they will be obsolete.
How is the move away from currency affecting worldwide banking? We’re only just now seeing the beginning of this revolution, but what it implies for central bankers and finance ministers is that they have competition. Bankers have been trying to re-create scarcity on the Internet through new electronic money systems. They are working like mad to do this, because if a pure, information-based paradigm of exchange takes hold, they lose their enormous power base. A return to barter — to win-win economics — will change all the world’s stock markets and will finally provide an alternative to the banks as a source of capital.
Is a major stock market crash imminent? There’s a 25 percent probability that before we are through with the Asian market meltdown, there will be a major national default somewhere. This is exactly what I would have expected, since we’ve taken down all the firewalls between economies. At some point, the finance ministers of the big countries and the central banks will have to get together and establish some regulations for this global casino.
What do you mean by a “global casino”? Speculators are responsible for at least 90 percent of the trading on the daily currency markets. Traditional economists have always said that currency trading creates very deep markets, but a recent study revealed the opposite. Not only does currency trading cause increased volatility, but currency traders are also error prone. So we can expect a lot more disasters like Barings Bank and Orange County, California.
You have advocated a global securities and exchange commission. What would be the purpose of such an institution? It would be a set of principles requiring companies all over the world to conform to a set of global accounting and trading rules. Right now we don’t have any harmonization of these rules, and some countries have no rules at all. It would provide much greater stability in the world markets. Where we are today is rather like Wall Street in 1929.
Do you think the “only the paranoid survive” approach of the computer industry is the best way to grow the market? To grow the market, the industry has to balance competition and cooperation. Technology is actually teaching the world about abundance, and the long-term players in this game are the ones that understand that the best way to get market penetration is to connect as many people as possible to the technology. We’re dealing with an abundant resource: information. The greater the number of people who are wired up, the more there is for everybody. I don’t understand why the leaders of the technology industry bring a supercompetitive scarcity mentality with them from the old industrial age.
How do you view the free market competition of the technology industry? The free market says that we have the best of all possible worlds — that we have the technology that individual consumers have decided they want. Of course, that isn’t actually so. What we have is huge institutions and huge corporations deciding for us what we want and then putting enormous sums of money into advertising campaigns to ram it down our throats or into bribing politicians in order to get public funds to develop these technologies.
What do you make of the squabbles over standards and operating systems? The battle for capturing global standards is happening in every sector in the world today. But the Web is one of the first signs of a cooperative public interest model. Perhaps we can find a way to institutionalize the goals of the Web’s organic beginnings, first for the technology industry and then for other markets.
What are the economic implications of widespread use of the Internet?If this use is regulated and untaxed, eventually it’s going to have very negative consequences on bricks-and-mortar communities all over the world. It puts people who are rooted in and care about their communities at a terrible disadvantage to people who are footloose and irresponsible.
Do you see any hopeful signs that we are getting more economically cooperative?That’s one of the great promises of the information age — that cooperation will develop along with a greater knowledge of the distant societies.I have been writing about the “love economy” for 25 years. The love economy is the amount that people desire to be altruistic on a global scale even though such altruism is unrewarded. The love economy is considered by economists to be irrational. They say being a volunteer is irrational, and yet 89 million Americans still volunteer at least five hours a week in their communities.
What effect has the rise of consumerism had on global economies?There is good news and bad news. The consumerism of the West is generating an “attention” economy in which time is more important than money. The producers of goods and the producers of services, entertainment, information, and education are all extremely aware that there are only 24 hours in a day in which to get a person’s attention. And despite the number of Americans volunteering and turning to less materialistic pursuits, commercial media are still promoting the old-fashioned image of “I am because I have.”
You’ve called for social innovation to match the technological innovations in the computer- and satellite-based “global casino.” Can a socially responsible business survive today? Yes, as long as they are out there raising the ethical standards as a whole and getting more and more people to understand that they have choices — that, for example, they can pay ten more dollars for a pair of shoes made without child labor.
You believe that competition has even obscured the benefits of cooperation. What do you think will change our global competitive mind-set? We will continue to create these very unhappy dramas for ourselves — like the Asian crisis — until we learn that in our current system, not everybody can win the game.