What was the impetus for creating Essential Knowledge for Transition?
In 2009 I left the finance industry and embarked on a quest to understand the causes of the financial crisis of 2007-2008. I was also looking for a different set of perspectives so I signed up for a permaculture design class and joined a number of movements including Occupy, Transition Towns, Public Banking, and Slow Money.
What I soon discovered was that the financial crisis was brought about by the collapse of the shadow banking system – the complex chain of financial intermediaries that turned mortgages into progressively more liquid and allegedly safer financial instruments, and that the various movements I had joined were not very familiar with the inner workings of the systems they were trying to change.
The first component of Essential Knowledge for Transition was Economy for Transition. As denizens of a society now profoundly shaped by the logic of the market and the drive towards the progressive commodification of all aspects of our lives and interactions, it is imperative that we understand how the economy works and stop deferring its managements to so-called experts if we want to maintain a working democracy. My initial task was therefore to explain in layman’s terms how the economy worked, and the key design flaws that caused it to operate in the interests of a progressively small fraction of society and at odds with the health of ecosystems and cultural and biological diversity.
As I looked at the economic system more closely, the role of the monetary and banking system came into stark relief. Even though standard economic texts treat money almost as an afterthought, it became clear to me that understanding the process of money creation and credit allocation was key to understanding the economy and especially the fluctuations in the business cycle and the recurring asset bubbles whose implosion cause so much economic suffering and dislocation.
Finally, the last piece of the puzzle was finance and the world of investing. Understanding how the financial system works is even more important now as we move into the late stages of a particularly complex form of financial capitalism (as opposed to the industrial capitalism of the 19th century).
The outcome of my research was a series of three talks – Money: The Invisible Operating System, Beyond Capitalism and Investing for the World We Want.
You might also enjoy this interview with Prof. Yanis Varoufakis on the importance of democratizing economic knowledge.