Money’s Place: Science Fiction, Realism & MMT in The Ministry for the Future

Money on the Left: History, Theory, Practice
Vol. 1, No. 1 (2023)

ISSN 2833-051X

Money’s Place: Science Fiction, Realism & Modern Monetary Theory in Kim Stanley Robinson’s The Ministry for the Future By Maxximilian Seijo

Abstract

Kim Stanley Robinson’s speculative near-future novel Ministry for the Future (2020) centers the heterodox political economy of Modern Monetary Theory (MMT) to forge a new path for ecosocialist politics. This money-positive path diverges radically from critical traditions in political and literary thought that reject money as the ultimate source of environmental exploitation and climate catastrophe. In this essay, I argue that Ministry’s centering of money challenges and displaces the generic conventions of science fiction and realism, each of which has historically related to money in opposing ways. Whereas science fiction prioritizes escape to an enclave “outside” of money’s mediation of social relations, and realism laments the immanent dynamics of money’s mediating force, Ministry estranges both genres from their relationship to money by redefining money as an inextricable expression of social relation and interdependence. As opposed to dominant Marxian modes, Robinson’s redefinition draws attention to money’s radical place within the speculative imagination, disclosing new political economic and ecological capacity to remake global reproduction. 

On Merger Policy and Labor

By Sanjukta Paul

What’s a merger? A merger is a specific method of expanding the scope of a particular form of economic coordination that has been authorized by law. There is nothing natural or necessary about firms as a form of economic coordination or organization. All throughout history, people have been innovating and creating and trading in all sorts of organizational forms and economic institutions—through craft guilds, through mercantile guilds. There’s nothing compulsory or natural about the specific form of the modern firm—shareholder-driven and organized in the particular way that it is, with workers largely divorced from decision-making. 

Now, I’m not suggesting that we go back to the guild system. I’m asking us to take a step back and think about what a firm is and what we’re doing when we say that the presumption should be that, in essence, firms have the right to combine into still-larger and more powerful firms.

Because I want to propose a shift in our thinking about merger policy. I suggest we think about merger policy not just from the perspective of a specific merger’s effect on market concentration and on wages. We should also think about the rules we adopt in terms of their systemic effects on labor, on labor unions, on workers. And that means thinking about antitrust rules not just in terms of how we would apply a given set of rules in a given adjudication, but also in terms of how they function prophylactically to create, or not create, the sorts of markets we want to see.

What is the effect of a permissive merger policy versus a quite stringent merger policy on the competitive and business strategies that executives and boards are looking at, and that they may even be compelled into when everyone else is also pursuing them? What competitive strategies are open to firm controllers given a particular set of legal rules? In the context of a strict merger policy, what would happen to business strategy? I’m just going to ask the question as a thought experiment: If we take mergers more or less off the table as a competitive or business strategy, if we make them the exception and not the rule, what would happen? What would be the implications for markets in general and for labor in particular? I’m not going to answer those questions exhaustively, but I’m going to suggest that we think about them.

The firm is specifically an antitrust exception. It is a suspension of competition. You can say that it’s crazy to think about not allowing firm-based coordination; how would we produce? Well, there are actually all kinds of ways. At the simplest level, if you were truly trying to maximize competition, you could take the output of a firm and divide it—you keep all the operational integration, but you could just divide control rights over that output among everyone who works for that firm and let them individually price their share of the output. That would be a more competitive outcome, potentially replicating the level of competition that the modern business firm displaced. It’s fine that we don’t do that, but I think we need to notice what is actually happening here. I’m not the first one to have this insight: Ronald Coase, most famously, talked about the firm as a suspension of competition and market exchange.

So that is what a merger is: expanding this particular way of suspending competition. We need to be very clear about what we are actually doing and how we treat that form differently from other suspensions of competition—including labor unions, cooperatives, and even looser horizontal coordination in the form of things like trade associations. 

Mergers are an expansion of the scope of what is already the biggest and strongest antitrust exemption we have: the firm. That’s one thing I want us to notice about mergers. The second point I want to make is about “efficiencies.” When we talk about efficiencies that may be realized by a given merger, we need to consider two things. Which of them, first of all, actually are efficiencies versus something else? And secondly, could any genuine efficiencies potentially be achieved through forms of coordination other than the expansion of the firm? How?

Now, taking the second point first, this idea of thinking about economic coordination broadly is not just an academic point. What could we do right now in terms of other forms of coordination that could realize some of the putative efficiencies that specific mergers may accomplish?

For instance, could some of those genuine efficiencies be achieved through industry-wide standards in various situations? Could they be achieved by a trade association? We have trade associations that do marketing for various industries. You’ve all seen the milk ads. Or maybe you remember the California Raisins. Is there coordination through those types of mechanisms that could actually preserve more independent decision-making throughout the economy? That, by the way, is one of the goals of antitrust under settled law: dispersed decision-making. So, should we be considering those alternative forms of coordination? And indeed, in any new merger guidelines, should we be considering a safe harbor for some of these alternative forms of coordination—potentially through dispersed coordination, through trade associations or industry-wide standards—that could achieve some of those genuine efficiencies without the consolidation, and specifically without the consolidation in the form of the shareholder-driven firm that mergers currently signify? 

And on the first point about efficiencies: We also have to ask, how many of these putative efficiencies are actually intensified forms of extraction versus actual efficiencies? And here, it’s important to first get conceptually clear about what we mean by “efficiency.” Do we mean allocative efficiency? I don’t find that concept terribly useful myself, but to the extent that we are adopting it, obviously a merger decreases allocative efficiency. Everyone, Robert Bork, Oliver Williamson, has actually agreed on that. Somehow, though, we sometimes seem to forget this simple point.

So, allocative efficiency certainly isn’t an efficiency that’s contributed by a merger. It has to be a production efficiency. Then the question becomes: When are there true production efficiencies that are contributed by a given merger? In some cases, what we call a productive efficiency may actually be a form of extraction. I’m not saying they all are; I think there are genuine efficiencies. But sometimes, specifically when we’re looking at price as an index of production efficiency—which is obviously a shorthand we use all the time—we mistake extraction, or just a transfer of benefits from one group to another, for efficiency. In other words, low prices are often not an indication of production efficiencies; they’re an indication of extraction. And I don’t mean that in just a moralizing, pejorative way; this has to be acknowledged regardless of your ultimate normative views.

Let me break it down. What is a production efficiency? A technical efficiency means you get more output for the same input. It is technical innovation. We have seen so much such technical innovation in history. We live in a time in which we’re benefiting from it tremendously. But consider the difference between a machine that allows two workers to produce more (at the same quality) with the same effort, versus a new institutional or organizational arrangement that pays those two workers less to produce the same amount—or has them put in more effort for the same amount. Those are not the same thing. The second thing simply is not a technical efficiency. I’m not taking a normative position on that, right now. You can, I suppose, have the position that that’s a good thing and that we should drive wages down to subsistence levels. I do not think that—I do not think many people would admit that they think that even if they do—but I want us right now to notice that, conceptually, there is a difference.

And the same thing applies when a merger leads to greater bargaining power with respect to other firms that are input suppliers or distributors or whatever—firms in adjacent markets that you’re bargaining with. If you ultimately get lower prices—which we know we often don’t because instead those savings go up to shareholders—to what extent is it coming from superior bargaining power with respect to suppliers, distributors, and other trading partners versus true productive efficiencies? Imagine you now have more bargaining power with respect to trading partners in adjacent markets—very plausible if you’re now a bigger firm and you have a larger market share. So, again, we need to distinguish between true technical efficiency and extraction, both on the labor side and on the smaller-firm side.

And by the way, that’s not mainly because we just care about small firms and we romanticize them. Those small firms have workers themselves. So we need to look very carefully at even the supposed wage premium of large firms, because to what extent is that a wealth transfer from the workers of other firms to the workers of large firms (to the extent there even is a wage premium)? Notably, aside from current harms, you don’t even maintain that benefit if you just get rid of small firms to extract from.

These are all things we need to think about when we think about merger policy and workers. It’s more than a matter of efficiencies, too. For instance, permissive merger policy might entail a direct transfer from the productive arms of the firm to its nonproductive arms, and therefore ultimately from workers to shareholders and dealmakers. We often talk about this process as a function of the greed of individuals, like executives or the members of the board, but if we consider it systemically, we see how everyone, including those executives and boards, are actually constrained by this.

Many social scientists and researchers have been talking about share buybacks as a form of this type of transfer from workers and from production in general to the financial and household sectors. Josh Mason, an economist whom antitrust folks should pay more attention to, has a nice essay thinking about M&A itself as this same type of transfer. And he says:

[W]hen acquisitions are paid in stock, the total volume of shares doesn’t change. But when they are paid in cash, it does. In the aggregate, when publicly traded company A pays $1 billion to acquire publicly traded company B, that is just a payment from the corporate sector to the household sector of $1 billion, just as if the corporation were buying back its own stock.

Again, we are transferring from producers to savers at a systemic level. And again, you can have different views on the utility of that, but that is exactly what has been critiqued with respect to share buybacks. And whatever your opinion about it, it certainly isn’t a productive efficiency!

If you’ve taught business associations, as I have, then you’ve read all kinds of cases with your students in which the board doesn’t actually want to do the deal—even beyond the deals actually classified as hostile takeovers. No one who’s actually running the company wants it to happen. But their hands are tied by the pressure exerted by this set of rules, or at least their hands are strongly guided toward doing deals that very few people actually want. And this is especially stark when we consider that their primary job is to be stewards and managers of certain productive assets. That’s the point of the firm: making the best use of productive assets. We’ve decided, as a society, that giving this job over to managers and CEOs and boards is the way we want to do that. So if that’s the goal, we must ask, with respect to merger policy: Wouldn’t it be useful to have prophylactic rules that actually channel decision-makers’ activity toward doing precisely that, rather than impelling them toward deals that often benefit very few people?

* This is an edited transcription of a presentation delivered at the “Antitrust and Competition Conference: Beyond the Consumer Welfare Standard?” (University of Chicago, April 20-21, 2023).

Internationalism in Name Only: The Left’s Realist Turn

By Jane Ball

The Russian invasion of Ukraine in February 2022 touched a dormant but significant fault line on the left. On the one hand, much of the left was outraged by the invasion, believing it to be an illegal and genocidal land grab. On the other hand, a cadre of the left, especially in the US and the UK, took the opposing position. They blame the US for NATO’s eastward expansion for provoking Russia’s invasion to defend its “legitimate security interests.” This second group, given voice by Noam Chomsky and by the Democratic Socialists of America (DSA), has consistently demanded Ukrainian capitulation to Putin’s demands. These voices combine an economistic definition of capitalism with the offensive realist IR theory (mainly John Mearsheimer‘s) of international relations as driven by the politics of power projection. Thus, they attribute Ukrainian unwillingness to capitulate to an American capitalist Realpolitik that perpetually threatens Russian security and not as an authentic defense of their nation. 

However, this argument suffers from a poverty of theory. It views the world as a mechanistic body driven solely by predetermined (capitalist) instincts and denies human agency to affect the world. It also suffers from acute ahistoricism. Mearsheimer’s formulation of an anarchic “security competition” is a tautology that self-consciously excludes factors that contradict his theories as outside the scope of international relations. He does not explain how this anarchy developed, what specific social property relations it expresses, or how those social relations evolved. Thus, while it is necessary to question NATO’s continued relevance in the 21st century, the critiques by Chomsky and the DSA rely on a theory of international relations that is divorced from the material realities of the actual historical process. A leftist IR theory must be firmly rooted in the specificities of history and must account for the development of the social relations buttressing the international order. If Western capitalism is to be blamed for the war, then capitalism should be defined. The theory must also understand the evolution of internationalism as a complex and sometimes contradictory ideology, which implies a complete understanding of its revolutionary origins. Finally, a left IR theory must consider how militant worker action impacts the creation of world systems and their tensions.

The Head and the Heart

The DSA position is that the US is uniformly responsible for capitalist expansion and exploitation. It is easy to dismiss this as typical left-reactionary anti-Americanism, but this proposition is critical to DSA’s analysis of capitalism. For example, its original NATO statement argues that provocation from NATO’s expansion is the sole reason for Russia’s militarization. The International Committee’s opening statement proceeds from the organization’s 2021 platform, which states “DSA operates in the heart of a global capitalist empire” and later says, “as socialists living in the heart of the American empire.” The conflation of the US with the totality of an empire of Capital suggests that they view the two as indistinguishable. It is not just a rhetorical posture; it is a philosophical disposition.

From a moral standpoint, the DSA statement is correct. As the sole remaining superpower, the US is responsible for many atrocities and horrors, disproportionately targeting people of color and developing nations. These horrors have been committed – sometimes justified – as necessary actions to spread democratic values, protect human rights, and above all, capitalist social relations. The DSA is right to call out these hypocrisies, and they stand on firm moral ground. However, as a critique of the current imperial order and an analysis of the specific social relations that comprise the existing order, they present a reductive and mechanistic theory of history that ultimately undermines their moral capital.

Consider DSA’s description of an individual’s relationship to the system of Capital. The system is a body, the US, the body’s heart. Humans living “within the heart” are individualistic cells encoded by DNA for specific functions. Cells have no agency – they can only do what they were programmed to do. A single cell cannot change the direction the body moves and does not exist apart from the body. The body is intrinsic to the cell’s identity and existence. Not only do people have agency that goes beyond the orchestrations of a univocal political “body”, but this agency is social and linked to other relations of affiliation and dependence. 

Likewise, analogizing the US as the “heart of empire” has problematic implications. The heart pumps blood, distributing blood and oxygen to the rest of the body. Without it, the body could not function. This reasonably analogizes the US’s function in the imperial system. As the prime hegemonic power, the US economy and military have an unprecedented ability to exert their influence directly and indirectly to maintain the imperial order. However, this is where the analogy breaks down. DSA presents the body—capitalism—as a totality, defined and driven entirely by a mechanistic heart. There is no agency here, let alone the heterogeneous institutions and stakeholders that actually make things move. The inevitable march of capitalism flattens everything. 

These notions of inevitability are at odds with the historical process. By imagining people as individualized cells within a mechanistic body, the DSA theory denies the working classes of the past the agency and the ability to effect positive change in the world that inspires them to organize today. It collapses the last five hundred years of human history into an inevitable, perpetual, and all-consuming system called “capitalism.” In doing so, the DSA theory merely inverts the Whig narrative of historical progress rather than changing them. It does not analyze the structure of the current imperial order, its origins, or what specific property relations they reflect. They see that the US pumps capitalism’s blood but ignores the mind controlling the body. The US acts in “service to Capital.” Still, DSA does not precisely define what capital is. Capital is everything and exists a priori and apart from the human experience. The US may be the “heart of empire,” but the heart does not direct the body’s actions. It does not create the logic through which the body engages with the world. By centering the mechanical heart and not the dynamic mind, DSA conflates the guarantor of the imperial order with the imperial order itself. This mistake renders their geopolitical posture incoherent; there’s no specificity to the social relations guiding the imperial international system. The United States’ actions are definitionally imperialistic, regardless of the actual social and political context. 

The Left’s Realist Turn

There is no better demonstration of this tautology than a portion of the left’s critique of NATO and response to the Russian invasion of Ukraine. For instance, here is how Noam Chomsky summarizes the crisis

There are some simple facts that aren’t really controversial. There are two ways for a war to end: One way is for one side or the other to be basically destroyed. And the Russians are not going to be destroyed. So that means one way is for Ukraine to be destroyed. The other way is some negotiated settlement. If there’s a third way, no one’s ever figured it out. So what we should be doing is devoting all the things you mentioned, if properly shaped, but primarily moving towards a possible negotiated settlement that will save Ukrainians from further disaster. That should be the prime focus…We can, however, look at the United States, and we can see that our explicit policy — explicit — is rejection of any form of negotiations. The explicit policy goes way back, but it was given a definitive form in September 2021 in the September 1st joint policy statement that was then reiterated and expanded in the November 10th charter of agreement.

According to Chomsky, the outcome of the war is a foregone conclusion; Russia will inevitably “destroy” Ukraine, and the only way for Ukraine to avoid destruction is to negotiate with Russia, having accepted this inevitability from the start. Since this outcome is obvious, it is irrational for Ukrainian officials not to accept this reality. Therefore, the refusal to accept Russian demands must come from an external force – the U.S. Rather than Zelensky’s refusal to capitulate reflecting Ukrainian rejection of Russia’s terms, it is caused by the US not allowing him to negotiate. The US is forcing the Ukrainian military to continue to fight to weaken Russia, thus confirming that the US and NATO are actively antagonizing Russia via NATO expansion and justifying Putin’s “legitimate security concerns.” Even now, a year into the war, Chomsky downplays Putin’s responsibility for the war in favor of placing blame on the United States while continuing to hint at Ukraine’s inevitable destruction:

Let’s return to the current topic: how policy is being designed to bring about “much worse” by escalating the conflict. The official reason remains as before: to severely weaken Russia. The liberal commentariat, however, offers more humane reasons: We must ensure that Ukraine is in a stronger position for eventual negotiations. Or in a weaker position, an alternative that does not enter into consideration, though it is hardly unrealistic.

On the topic of NATO’s expansion, the Chomsky argument weds itself to the statements made by proponents of the offensive realist school of foreign policy – John Mearsheimer in particular. In a New Yorker interview in March 2022, Mearsheimer makes a similar version of this argument:

Nevertheless, what has happened with the passage of time is that we have moved forward to include Ukraine in the West to make Ukraine a Western bulwark on Russia’s border. Of course, this includes more than just NATO expansion. NATO expansion is the heart of the strategy, but it includes EU expansion as well, and it includes turning Ukraine into a pro-American liberal democracy, and, from a Russian perspective, this is an existential threat.   

Mearsheimer, like Chomsky, depicts the United States as the prime mover in the story of NATO’s expansion. NATO’s expansion is something the US did to push a “Western bulwark” further east, closer to Russia’s borders. In both accounts, the US is the only country with agency; everyone else is just along for the ride. Both deny Putin’s imperial desires and believe Russia is only reacting rationally to the security threat the US is perpetrating. However divergent their intellectual paths to this moment may have been, Chomsky and Mearsheimer are in complete alignment in arguing that the US has stretched the limits of unipolarity and is facing the natural, inevitable, almost mechanical reaction from its adversaries. This convergence is not new; for instance, Chomsky has long argued that NATO intervention in Kosovo was an imperial act of aggression by the US against Serbia. Nor is it just a rhetorical convenience; it betrays that both Chomsky and Mearsheimer share a highly deterministic view of capitalism and empire that, at its base, rejects the importance of diverse human agencies in the historical process. Nothing is contestable.

The left should be wary of aligning itself with offensive realists like Mearsheimer and, more recently, Henry Kissinger. In the first place, Mearsheimer’s worldview is highly simplistic and self-reinforcing. He defines his worldview on his website: “I believe that the great powers dominate the international system, and they constantly engage in security competition with each other, which sometimes leads to war.” This statement reveals that Mearsheimer believes that competition is every state’s historical default security posture and that international relations can only be defined as the sum of this competition, with the most powerful states monopolizing this competition. Only the Great Powers can express agency; minor nations are along for the ride, and the heterogeneous agencies of a state’s populace receive no consideration in his analysis. The reification of the nation-state and the naturalization of competition as a universal law of politics is antithetical to any leftist project that believes that collective action by the working classes can positively transform society. 

Second, leftists who would invoke realist foreign policy should know why Mearsheimer is so critical of the US’s focus on Russia. He is not advocating for dismantling American imperialism; he believes the US is distracted by a weakened Russia and is not doing enough to engage in Great Power politics with China, which he views as the true global rival. In his words: 

We do face a serious threat in the international system. We face a peer competitor. And that’s China. Our policy in Eastern Europe is undermining our ability to deal with the most dangerous threat that we face today.

Contrary to the left’s goal of preventing a new Cold War between the US and China, Mearsheimer is advocating for such a Cold War. 

Finally, neorealism self-consciously lacks historical explanations for international relations and state behavior variations. The theory declares a universal and transhistorical motivation for state behavior – specifically “security competition” – and only concerns itself with factors affirming the view. Aspects that contradict the theory are externalized; these are forces outside the narrowly delineated sphere of international relations beyond the scope of consideration. Mearsheimer presents another mechanistic world where complex social relations are relegated to a series of If/Then loops with narrowly defined parameters. Outcomes are predetermined, and reactions are instinctual and predictable. 

Ignoring the social complexity of history’s unfolding, Mearsheimer reduces inter-state politics to competition for security dominated by the most powerful states. Each state, like each individual “under capitalism,” has objective “interests” that are defined a priori: a zero-sum game of security flatly mediated by the invisible hand of power. Chomsky’s theory of international relations is nearly identical to Mearsheimer’s, with the difference that Chomsky incorporates a vulgar Marxist specter of Capital to position the US as the invisible hand moving all international relations. It assumes that if a Russia-Ukraine war were against the US’s interests, the US would prevent or stop it. Therefore, the conflict continues because the US wants it to continue. The US is one “actor”; the heart beats, the body responds. 

Internationalism in Name Only

DSA claims its anti-NATO position is principled internationalism. However, carefully reading their statements undercuts both claims of internationalism and the arguments made to justify the DSA stance. In the preamble of the June 11th, 2021, “No to NATO” statement, DSA calls for an immediate and unilateral withdrawal from the alliance. Regardless of NATO’s continued relevance in the 21st century, such a unilateral move by the US would be viewed – rightly – as an act of betrayal by our allies and would seriously hinder possibilities for future international cooperation. Further, immediate withdrawal would create a defense vacuum, as the defense umbrella European countries have planned their entire economies around for decades will suddenly evaporate. The vacuum would cause a rapid intensification of defense spending, well beyond the 2% of GDP requirement, leading to increased instability domestically and internationally. Domestically, intensifying defense spending would divert essential resources from the civilian sectors. Internationally, unilateral withdrawal makes the concept of “common defense” across Europe moot. The sudden vacuum of the American defense umbrella would spur a flurry of regional defense pacts among factions with diverging – and sometimes competing – security interests. Instability on both fronts is likely to be exacerbated by the fact that many of the NATO countries are also part of the Eurozone, whose monetary policy is effectively controlled by the German central bank. Far from undoing American imperialism, a unilateral withdrawal of the US from NATO is a continuation of Bush-era foreign policy and displays utter contempt for international institutions. 

Additionally, the language of the first bullet point in the “No to NATO” statement is inherently nationalist, not internationalist. The bullet point reads: 

Article 5 of the founding document that binds NATO members stipulates that “an attack on one is an attack on all.” A hypothetical attack on small Baltic nations that border Russia, although all the way across the Atlantic from the US, would force Americans to fight on European soil.

This statement is explicitly isolationist, arguing that the Baltics are too distant and insignificant for Americans’ concern. The phrasing of “European soil” also naturalizes the arbitrarily delineated borders of the nation-state.

Likewise, the fifth bullet point in the No to NATO statement is ostensibly a critique of the hypocrisies of liberal internationalist humanitarianism. However, in practice, it does more to cast doubt on the legitimacy of humanitarian concerns rather than the methods used to affect humanitarianism. The statement doesn’t argue for a better way to address humanitarian concerns; it dismisses any humanitarian justification as a pretext used to manufacture consent. Strikingly, though, the most potent example of the US using humanitarianism as a pretext for naked American aggression – Iraq – receives the least attention. Most of the critique is directed at the NATO intervention in Serbia, where the humanitarian situation was unambiguous. This position is consistent with Noam Chomsky’s overt denial of Serbian ethnic cleansing and genocide of Bosniaks and Kosovars as part of his criticism of the intervention., The Chomsky-DSA foreign policy may be anti-imperialist, but it is not internationalist. An approach that calls for the unilateral withdrawal of the US from its defense commitments combines all the arrogance of Bush unilateralism with all the fatalistic bleakness of Kissingerism. The denial of the genocides that precipitated NATO’s interventions in the Balkans and, more recently, the dismissal of Ukrainian sovereignty perpetuates fascist propaganda propagated throughout Europe and Russia. The defense vacuum created by the abrupt withdrawal advocated for by DSA would further destabilize Europe during its second refugee crisis in a decade. The lack of an American presence will drive European military spending, not decrease it. DSA’s No to NATO statement demonstrates this fact. 

On the one hand, to support its claims that NATO encourages European militarization, the statement points to an increase in France’s defense spending in 2018. On the other hand, it notes that the US and France’s chief executives have recently questioned the relevancy of NATO, with Trump nearly withdrawing the US from the alliance. The specter of a NATO without the US increased French military spending. Realizing such a withdrawal will encourage more militarization across the entire continent. With decades of austerity policies and multiple refugee crises, widespread militarization increases the threat of reactionary and fascist movements. The Chomsky/DSA position is reactionary anti-imperialism and is a dead end as a leftist vision of international relations. 

What Must Be Done

DSA’s adoption of neorealism comes at the most inopportune time. Now is a time for questioning the continued relevance and future of NATO. If the left is to have a voice in this conversation, it must be able to speak coherently with other political factions in this country. A left critique of the current state of IR cannot resort to polemics and sloganeering. It is not enough to say, “the US acts in service of capital.” This statement has no explanatory value. A critique of American foreign policy cannot assume that historical “forces” – capitalism, imperialism, or liberalism – are self-motivating, nor can it be guided by purely economistic theories of history that adopt conservative premises and assumptions of international relations. 

Missing from both left and right neorealism is any social content. Both ascribe the movement of history to large and impersonal forces impervious to human input, a riderless locomotive charging through a desolate landscape. “The US is the heart of the imperial project and acts in service to capital.” This is a description, not an explanation. It treats imperialism and capitalism as interchangeable words rather than distinct phenomena that interact with each other. For example, while NATO’s intervention in Kosovo certainly qualifies as an imperial projection of power, it’s unclear how such an intervention served the interests of capital. These words need grounding to a materiality that clearly defines them as social relations and is tied to the specificities of history. Capitalism isn’t a thing. It is the name used for a set of social relations defined by market dependency to meet basic needs. These social relations are not a transhistorical force; they developed in a particular place under specific circumstances. Moreover, the constitutive relations of “capitalism” are not constant over time. They are contestable across and within classes and often adapted ad hoc to crises and changing circumstances.  

Likewise, there must be an explanation of the origins of the imperial state system, from the seniority rankings of European monarchs below the Papacy to its evolution into today’s liberal internationalist rules-based system. Much of the imperial system’s history predates the global dominance of capitalist relations; the political and social character of early modern imperial disputes must be understood on their terms, not as subordinate parts of capitalism. Imperial competition in the 17th and 18th centuries was motivated by dynastic rivalries and the secularization of the Reformation into disputes over political rights and legal jurisdiction. It was not until after the Congress of Vienna in 1815 that capitalist relations became integral to imperial power competition. What precipitated these reconfigurations, what social tensions did they mediate, and how did states respond? 

Additionally, we must make distinctions among different iterations of the imperial system and the purpose of each. Differences must be enumerated. For example, the Congress of Berlin system is qualitatively different from the post-war liberal internationalist system. The Congress of Berlin self-consciously triggered an imperial competition for resources as the European powers rushed to industrialize to catch up to Britain. On the other hand, the post-war liberal international system saw itself as the ultimate triumph of the ideals of the French Revolution; the Declaration of the Rights of Man heavily influenced the UN’s Universal Declaration of Human Rights. At the very least, a Left IR theory should use these principles as our comparison point; how has the US, the other western powers, and the international institutions they created undermined these goals? It should then attempt to answer how to articulate better and realize the UDHR’s principles. We should not, as realists do, reject their importance as superfluous or merely as a cynical excuse. 

Finally, a Left IR theory must recognize heterogeneous working-class agencies and their ability to affect the trajectory of history, including in international relations, for both better and worse. Mass movements over the past two centuries have profoundly impacted the foreign policies of imperial nations. For instance, during the negotiations for the Treaty of Paris in 1814, the British government considered recognizing Haiti as a French possession to increase the legitimacy of the newly restored Bourbon monarchy. However, the British public, building off over two decades of grassroots agitation against the slave trade, vocally rejected this concession. A massive protest campaign organized by the African Institute sent 800 petitions with 750,000 signatures to Parliament. The outrage forced the British government to back away from the proposal and ultimately to insist the Congress of Vienna include an international repudiation of the slave trade. Returning Haiti to France was essential to the British government’s geopolitical interests- it would have provided the Bourbon monarchy financial self-sufficiency while still leaving them beholden to British sea power to protect French trade, neutralizing them as a threat on the continent. Public agitation intervened to change the treaty’s terms decisively, forced the British government into an anti-slavery position, and committed the resources of the British Navy to enforce the ban on the slave trade. 

However, just as these mass movements forced human rights concessions from the ruling class, they have also been co-opted by the ruling class to further the imperial mission. As anti-slavery sentiment grew in mainstream society in the middle of the 19th century, it coalesced in the “Free Soil, free Labour” ideology. Historian Eric Foner argues that the Republican Party formed as a coalition among certain aspects of the Capital class, artisans, professionals, and radical worker elements espousing this ideology to counter the political influence of the Slave Power. By the end of the century, the abolition of slavery was a primary justification for colonial intervention in Africa; Germany, France, the UK, and King Leopold of Belgium used the suppression of the slave trade to justify carving Africa amongst themselves at the Berlin Conference in 1884-1885. On the one hand, this represented the ultimate success of abolition over the planter classes. On the other hand, it represented the ultimate betrayal of the radical ideals of the abolitionist movement. 

Similarly, the international institutions and world order created by the United States and the Soviet Union represented the ultimate success of many revolutionary ideals espoused since the English Civil War. In his 1941 State of the Union address, FDR outlined four universal freedoms that became the justification for the Allied war effort: freedom of speech, freedom of worship, freedom from want, and freedom from fear. Roosevelt later expanded on these four freedoms in his 1944 State of the Union speech when he argued for a Second Bill of Rights that guaranteed economic and social rights such as guaranteed employment, a basic income, decent housing, adequate healthcare, and education. In many ways, the Second Bill of Rights echoes some of the most radical revolutionary demands from the 1800s; the Soviet Constitution of 1936 likewise contains similar provisions. The four freedoms became the basis of the Allied war goals and formed the ideological underpinning for the United Nations. Though there were deep ideological divides between the Allies, each manifested a society shaped by similar revolutionary ideals. The post-war international institutions were designed to extend these ideals worldwide. 

Despite these lofty goals, and although much of the world’s population did see a significant overall increase in living standards, the reality of the post-war consensus was a betrayal of many revolutionary ideals. The post-war “peace” was predicated on preventing another land war in Europe and domestic politics hostile to labor militancy in Europe and the US. The transition from coal to oil as the primary energy source after WWII allowed for the extension of middle-class prosperity to more people spatially dispersed across a wider area. Replacing coal with oil also altered the social relations of energy production and consumption. Coal mining was labor intensive, required high concentrations of largely autonomous workers to extract and transport to sites of consumption, and was done by workers within Europe and the United States. By comparison, oil requires far less labor to extract and transport, and reserves were primarily in formerly colonized countries. This change in production requirements and locations further cemented the control of capitalists over energy planning, undercutting worker movements in industrialized nations by shifting the nature of work while reinforcing the economic power of former colonial states in the newly independent states of the Middle East and North Africa. With coal, labor could exert significant control over energy production and, thus, the entire economy, whereas, with oil, workers were too few and spatially dispersed to exercise political power similarly. The change in geographic location outsourced the violence and instability necessary to maintain worker discipline from urban centers in both the NATO and Warsaw Pact countries to newly independent nations in the MENA. The post-war attempt at securing political, economic, and social rights for the middle classes of the industrialized nations came at the cost of undermining those same rights for people living in oil-rich countries. 

One year into the conflict and contrary to Chomsky’s prediction, Russia has not destroyed Ukraine. While it is undoubtedly true that NATO’s military and financial support has been invaluable to the Ukrainian war effort, the failure of the Russian invasion is a testament to the Ukrainian people’s will to maintain their independence from Moscow. Despite ongoing resistance from Ukrainians, the Chomsky Left continues to view the war through a lens of brute economistic offensive realism. They rely on vague assertions that NATO’s goal is to destroy Russia and “expand capital.” However, their arguments lack specificity and are unmoored from the historical process. They adopt a mechanistic view of history that assumes that capitalism is natural and inevitable. They claim the mantle of internationalism while utilizing isolationist rhetoric to advocate for unilateral treaty withdrawals. Further, by aligning with offensive realists, they dismiss the possibility of cooperative institutions at the international level, rejecting the left’s first attempt at ending imperialism during the first world war. Finally, by characterizing capitalism as a totality, they deny working class agencies in affecting history, including international affairs. 

If the Left is to articulate a coherent anti-imperialism for the 21st century, it cannot adopt conservative theories about the construction of the international system. The historical specificities around the development of capitalist social relations and the imperial order must ground our critiques. Likewise, it cannot hold itself hostage to the ideological battles of the Cold War nor be guided by a rote opposition to anything the United States supports. The Chomsky-DSA reaction to the Russian invasion of Ukraine failed on all accounts. As a result, they’ve squandered an opportunity to offer a coherent alternative to the current international order that deals with the challenges of the 21st century – particularly climate change and the rise of authoritarianism both at home and abroad. By joining with neorealists such as Mearsheimer, they eschew a material analysis of the imperial system for one that treats the system as constant and inevitable – a mechanistic progression of history – rather than constitutively polyvalent and contested. More than strange bedfellows, such a marriage is a death knell for international solidarity in the 21st century.

Mikhail Bakhtin Pt. 1 – Carnival Laughter & Grotesque Realism

Will Beaman (@agoingaccount) inaugurates the first of a lecture series on the work and ideas of Mikhail Bakhtin. Drawing parallels with right wing attacks on contemporary drag performance and ballroom traditions, Will discusses Bakhtin’s analysis of the Medieval carnival humor, its manifestation in Renaissance literature, and its unique aesthetics of what he terms “grotesque realism.” Quotations are drawn from the Introduction and first chapter of Bakhtin’s text, Rabelais and His World (1965), with additional references made to Siegfried Kracauer’s 1927 essay “The Mass Ornament” and Marx’s Capital


Music: “Lilac” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.

http://flirtingfullstop.bandcamp.com
Twitter: @actualflirting

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Money & Solidarity in Latin America w/ Andrés Arauz

Money on the Left is joined by Andrés Arauz, recent candidate for the Ecuadorian presidency, heterodox economist, and outspoken advocate for the creation of the “Sur.” The Sur is a complementary currency for use in intra-Latin American trade and cooperation. Dismissed by New York Times blogger, Paul Krugman, as a “terrible idea,” Brazilian President Lula De Silva’s proposal for development of the Sur as a tool for encouraging economic and political integration between Latin American countries has stoked the imaginations of progressive leftists within and beyond the region. As he makes clear in our conversation, Arauz is among those who see in the Sur urgent opportunities to build plurinational solidarities among countries like Ecuador, Colombia, Brazil, and Peru, as well as to diminish the hegemony of the U.S. dollar and financial institutions over Latin American economies and politics. Arauz offers an astute and defamiliarizing perspective on the Sur for anyone who may be committed to or uncertain about the political economic potentials of a SUR-driven future for the Latin American Left. 

In our dialog, we speak with Arauz about his time serving as director of the Ecuadorian Central Bank. Remaking an orthodox organization with heterodox tools, he not only oversaw the Central Bank’s transition from a neoliberal handmaiden for corporate interests to a robust public institution in Ecuador’s complex “dollarized” economy, but also empowered and secured the country’s network of local credit unions by integrating them into the Central Bank’s federal payment system.

Money on the Left is proud to present transcripts of this important conversation in both English and Spanish.

Andrés Arauz on Center for Economic and Policy Research (CEPR): https://www.cepr.net/staff-member/andres-arauz/

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Music by Nahneen Kula: www.nahneenkula.com

English Transcript

The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Billy Saas:  Andrés Arauz, welcome to Money On The Left.

Andrés Arauz:  Thank you very much for having me. I’m excited to be here. I’ve been following your work for the last few months and years, and I’m happy to be here.

Billy Saas:  Oh, that’s exciting to hear. We’re excited to have you here with us, especially now, because these are some pretty historic times in Latin America with six now (very recently, seven) of the most populous countries, including for the first time Colombia, run by leaders with progressive left politics. How would you characterize this moment and its importance for the future of the region?

Andrés Arauz:  Well, this is a very exciting moment for progressives, especially people in Latin America that already lived through the first pink wave, the first progressive tide in the region. Of course, now there’s a bit more maturity in the progressive space, in general, and I think we have learned a few lessons. One of the most important issues that we have learned is the importance of regional integration. Right? So we know that one country by itself will not change the world. One country by itself will not change the major dynamics of the world system, or come out, in a sustainable way, out of poverty and transform its economy, its industrial base, and so on. We know that that can only be achieved with a regional plan or integration. And I think that has definitely been incorporated into the left’s agenda. That’s why this is a critical moment in history, because now we see that President Lula, who just arrived to power only 10 days ago in Brazil, and has already faced the first putsch attempt, has said that regional integration, specifically with South American countries, is one of his key priorities in his foreign policy. So this is exciting for us, with the leadership of Lula, of course, the situation in the region changes completely. We see that the sort of extra regional forces like the US have also taken note of this shift towards the left, and that has implications for the entire region. Hopefully, we will overcome all these putsch attempts and violent threats against progressive forces. And this can be not just a reaction, a resistance in opposition to the forces of Empire, the forces of Neocolonialism that threaten progressive politics all over the region, but that we are able to actually build something. And I think the monetary, the financial issue is definitely something that we can achieve in a short timespan. Because of the electoral dynamics in the region, I would like to insist that for Latin America and progressive politicians and those who are leading the countries, we don’t have an infinite timespan. We have a very limited window of opportunity, which is exactly this year, 2023. If we go beyond that, it will probably be much more difficult, because of the domestic political junctures, the correlation forces, and so on. So I think this year is the year of hard, hard work, and to put things in order and get them rolling.

Scott Ferguson:  So how would you understand Ecuador’s place in this particular historical moment? And I’m wondering, in your experience, taking advantage of this particular historical opening, how have you pursued speaking about money and public financing from a heterodox point of view and communicating that to everyday people?

Andrés Arauz:  Okay, so let’s begin with Ecuador’s role in all of this. Ecuador, unfortunately, right now is headed by the antithesis of progressive money with policy, which is a banker. A neoliberal billionaire banker, who has completely sided with the IMF in their conventional, and old school, and effectively-demonstrated false and incorrect policy advising and policymaking, and he’s leading the country into a major economic crisis. The country of Ecuador is probably the country that has least recovered after the pandemic. So it hasn’t grown, really, because of very restrictive monetary policy and fiscal policy, in general. He is promoting capital flight as part of the government policy. Just yesterday, or I don’t know when this will air, but very, very recently, he just announced that he will scrap the money outflow tax that we have in Ecuador. It has been there for a while. So that will promote capital outflow. But the thing is, his main line of business as a banker is actually to own an offshore bank based in an offshore center in Panama, whose approximately between 80 to 85% of all deposits actually come from rich Ecuadorians. So it really is very messed up for any country, in general. But for my country, it actually hurts, you know? When you have a president whose main line of business is to actually promote capital flight to his offshore bank based in Panama. And of course, all the policy is changed to fit his line of business. And it’s actually quite absurd, but also a bit disgusting, because he has not quit the bank, he has not put his shares into a blind trust or whatever. No, he has been explicit about holding his property, and that’s very sad. Also, because if you extrapolate this or you zoom out a bit, you’ll see that this is the type of character that will oppose a proactive role that has always been Ecuador’s foreign policy, except for this government, to be a part of a regional force. To be part of a regional bloc. So he will most likely oppose all these initiatives, and it is very sad because until very recently, Ecuador was the capital of UNASUR: it was the head seat of the headquarters of the South American Union. The former President Moreno, who betrayed his program, and now Lasso, have resigned, have renounced the fact that Ecuador was the Capital of South America, the city of Quito. Fortunately, on the other hand, Ecuador’s population is markedly progressive. So in the last elections, where I ran, Ecuador’s population voted around 70% for progressive parliamentarians. The presidential result was not exactly the same: I lost by just a bit. But the parliament is overwhelmingly progressive with social democrats, with progressives with what we call the indigenous movement of plurinational national forces. They are over two thirds of the parliament. And the population, in general, is fairly progressive, as well. So this means that sooner rather than later, Ecuador’s population will step up, will start exerting their democratic rights, and will probably have a changeover in the administration. It is very unlikely that the current president would be reelected. And we will have a progressive government in place to align themselves with the regional integration project. You also asked me about how to approach heterodox money and heterodox economic policy in this context, and I have several hats that I wear all the time. In the context of my own country, I am predominantly a political actor within my country. Ever since the election two years ago, I am now seen as a political player, so it’s a chance to be in the media quite a bit. It’s a chance for my social networks to have plenty of followers, and it’s important to try to relay the message adequately. I tried to share my knowledge in very lay terms and with fairly easy vocabulary, but mainly showing contrasts. I think that’s been a very effective way of communicating to people, to large segments of the population by contrasting either policy recommendations or policies from orthodox money, monetary policy or in general economic policy, with what can come about with a heterodox approach. That’s my hat that I use within Ecuador, but outside of the country, I have, perhaps, still more of an academic hat on. I use my knowledge to communicate to specialists and specialized media, to those, perhaps, that are monitoring the international financial institutions, in general, and try to use that sort of language to reiterate and to insist on my academic credentials, which I think is also important in terms of legitimacy building. That’s more or less what I do. I work in several spaces, always around issues related to money and technology. I’m pretty happy in that space and trying to change the world with my knowledge, my brain power, with the networks that I can try to build. Hopefully, we can also leverage that to further develop and transform my own country.

Billy Saas:  As you’re doing this communication work, are there any other thinkers who model the kind of communication that you aspire to? And then under the broad banner of heterodox economics, are there any schools or perspectives that you find yourself more consistently drawing on?

Andrés Arauz:  I haven’t had any specific person in mind in terms of how to model the communication. I have been exposed to many leaders and to many economic thinkers. I can’t deny the incredible and important role model that, for example, Rafael Correa has been in terms of economic policy communication. He used to have a weekly radio program where he explained the economic policy and government policy to the entire population. It was a program that lasted between two and four hours every Saturday. And then, of course, making issues easy and communicating them to people using PowerPoint slides and so on was also, I think, something that did not only affect me, but it was a style of communication that everyone in my country got to be familiar with. In terms of economic thinking, though, I definitely recognize the influence of many Latin American economists that have been around ever since Raul Prebisch; structuralists and dependency theory thinkers. More recently, I think the influence of Post-Keynesians has been very explicit in my economic thought and practice. I would say that I would ascribe to the broader Post-Keynesianism, and then there are many smaller groups within that broad school, and I like to gather elements from all of them. I have really grown to like some of the main elements gathered by the separatists, the French separatists school with some Italians in there as well. My PhD work includes a lot of their work, as well. Specifically, Augusto Graziani because I specialized in payments systems, and in money dynamics, and the role of banks, and so on. And I like to consider that as well. But also, and this is perhaps something that is related to more of Latin American context, is what I call the Solidarity Economy school; economia solidaria in Spanish. The Solidarity Economy is very important in our region because we are a late comer to industrialization. We’re a late comer to capitalism, itself. We’ve been under basically feudal economies well into the last century, the 20th century. Solidarity Economy is important because it is a way of including those who were excluded by the capitalist system. If you analyze my country, or my neighbors, between 70 and 80% of the working age population is not a formal worker. They’re not under a capital-work relationship. They are basically survivors in a system where they have to find a way to survive every single day. That doesn’t fit into any neat economic theory, so Solidarity Economy tries to say: okay, what can we do as people that have been excluded from the system? Let’s save each other. Let’s cooperate. Let’s build community. Let’s build a cooperative economic system where we can recognize that we are partially excluded from capital and capitalism, but we have to talk to capital and capitalism. We’re partially excluded from the state, but we have to interact with the state, as well. We are divorced from our own realities because we have to survive. We also have to work together. We have to become cooperatives, we have to get together into associations. Even though we’re not a union, or a Workers Union, we have to come together so that we can negotiate in better terms with the forces that be. Solidarity Economy, I think, has a very important and marked influence in how I think about development. Yeah, there are probably many more that I’m missing right now, but definitely some of these that I’ve mentioned.

Scott Ferguson:  When you ran for and nearly won the presidency of Ecuador in 2021, the press liked to note that you would have been the youngest president in the country’s history. But we find it just as remarkable, if not more remarkable, that you already served as Director of Ecuador’s central bank when you were just 24. How did this situation come about? What drew you to that work in monetary policy in the first place?

Andrés Arauz:  I would have to definitely mention my Masters thesis director Pedro Paez Perez. He was a very important person in my early stages of professional development. I actually got my Bachelor of Science degree at the University of Michigan Ann Arbor in both math and economics, and then I went back to Ecuador and started doing a Masters in Ecuador. The order is usually the opposite: people get a local degree, and then they get a Masters abroad. I did it the other way around. Actually, it was very, very helpful because when I enrolled at FLACSO, which is a Latin American university that has offices in different parts of the region, in my case Ecuador, all my professors were going to become ministers of finance, planning, development, central banking, and so on. My thesis director, Pedro Pais, had been a central bank researcher, so when he became Minister of Economic Policy, I became his advisor.  I was actually 22 when I was advisor to the Economic Policy Minister. I was in charge of what we called the new financial architecture, which is basically proposing a transformation of the domestic financial system, but we were also working on transforming the South American financial system and their institutions. I worked with him on a lot of those issues, and I got to know the central bank from the outside. I was an advisor to the ministry, but most of my work had to do with the central bank. So I was able to criticize it all the time and to push them to make changes and so on. It’s important to mention that before all of this, I had worked at the central bank. I was a statistician at the balance of payments statistics area, and my job allowed me to see the individual transactions of money that went in and out of the country. I got to see names of people, names of companies, and that knowledge has always been valuable to me because when an economist goes and finds the statistics, you see a bunch of numbers, you see a bunch of aggregates, you try to build a story in general terms, in general concepts. Well, when I see statistics, and when I see these numbers, I don’t see general stories and general concepts. I see people. I see the companies. I know their behavior. I know their patterns. I know exactly who we’re talking about because of that experience that I had failed more than 15 years ago. So that’s definitely a plus when you build the policy, when you know what makes up the statistics, and how much of it is also just hot air and how much is actually rigorous statistics building. I always thought that statistics, and therefore accounting, were absolutely crucial if you really want to do rigorous economic analysis. That’s also why I sometimes laugh when I see colleagues putting out all these nice, econometric models and using numbers as if they were some sort of physics and hard science when a bunch of these statistics are absolutely made up and have very strong deficiencies, or very large, significant deficiencies. I’ve actually written quite a bit about problems about monetary and balance of payments statistics Anyway, to come back, I was an advisor to the Economic Policy Ministry, and we had a major issue because the central bank of Ecuador had been ran, perhaps over two decades, by the most conservative, Orthodox people in the country, and with clear links to the more powerful bankers. So in 2008, under Correa’s government, we had a new constitution of Ecuador, which was a very interesting process of democratization of lawmaking. We had thousands and thousands of people propose amendments, and changes, and wording, and so on, for the Constitution. And eventually, I really think it’s a piece of artwork, the Ecuadorian constitution. It is very progressive, it is forward looking, and one of the things that the Constitution did was to change the nature of the central bank. It said that the central bank would no longer be independent. It will no longer be autonomous, that it would be democratically accountable to democratic forces, and therefore be part of the executive branch. Now, we’re also a dollarized country, but with a non-independent central bank, that was run as a branch, effectively, of the executive government, and the President was a PhD economist. Okay, so this was a very particular moment in time. And if that guy wanted to have the central bank also comply with the new constitutional mandates, which also changed for the central bank. For example, we have financial inclusion as a constitutional objective, not just inflation or whatever. You have a list of constitutional mandates for the central bank. You wouldn’t find anybody in the central bank staff that would even understand much less so be aligned with the new constitutional objectives. So since I had a monetary background and I specialized in those issues, and I knew the central bank both from the inside, and the outside, because I had been able to live within its framework, but also to criticize it from the outside. I became the general banking director, which is basically the one in charge of the central bank’s operations. It was a very happy moment for me because I was fairly young, but I already, perhaps, could be considered an expert in central banking affairs. And I knew the workings of the payment system, the reserve management areas, the international payment systems, and financial institutions. I knew accounting very well, and it’s key to know that if you’re running a central bank. And I had the correct political orientation as to what were the key transformations that I had to achieve within the central bank, so as to instead of destroying the institution, leveraging the institution to fulfill these new constitutional roles. So I had a key role there in transforming the central bank into what it still is today, even though we now have, again, a conservative government. But because we had very important changes in place, even in the culture of the central bank, I think it’s difficult for them to revert all of that. So that’s how it all came about. It’s a really nice story, and I think it’s not easily replicable elsewhere in the world, unfortunately, but there are many things that on the margin can be done to use an immense power that any central bank has in any society to democratize that society, to democratize its economies.

Music Break – “This is Not America” by Residente

Billy Saas:  So moving from critic of the central bank’s activities to someone who’s effectively directing them, were there things that you learned or surprises that you encountered in your new position on the inside? Did anybody take your place as the critic from the outside? And what was that criticism of your work like?

Andrés Arauz:  Well, to be honest, no. There was no strong criticism at the time because, like I said, we were moving really fast.

Billy Saas:  Yeah.

Andrés Arauz:  This academia in Ecuador had been dominated by neoliberal thought by neoclassics and no real thought about heterodox monetary policy, and so on. The payment system was something that was completely out of the discussion, out of the debate. None of that. The central bank’s proactive role in the economy had been forgotten for the last 20 or 30 years, and so on. So the people in academia, even the right wing academia, had no idea what we were doing. They looked at the balance sheets, and they just couldn’t figure it out. They didn’t even know how to read the balance sheets, because they had excluded that sort of training for a long time. So the first few years, there was really no criticism, not because they didn’t feel like something was wrong, but because they didn’t know what to do about it. We had also kicked out the IMF and the World Bank from our country. We had expelled the World Bank from Ecuador. The IMF was still in the country; they used to occupy a large office at the central bank, and they didn’t pay rent. So we said, “no, if you don’t pay rent, you get kicked out of the building.” And of course, they didn’t have as much access to what was going on within the central bank, either. So there was really nothing that they could do or say during that time because we were making changes in the plumbing of the system. We were working on, for example, democratizing the payment system by something so simple as retrofitting the telecommunications requirements for connecting to the payment system, and for making a light version of the software available for credit unions. In Ecuador, we had over 600 credit unions that were operating, but were not included in the payment system. So they weren’t able to offer the same kinds of financial services, transactional services, payments of government wages, and so on, like big banks were able to. So just by democratizing the payment system, we had a revolution at the base of the pyramid where rural credit unions all of a sudden became a major force in the economic system. These guys were part of the Solidarity Economy, so they had another value system in there as well. Not just capitalist banks, right? Just by democratizing the payment system—something that we did out of the mainstream or the media’s radar—we were able to make major changes. Now, when did they start to pick up when they, by then, I mean basically right wing academics, opposition pundits, and so on, was when we started the launch of what we call the mobile money system. Ecuador was the first central bank digital currency. Now it’s a fad. But we did this 10 years ago, and the project started in 2009. So this is like 15 years, 14 years ago. We changed the regulations so that citizens, any citizen, all they had to have was a national identification number, so their ID, and that was the only requirement to open an account at the central bank. A central bank digital currency, we called it mobile money then. It was designed in such a way that was perhaps another tenant of my way of thinking about technology, its appropriate technologies, rather than vanguard technologies, or the latest thing. You need to make technology appropriate to people’s needs, not to just…

Scott Ferguson:  Disrupt.

Andrés Arauz:  Right, so we had this mobile money that would work with the most basic feature phone, without the need of having a smartphone, without the need of having a data plan. All you needed to do was dial a shortcode, and you will get access to an entire system to transact. And that’s when the right wing opposition started to criticize. I had been out of the central bank by the time it actually launched, but that’s when they started to pick up on some of the major issues. In part, because one of the main people that they recruited was a former central bank guy, who then went to work for the private bankers association, and is now working at the IMF. So this person is perhaps the only one that was able to educate the right wing as to what was actually happening. And now it’s only about 10 or 14 years later, writing about what we did in 2009, 2010, and 2011 with a critical perspective. I think it took them a while to understand what was going on. People, when they think about a dollarized country, they usually say, “you lost your monetary policy, and you’re screwed,” and so on. That’s not true because when we went into the central bank, and when I was an advisor at the Economic Policy Ministry, we said look, sure an Orthodox dollarization removes all of those tools and possibilities and policies and you just sort of quit and say: I renounce everything and let the markets dominate. But in a heterodox dollarization, it forces you to be creative. You will have an advantage, which is that you have a stable unit of account, which is actually a challenge for many developing countries that try to apply heterodox economic policy. You get these devaluations, depreciations, people lose faith in the currency because of the pundits and the markets react quickly. But when you have a dollarized economy and a stable unit of account, you can be a bit more creative without worrying about these speculative attacks, because they have nothing to attack. So then you really start to play with actual issues that depend on credit creation, and the role of banks in society, and the workings of the payment system, and the velocity of circulation of money, and how the securities market operates. You can be more creative without worrying about issues like speculative attacks. For example, we have a neighboring country, Colombia. President Petro is also an economist. He’s pursuing a heterodox policy. But of course, the speculative attacks against the Colombian currency are there, and you have an Orthodox central bank that is not aiding or helping or contributing in that same heterodox orientation. So it’s much more difficult to be heterodox when you don’t have all the pieces aligned.

Scott Ferguson:  So do you still have a critique of dollarization, despite having a more nuanced, creative, heterodox, experimental approach to moving and creating institutions, and developing forms within a dollarized country?

Andrés Arauz:  Absolutely. Yeah, I’m critical. First, we have to understand that there are many dollarizations, right? I’m critical, absolutely, of dollar hegemony, for example. So this is geopolitical. This is a colonial thing. The south does not have to use a New York or Miami account to make payments between Uruguay and Peru. Why, right? So dollar hegemony, and the fact that dollar hegemony contributes to imperialist measures like economic sanctions, unilateral coercive measures that are destroying entire countries. Furthermore, if you put dollar hegemony together with transactional systems such as SWIFT that are a global monopoly, and if you cut them off SWIFT, you are also effectively cutting them off. And it’s basically being weaponized. Money as a weapon, and the plumbing of the system used as a weapon, I’m absolutely critical of dollar hegemony. I will continue to be so, and I will try to build alternatives because I don’t think the world has to subject itself to one country’s currency. I think that it has to be a global system, and that means going towards a more democratic, multilaterally-based economic monetary system. Just like it was dreamt decades ago, almost 100 years ago, by key thinkers such as Keynes: you have the Bancor, a global monetary asset. Of course, there are key power players. We cannot deny that, but let’s have a more balanced approach. Now, that’s one issue that has to do with dollarization. For example, dollarization of international transactions, of international trade, and so on. Then there’s the issue of domestic economies and adopting the dollar for domestic means of payments. Like I said, one thing is the dollar as a unit of account. Another is the dollar as the actual physical means of payment that people use on the street. I think that even if you’re dollarized de jure like my country is, it’s best to try to replace the physical dollar used for means of payment domestically with electronic means of payment, and keep the physical dollars as international reserves for the current international system that requires that you use the US dollar. That way you free up dollars that you’re using for domestic payments that you don’t really need to better import equipment, technology, and resources that you don’t have available in your own country. So I think there are nuances to all of this. And while I’m a critic of dollar hegemony, I think we have to recognize that until that changes, the dollar plays a key role in Latin America, and basically 99% of international transactions in the region. Many domestic prices in the region are pegged to the dollar de facto like real estate, in cars, of course imported technology, and then that sort of creeps into the rest of the prices in the economies. So the dollar is there. Now, how do you optimize that? How do you gain degrees of freedom? How do you get some policy space, a bit of sovereignty in that context, is what it’s all about. And that is independent of whether you’re a de jure dollarized country, or just a normal market economy with a domestic currency. But that has to comply with the rules of dollar hegemony. So I think there are many similarities in both approaches, and I think you can be a critic, and as well, be a proactive thinker, and policymaker, in that context.

Billy Saas:  So you are making the best of the situation, working in the dollarized economy, but it clearly was not the case, when Ecuador’s economy became dollarized, that they had these sort of advantages in mind. So can you talk a little bit about, you’ve been a critic before of President Jamil Mahuad’s decision, the administration’s decision in Ecuador, in 2000, and into 2001, to give up the Sucre and adopt the dollar as the state currency. Could you sort of tell us, what was their motive as you understand it? And why was that a particularly bad idea for Ecuador at the time?

Andrés Arauz:  It was a bad idea because it was a conspiracy. Now that Mahuad just came out with a book, and there are people that are doing a bunch of research. Marco Naranjo has also come out and said this was a conspiracy. He was the one guy who was planning dollarization five years before. You have declassified reports from the United States government saying that they actively pursued the dollarization of several economies in Latin America. It is not a coincidence that Ecuador accepted a US military base in Manta in 1999, and Ecuador was dollarized in the year 2000. There were only four months between both decisions., and, unless you believe in fairy tales, that’s fairly easy to link up in terms of the international political economy. Now, Mahuad was a terrible president, predominantly for what he did to the people of Ecuador. He was bankrolled and financed by bankers. He put bankers in the ministries, in the central bank, and everywhere. Private bankers, who did not quit their jobs as bankers while they were being government bureaucrats at the same time. So just plenty of conflict of interest, nasty policies, and so on. He started basically bailing out banks when the crisis came, which was not an accident. Again, crises are not natural disasters in the sense that there’s an unforeseen circumstance. Financial crises are anthropogenic in nature; they are manmade, they are engineered, if you will. And there is enough research into financial crises, especially from Hyman Minsky, and all of his disciples, and people that have studied him, we know how crises come about, and how they play out, and then how they eventually get resolved. So instead of preventing the crisis, instead of solving the crisis, Mahuad basically started pumping all this amount of money for the bankers, but at the same time, didn’t close the capital account or didn’t put exchange restrictions. So what the bankers immediately did was they got all this bailout money in Sucres and they literally just went through the revolving door of the central bank and came back with the Sucres and bought Dollars. Now if overnight, you have this increase of demand for dollars because of the huge supply of Sucres, that without any exchange rate restrictions, without any capital account restrictions, of course, you’re going to have a devaluation, depreciation of the local currency immediately. But this is not something that requires a genius mindset. This is sort of very, very basic. And they did it anyway to purposely weaken the local currency and justify the dollarization measure, which had been in the workings for quite a bit. So now, Mahuad 24 years later is trying to come out and say, “Oh, look, I wanted a dollarized economy. Look what would have happened if the Sucre kept devaluating,” and so on. But they did it on purpose. It’s not like it was an accident, and he cured the illness. It is that they created this crisis to justify the measure, so they weren’t thinking about the creative uses of dollarization. They had no idea about the actual workings of the dollarized economy or the balance sheet logic that you can apply. They were working on, basically, assumptions that you would renounce monetary policy, and that it would be a hard restriction on fiscal policy, as well. Basically, they said, if you have dollars, then the central bank cannot lend to the government anymore. And then, we’ll starve the beast, and then we’ll justify our privatization program, and so on. It was very purposely a neoliberal agenda. The law of dollarization was written, not in Ecuador. It was written in DC at the IMF, and then sent via fax to Ecuador to be copied and implemented. It’s a very long story, the story of how dollarization was implemented. But they didn’t see that we were going to be smart enough to find loopholes and creativities and creative solutions to that. For example, and I will mention this quickly, but starting in 2009, the central bank of Ecuador started to lend to the government, even though we’re dollarized. This completely blew their minds because it was like, “Isn’t dollarization supposed to forbid the central bank from creating money out of thin air?” No! You can still create dollars, right? You can still create dollars on a central bank’s ledger. They are just accounting dollars, right? Of course, you can’t go and print physical dollars, but you can still create dollars on the ledger, and then have them be transacted in the domestic economy. Sure, that creates an issue then later with a balance of payments, international reserves, but then you have to have a proactive balance of payments policy, like any developing countries should, in fact.

Scott Ferguson:  Isn’t this the case with Eurodollars, as well?

Andrés Arauz:  Yeah, I mean, that’s exactly. The thing is, when it’s private banks doing it, nobody has an issue with them creating dollars in their banks, and in the ledgers. That’s how offshore dollar banking systems also work, in general. I use the term “xenodollars” to be more etymologically correct. But yeah, that’s exactly how it works. What they didn’t like is that now a state institution, which was the central bank, was doing exactly the same, perhaps with even more care, with more oversight, with clearly defined parameters under a democratically accountable system than what private banks were doing, which was creating Ecuadorian dollars when they lent. That’s definitely something they didn’t have in mind in the year 2000. When the economy was dollarized, there was a huge crisis in terms of prices. Relative prices just got really messed up over the next year or so. Many economic activities became non-competitive overnight, and Ecuador could have collapsed, even as a country, except for one thing, which was that the crisis of the late 90s and dollarization created a mass migration of millions of Ecuadorians. We lost almost 15% of the population that went to live in the States, in Spain, and Italy, and then started sending remittances home. So it was this hard currency that was coming from abroad that basically saved the country from catastrophe.

Scott Ferguson:  You’ve been a vocal advocate for the development of a regional currency in South America called the S-U-R, the Sur. And this currency would be used instead of dollars in international cooperation and trade. Could you share with our listeners a little bit about the Sur currency and what its adoption will mean for member countries like Ecuador.

Andrés Arauz:  So the Sur is actually an initiative by President Lula, by former presidential and now Minister of Finance, Fernando Haddad, and his team. The Sur is not a currency like the Euro that wants to replace the national currencies. That’s something that I have to insist from the start: it is not a currency intended to replace national currencies. It’s a complementary currency. It’s a regional complementary currency that wants to contribute to the dynamics of intra-regional trade. Okay. So, right now a country like Argentina, in order to buy staples or equipment from Brazil, has to have Dollars in their reserves, and then it has to transfer those dollars to a Brazilian bank in order to get the equipment, the machine, or whatever, from Brazil. Why? Why? Then, of course, the logic of that is that the dollars aren’t in suitcases or wherever. The dollars are just accounts in US banks abroad. The dynamic of that is creating institutionalized capital flight because you have to have a liquidity pool, a bunch of money basically deposited abroad, that you cannot use for your developmental needs. So, by having the Sur, we’re basically setting up a payment system with a regional unit of account, the Sur. We have to still talk about how we’re going to value it, but most likely, it will be pegged to the SDR, the Special Drawing Right. And the Sur will avoid having to require US dollars for these international transfers, for these intra-regional international transfers. We can just use this unit of account for our purposes. Again, it does not resemble the Euro in the sense that it replaces national currency. More likely it resembles, even though I don’t like to use this example that much, the European Currency Unit, the ECU, which was an ancestor of the Euro. So you have a unit of account composed of a basket of currencies whose idea is: let’s avoid using an extra regional currency for inter regional trade. I think that will definitely create some flexibility and policy space for countries so that they can free up some of their reserves, and use those for technology and equipment that’s not available within the region; stuff that we may need to import from the US, Europe, or Asia. At first glance, it does not seem so ambitious. I am proposing to the working group that we start with a bit more ambition, which is allowing payments in Sur from any bank account in the region—twenty other bank accounts in the region—in real time, like the Brazilian Pix payment system is working. We already have the technology. We don’t really have to make anything up. All we have to do is connect the softwares, and the pointers, and the parameters, and we can get that rolling overnight. Why is this very important? Because in South America when people think about regional integration, sometimes they think it’s a thing about politicians, and presidential summits, and they gather once a year, all the flags are put together and they hug each other, and so on. But we need to make this very tangible and to build regional integration in such a way that it’s actually existing in people’s lives. And the way to do that is, I think, by making a democratic payment system where you can actually make transfers within the region, denominated in Sur in real time. That will be a big, big competitive leap compared to the legacy system, dollar based, SWIFT-based system that runs today.

Billy Saas:  That’s super helpful. Thinking a little bit more in terms of on the ground in Ecuador, there have been major indigenous uprisings over the last several years, indeed going back to the 1990s. Then, there was recently a call this past week by the Confederation of Indigenous Nationalities of Ecuador, or CONAIE, for more protests after one of their leaders, the chairman of CONAIE was arrested and detained. The CONAIE endorsed your candidacy and 2021, and I imagine you might like to have that endorsement again. Could you talk to us a little bit about your vision for the newly created Sur, and a reinvigorated Unasur, and how those will serve and advance the interests of Ecuador’s indigenous peoples? So thinking about on the ground, in material terms, how does this complimentary currency improve the lives of Ecuador’s indigenous?

Andrés Arauz:  First, CONAIE is an organization that I really respect. I think they have decades of political organization and work. They were, unfortunately after 2003 specifically, infiltrated and contaminated by different intelligence agencies—Local, neighboring, and foreign intelligence agencies—to try to break it apart because it was becoming a very powerful force, and they clearly had a left wing agenda. During the left wing progressive government of Correa, there was a lot of tension with CONAIE, but during my candidacy, we were able to find common ground, and to admit some of the historical mistakes that progressive forces had made, which allowed these foreign interests to penetrate such a valuable movement. Now, I didn’t have the endorsement of the entire CONAIE. I had the endorsement of the President of the CONAIE at the time, and let’s just say good relations with the rest. But specifically with the Amazonian indigenous peoples of Ecuador, which is the Confeniae. This year, we had protests in 2022 over several issues, among them, importantly, the price of gasoline and fuel. Of course, there was a packet or package of agreements that the government reached with CONAIE, but the government has, of course, continued their neoliberal agenda, because that’s what a private banker is there to do. There will probably be more protests. Now with the government, Lasso’s rampant banking corruption will probably come out in 2023, and we’ll see a change there. So that’s what’s happening in Ecuador. In Ecuador, what has always been my proposal is we need to build what’s called the historical block, which is reiterating the same forces that supported the new constitution of Ecuador in 2008. That sort of waned over time. We need to rebuild that and have that be strong again. So that involves an agreement, a political, social, and economic agreement with the indigenous movement and the Citizens’ Revolution which is the political space that I belong to. Now, the Unasur that is now in zombie status, but will not be for long because in the next few days, we’ll see Unasur have a rebirth, especially with Lula’s leadership. One of the reasons that I think Unasur failed—and I want to emphasize this is my perspective—was because it did not have a material or tangible effect on people’s lives. It remained as a general idea that was mostly around political circles. It was not a culturally ingrained concept. I see that Unasur cannot just be an integration of politicians or of states, it needs to be an integration of the peoples. And I use that term on purpose. The peoples of South America need to perceive that this thing is actually something that is useful to them. I think the way of doing that is, first, having the Sur allow all these transfers like I mentioned, in real time, denominated in the unit of account, which will be a thing that would materially impact trade in the region. You will get businesses, small, medium, and so on, to support this. You would also have an education pillar that would allow for students to have an exchange program; a year long exchange program in any of the countries in the region, both high school students and university students. That would also make it very concrete. The third thing is the thing that Evo Morales, former President of Bolivia has started, which is called Runasur. Runa, in other indigenous languages, means person or lay man, and it is, of course, a reference to an indigenous integration of the South. I think we have a key opportunity there in terms of the urgent needs for climate change, biodiversity, and above all, the respect of indigenous peoples. So I think that also will be a key pillar in strengthening the integration of the peoples. Hopefully, that can also become an integration of social movements. Why not, instead of having 12 different workers unions, for example, in a specific economic sector, just have a regional workers union with 12 chapters, or with local chapters. Just like a big organization, because transnational companies all work in that way; they operate in different countries, but they all respond to the logic of the headquarters. This is what we should do in terms of workers unions, women’s movements, students movements, indigenous peoples, and in general, the organizations that respond to the majority of people and our capital. So hopefully, not Unasur per se, because it’s more institutional space, but Runasur, which is the space of lay people, can also have a political union going forward. That’s why it’s important for the indigenous peoples of Ecuador to support that initiative, as well.

Scott Ferguson:  Are there critics of these complementary currency systems, either on the right or left or center? And if there are, what do you say in response to them?

Andrés Arauz:  Yeah, of course there are critics. People that think and believe that we should always just comply with the dollar hegemony and base all of our economy on the needs of US interests, and who are happy to have their double residence in Miami and another Latin American country. Unfortunately, this sounds caricature-esque, but this is what it is. Bolsonaro was a supposed nationalist and supposed Brazilian Jersey fan. Even before leaving the presidency, he went to live in Orlando, Florida and put on the Mickey Mouse hat. I don’t know if you saw it, but he also wore the US Soccer Jersey.

Scott Ferguson:  Oh yeah, we saw.

Andrés Arauz:  I mean for Latin Americans who are football fans, and we just had Argentina win the World Cup, it’s really symbolic. It’s pretty bad. That shows how these fascist nationalisms in Latin America say that Latin American Integration is bad, but somehow wearing the US Soccer jersey is good. It makes no sense whatsoever, but this is how they think. This is what’s in their mind. And that’s also where their wallets are, and what their bank accounts are, and where the property is. Lasso has 140 properties in Broward County and Miami Dade County, in Florida, so this is who they are. The elites, unfortunately, are more Miami-based than Latin American-based, and we will have to face that struggle, show these contrasts, and make that transformation happen.

Scott Ferguson:  Yeah, it’s a big middle finger. What about the center left and left? Because I think we’ve come up against many critics and oppositional forces, whether it’s in the British Labour movement, British Labour economists, or left wing media folks and activist in the United States who are not thinking with Post-Keynesian theories of endogenous money, are really thinking in these old fashioned, even classical hydraulic models of finite money redistribution. Do you come up against those kinds of criticisms from center left and left interlocutors?

Andrés Arauz:  Yeah, unfortunately, there is not enough education as to how money works. You have covered this extensively in the past, and yeah, we all have to face not just a radical idea, but then we have to also deconstruct the previous theoretical assumptions that even our peers or comrades are having in their day to day. A logic of understanding policymaking, or economics, or money to sort of rebuild from scratch and say, “Okay, now forget everything you know about this and let’s start all over.” Yeah, there’s that. Fortunately, I think, the pandemic and then before that the financial crisis, were lessons in what is scarcity? What is scarce money? What is money, where does it come from, and so on. Now, it’s very easy to point to that. All you have to do is show a graph or even show examples. It’s much easier than before. You know what else, actually? The crypto space, even though it doesn’t understand or doesn’t want to understand endogenous money, has at least opened the minds of people in terms of the discussion about money. So what they have done is popularize the issue of money to the point where now people are just more open minded, in general. And that’s also important, and it has also been key in opening the doors for these heterodox approaches, endogenous money, MMT, Post-Keynesianism, and so on. I think, also in academic circles, you’ve had key people and gatekeepers admit to the fact that that is how money works. The famous Bank of England paper, and so on, and we’re getting there. I still think we still have a lot of work to do in terms of how the formal education system talks about money and textbooks and stuff. If you go to a classic Econ 102, an introductory course in university, you still get brainwashed with other kinds of things. We still have to do a lot in terms of the curriculum and universities, especially in developing countries, which need to know this more. But I think we’ve definitely gone forward a lot, including with center and center left people in the region. That, by the way, the Post-Keynesians are pretty strong in Brazil, and that’s also a big one.

Billy Saas:  Awesome, I think one other area of concern for some people who might be interested in the Sur but worried is: what happens when the political tides change again? Hopefully they don’t ever, right? But say the Sur is built, implemented, and the gains of the left are lost over the next several years. Could the Sur not be weaponized against the countries in the region? What do you say to those folks who might have that kind of concern?

Andrés Arauz:  So my approach to policy making is, of course, planning. When I want to make these major transformations, such as when I was in the central bank or in other spaces, like the developing ministry, planning is central. Improvisation is bad. You need to plan. You need to make a short, medium, long term plan. You need to have the risks involved in there as well as plan for the risks, as well. And then something that most technocrats forget is, what those of us that have a bit of Marxist influence, is the correlation of forces. So how is the political economy? What’s the political economy for this? It’s thinking about sustainability in terms of political economy. Is this going to be reversible or not? Right? So that’s when we start having some implementation issues with some peers and colleagues on the left, because we just assume that we’re going to have power, and we’ll keep power forever, or for a very long time, and then people just get used to this somehow or another. That’s not how it works. We need to make sure that the political economy of this is sustainable over time so that the forces, the political and economic forces, sustain it over time. Like the example that I gave you with the credit unions, I can’t imagine Lasso, the banker, President of Ecuador, even after coming to the central bank, trying to turn off the switch, which disconnects 600 credit unions from the payment system. He will get sort of a massive push back and strikes, and it won’t happen, right? So we need to achieve that point of irreversibility in terms of the political economy, but also in terms of the usage of the system. So if three or four people use the system, whatever, they’ll disconnect it, and that’s it. But if you get many people using it, this is why I think it should be part of the regional payment system and get businesses, small and medium enterprises specifically, using the Sur payment system. We need to have a dynamic sector. We need to have even capitalist forces support the system saying: this is much cheaper than using the dollar-based SWIFT system. And have that incentive in place, as well. We need to sort of create incumbents that will defend the system, even when the left wing politicians are out of the game. That’s the kind of process building that we need to achieve, both in terms of the Sur and the Unasur. That’s why the economic pillar has to be in place, as well, and not just the other pillars of integration that happened in the past, such as the military union, or the health union, or the democracy union, or whatever. All of those can be stripped away as soon as the politicians are gone. When you have the fabric of society, an economic and productive fabric, that needs the regional system, then it’ll keep moving forward and it’ll become the incumbent. It will become a long lasting, sustainable project.

Scott Ferguson:  In December, you published a significant report for the Center for Economic and Policy Research (CEPR) titled “Putting Climate At The Core of IMF Governance.” To close out our conversation, would you mind giving our listeners a sense for what you are arguing for in that project?  Well, first, I’m really thankful to CEPR for opening the doors to my contributions, to my thoughts, to whatever I can do to coincide in terms of our priorities in an economic and policy arena. I’ve been studying the IMF for over a decade now. I’ve seen the IMF face to face, and I’m strongly versed with some of its policymaking, which strongly coincided with some of their issues like SDRs. I think SDRs are a very important instrument that, even though they’re not perfect, we should continue to push for them.

Billy Saas:  Special Drawing Rights, could you say just a little bit about the Special Drawing Rights?

Andrés Arauz:  SDRs, or Special Drawing Rights, are international money, international currency, that is created out of thin air. It’s endogenous money. And it’s political money: it was created as an international treaty to replace gold and the US Dollar as a reserve asset in the 60s. So it’s the thing that mostly resembles an international currency even though in the SDR basket, the US dollar has a large weight, like 40%, or something like that. It’s okay because it will have to recognize the realities of world power players. And hopefully one day, the Sur will be part of the SDR basket. That’s actually something that I am proposing should be one of the long term objectives of the Sur. We’ve been working with CEPR on promoting SDR use. Also with other organizations such as Latindadd, the Latin American Network of Economic Justice. Other organizations around the world like Oxfam, Arab Watch, and so on. Really, a large coalition has been built in civil society, and people who think and propose economic policy issues use SDRs beyond the narrow monetary reserve asset quality of them. I wrote a handbook for Latindadd saying, look: SDRs can actually become an instrument of fiscal policy. Then, that opens the door for central bank-Ministry of Finance coordination even though it’s taboo that many want to hide and not speak about until after the pandemic. Anyway, I really like SDRs, and I want to keep exploring and writing and mainstreaming them. But this other thing, this paper on putting climate at the core of IMF governance comes about because I started to read a lot of greenwashing from the IMF, especially in the RST, the Resilience and Sustainability Trust. They put out a climate strategy, and so on and so forth. Most of it is, unfortunately, sort of greenwashing: just basically saying that they’re going to work on climate issues, but not really incorporating that into the main logic of the functioning of the monetary system like they could. For example, they don’t mention the fact of the Petrodollar, the exorbitant privilege of the dollar issuer that can acquire extrasomatic energy needs from Petrostates just by printing their own money versus the rest of the world, and how that relates to historic CO2 emissions on behalf of the United States. So there are many issues that are systemic in terms of the relationship between climate and money that the IMF is not even touching with a stick. I thought that it would be interesting to say:  well, if you’re serious about climate change, if you’re serious about having systemic structural change with regards to the climate, let’s talk about how IMF governance has an incidence in that. I don’t know if you’ve seen this, but the Bridgetown agenda, which is basically being promoted by Prime Minister Mia Mottley of Barbados. She’s saying we need more SDRs so we can invest those SDRs in climate because if we just wait for the rich countries to give us money, that’ll never happen. Poor countries don’t have money on their own to do this, because you need hard currency. The next best thing to hard currency are SDRs, and they can be created out of thin air. Hey! We have the money to invest in fighting climate change. Let’s do it. And of course, then the rich countries are saying: hahaha, no, maybe later, let’s think about it…And they pretend not to hear. That all could happen if the IMF governance system could change a little bit. Right now, at the IMF, there is only one country that has veto power over the decision to create more SDRs, and that country is the United States. You can have veto power with 15% of the vote, and the United States has 17%. So you need to change that. You need to have more weight for developing countries, and especially for the countries that are vulnerable to climate change because they are the ones most desperate to actually make things change and make things happen. So in this paper, with my co-authors, we propose changing the formula of how the IMF voting share is distributed. How the votes are allocated within the IMF, among the different countries. All we do is very simple. There’s a formula with five variables: GDP, reserves, openness, amount of trade, and so on. And they have a weird variable called variability of capital flows. I have these five variables, and sure the biggest countries get the biggest voting share, but we just add one more variable, which is historic CO2 emissions. We say keep the same variables and divide the openness variable by the cumulative, historic CO2 emissions of that country so that we can include their degree of responsibility to climate change as part of the IMF form. We use non-ambiguous, objective metrics published by the Potsdam Institute for Climate to measure the country’s contribution to climate change via cumulative CO2 emissions. Of course, as you would expect, the United States voting share at the IMF falls from 17% to somewhere like 6%. China’s also falls significantly to somewhere like 6%. Rich countries, in general, all fall significantly, and developing countries, in general, increase their voting share significantly, especially small island developing states. So those that risk being destroyed, those at risk of disappearing from rising sea levels, are actually the ones that increase the most, from around 2% to around 20% of IMF voting share. That would have a significant impact on the entire monetary system, the practices of IMF lending, the logic of power within the institution, and they would actually have a transformational impact on how the world, how the planet, deals with climate change. The IMF is a powerful institution with a trillion dollars of lending power. That’s not counting how much money it can create via the SDRs, and it’s not counting the influence that it has over financial markets, and not counting the influence that it has over local policymakers in terms of the ideas of money, the ideas of policymaking, the ideas of fiscal management, monetary policy, and so on. I think if we start from the core, then we can have far reaching effects. Of course, I’m not naive to think “oh, wow, how could we not think of this and have the US accept this change overnight?” That’s not gonna happen. But at least we’re putting the discussion forward so that we can understand the true magnitude of this reality.

Billy Saas:  We will, of course, link to that on CEPR and your other work there. Andrés Arauz, it has been an absolute pleasure talking with you. Thank you so much for joining us on Money On The Left.

Andrés Arauz:  Thank you all! I hope we get another chance to share some more stories about CDBCs and what’s happening in that space, as well. I’m quite involved in that area, as well. I’m advising a tech company called Nym on that issue. I would also like to talk about creating unions, financial inclusion in the solidarity sector and the role that money plays there. So yeah, in general, I’d love to share this on another occasion with you and it’s been a pleasure talking to you all.

Spanish Transcript

The following was translated by Sisa Pacarina Tixicuro Duque and has been lightly edited for clarity.

Billy Saas:  Andrés Arauz, bienvenido a “Money On The Left”.

Andrés Arauz:  Muchas gracias por recibirme. Me complace estar aquí. Vengo siguiendo su trabajo desde hace unos meses y años, y me alegra estar aquí.

Billy Saas:  Oh, qué emocionante saberlo! Estamos encantados de tenerte aquí con nosotros, y más ahora, que estamos viviendo un momento histórico en Latinoamérica, puesto que seis (hace muy poco, siete) de los países más poblados, incluida por primera vez Colombia, están siendo gobernados por líderes con ideas políticas progresistas de izquierda. ¿Cómo calificarías este momento y su importancia de cara al futuro de la región?

Andrés Arauz:  Bueno, este es un momento muy emocionante para los progresistas, sobre todo para la gente en Latinoamérica que ya vivió la primera Marea Rosa, la primera corriente progresista en la región. Desde luego, ahora hay un poco más de madurez en el entorno progresista, en general, y pienso que hemos aprendido un par de lecciones. Una de las más importantes que hemos aprendido es la importancia de la integración regional. ¿Verdad? Así pues, sabemos que un país por sí solo no cambiará el mundo. Un país por sí solo no cambiará la dinámica fundamental del sistema mundial, ni saldrá, de manera sostenible, de la pobreza, ni tampoco transformará su economía, su base industrial, etcétera. Ya sabemos que eso sólo puede lograrse con un plan regional o de integración. Y creo que definitivamente eso se ha incorporado a la agenda de la izquierda. Por eso este es un momento crítico en la historia, pues ahora vemos que el Presidente Lula, que acaba de llegar al poder hace sólo 10 días en Brasil, ya se ha enfrentado al primer intento golpista. Él ha declarado que la integración regional, concretamente con los países sudamericanos, es una de sus prioridades clave en su política exterior. Así que esto es emocionante para nosotros, con el liderazgo de Lula, desde luego, la situación en la región cambia por completo. Observamos que fuerzas extrarregionales como Estados Unidos también han tomado nota de este giro hacia la izquierda, y eso tiene repercusiones para toda la región. Esperemos superar todos estos intentos golpistas y amenazas violentas contra las fuerzas progresistas. Y esto puede ser no solamente una reacción, una resistencia frente a las fuerzas del Imperio, las fuerzas del Neocolonialismo que amenazan la política progresista en toda la región, sino que realmente seamos capaces de construir algo. Y pienso que lo monetario, la cuestión financiera, es sin duda algo que podemos conseguir en un corto período de tiempo. Dada las dinámicas electorales en la región, quisiera insistir en que para Latinoamérica y los políticos progresistas y quienes dirigen los países, no contamos con un lapso de tiempo infinito. Disponemos de una brecha de oportunidades muy limitada, que es justamente este año, 2023. Si traspasamos ese plazo, probablemente será mucho más difícil, debido a las coyunturas políticas internas, las fuerzas de correlación, etcétera. Así que considero que este año es el año del trabajo duro, y de poner las piezas en orden y echarlas a andar.

Scott Ferguson:  Entonces, ¿cómo interpretarías la situación de Ecuador en este momento histórico en particular? Y yo me pregunto, según tu experiencia, aprovechando esta peculiar apertura histórica, ¿cómo has conseguido hablar sobre dinero y finanzas públicas desde un punto de vista heterodoxo y comunicarlo a las personas comunes y corrientes?

Andrés Arauz:  De acuerdo, empecemos con el papel de Ecuador en todo esto. Ecuador, por desgracia, ahora mismo está dirigido por la antítesis del dinero progresista con la política, es decir, un banquero. Un banquero multimillonario neoliberal, que se ha alineado completamente con el FMI en su asesoramiento y formulación de políticas convencionales, y de la vieja escuela, y demostrado eficazmente que son falsas e incorrectas, y está llevando al país a una gran crisis económica. Ecuador es probablemente el país que menos se ha recuperado tras la pandemia. En general, realmente no ha crecido a causa de una política monetaria y fiscal muy restrictiva. Él está promoviendo la fuga de capitales como parte de la política del gobierno. Ayer mismo, o no sé cuándo saldrá al aire, pero muy, muy recientemente, acaba de anunciar que eliminará el impuesto a la salida de divisas que tenemos en Ecuador. Existe desde hace tiempo. Así que eso promoverá la salida de capitales. Pero la cosa es que en realidad su principal línea de negocio como banquero es poseer un banco offshore con sede en un centro offshore en Panamá, en el que aproximadamente entre el 80 y el 85% de todos los depósitos proceden de ecuatorianos ricos. Así que es realmente muy complicado para cualquier país. Pero para mi país, es realmente doloroso, ¿sabes? Cuando tienes un presidente cuya principal línea de negocio es promover la fuga de capitales a su banco offshore con sede en Panamá. Por supuesto, toda la política se cambia para adaptarse a su línea de negocio. Y es bastante absurdo, pero también un poco repugnante, porque no ha abandonado el banco, no ha puesto sus acciones en un fideicomiso ciego o lo que sea. No, él ha sido explícito acerca de mantener su propiedad, y eso es muy lamentable. Además, porque si uno se aleja un poco y amplia la visión, verá que este es el tipo de personaje que se opondría a un rol proactivo como lo ha sido siempre la política exterior ecuatoriana, salvo este gobierno, para ser parte de una fuerza regional. Formar parte de un bloque regional. Así que lo más probable es que se oponga a todas estas iniciativas, y es muy lamentable porque hasta hace muy poco, Ecuador era la capital de UNASUR: era la sede de la Unión Sudamericana. El ex Presidente Moreno, que traicionó su programa, y ahora Lasso, han renunciado, a que Ecuador fuera la Capital de Sudamérica, la ciudad de Quito. Por fortuna, en cambio, la población ecuatoriana es notablemente progresista. Así, en las últimas elecciones, a las que me postulé, la población ecuatoriana votó alrededor de un 70% a parlamentarios progresistas. El resultado presidencial no fue exactamente el mismo: perdí por poco. No obstante, el parlamento es mayoritariamente progresista con socialdemócratas, con progresistas de lo que llamamos el movimiento indígena de fuerzas plurinacionales. Representan más de dos tercios del parlamento. Y la población, en general, también es bastante progresista. Por tanto, esto significa que, más temprano que tarde, la población de Ecuador dará un paso al frente, empezará a ejercer sus derechos democráticos y probablemente se produzca un relevo en la administración. Es muy poco probable que el actual presidente sea reelegido. Y tendremos un gobierno progresista que se alineará con el proyecto de integración regional. También me preguntaste sobre cómo abordar la política financiera y económica heterodoxa dentro de este contexto, y tengo varios, digamos sombreros que me pongo todo el tiempo. En el contexto de mi propio país, soy principalmente un actor político. Tras las elecciones de hace dos años, se me considera un actor político, lo que me da la oportunidad de aparecer bastante en los medios de comunicación. Supone para mis redes sociales la oportunidad de contar con muchos seguidores, y ahí es importante procurar transmitir el mensaje adecuadamente. He intentado compartir mis conocimientos en un lenguaje sencillo y con un vocabulario bastante fácil, pero principalmente mostrando contrastes. Pienso que ha sido una forma muy eficaz de comunicarse con la gente, con amplios segmentos de la población, contrastando las recomendaciones políticas o las políticas monetarias ortodoxas, la política monetaria o la política económica en general, frente a lo que se puede conseguir con un planteamiento heterodoxo. Ese es el sombrero que uso dentro de Ecuador, pero fuera del país, tengo, quizás, más reluciente el sombrero académico. Empleo mis conocimientos para comunicarme con los especialistas y los medios de comunicación especializados, con aquellos que, tal vez, hacen un seguimiento general de las instituciones financieras internacionales, y trato de utilizar ese tipo de lenguaje para reafirmar e insistir en mi acreditación académica, lo cual creo que también es importante en términos de construcción de legitimidad. Más o menos eso es lo que hago. Trabajo en varios espacios, pero siempre en torno a cuestiones relacionadas con las finanzas y la tecnología. Me siento bastante feliz en ese espacio y trato de cambiar el mundo con mis conocimientos, mi capacidad intelectual, con las redes que puedo tratar de establecer. Espero que también podamos aprovechar eso para seguir desarrollando y transformando mi propio país.

Billy Saas: A la hora de realizar esta labor de comunicación, ¿hay otros intelectuales que modelen el tipo de comunicación al que aspiras? Y dentro del amplio espectro de la economía heterodoxa, ¿hay alguna escuela o perspectiva a la que recurras más a menudo?

Andrés Arauz: No he tenido en mente a ninguna persona en concreto como referente de comunicación. He estado en contacto con muchos líderes y pensadores económicos. No puedo negar el increíble e importante modelo que ha sido, por ejemplo, Rafael Correa en cuanto a comunicación de política económica. Él solía emitir un programa de radio semanal en el que explicaba la política económica y la política gubernamental a toda la población. Fue un programa que duraba entre dos y cuatro horas cada sábado. Y luego, por supuesto, explicar los temas de forma sencilla y comunicárselos a la gente utilizando diapositivas de PowerPoint y demás también fue, creo, algo que no sólo me afectó a mí, sino que fue un estilo de comunicación con el que todos en mi país llegaron a familiarizarse. En términos de pensamiento económico, sin embargo, reconozco definitivamente la influencia de muchos economistas latinoamericanos que han existido desde Raúl Prebisch; estructuralistas y pensadores de la teoría de dependencia. Más recientemente, la influencia de los post-keynesianos ha sido muy significativa en mi pensamiento y práctica económica. Diría que me adscribo al post-keynesianismo más extenso, y dentro de esa amplia escuela hay muchos grupos más pequeños, y a mí me gusta recopilar elementos de todos ellos. Realmente me han llegado a gustar algunos de los principales elementos recopilados por los separatistas, la escuela separatista francesa junto con algunos italianos también. Mi trabajo doctoral abarca muchos de sus trabajos. Concretamente, Augusto Graziani porque me especialicé en sistemas de pagos, y en la dinámica del dinero, y el papel de los bancos, etcétera. Y también me gusta tener eso en cuenta. Pero además, y esto es quizás algo que está más relacionado con el contexto latinoamericano, está lo que yo llamo la escuela de la Economía Solidaria. La Economía Solidaria es muy importante en nuestra región porque nosotros llegamos tarde al proceso de industrialización. Llegamos tarde al capitalismo mismo. Hemos estado bajo economías básicamente feudales hasta bien entrado el siglo pasado, el siglo XX. La Economía Solidaria es importante porque es una forma de incluir a los que fueron excluidos por el sistema capitalista. Si analizas mi país, o mis vecinos, entre el 70 y el 80% de la población en edad de trabajar no es trabajadora formal. No están bajo una relación capital-trabajo. Son básicamente sobrevivientes en un sistema en el que tienen que encontrar la manera de sobrevivir cada día. Eso no encaja en ninguna teoría económica definida, así que la Economía Solidaria trata de explicar: vale, ¿qué podemos hacer las personas que hemos sido excluidas del sistema? Salvémonos los unos a los otros. Cooperemos. Construyamos una comunidad. Construyamos un sistema económico cooperativo en el que podamos reconocer que estamos parcialmente excluidos del capital y del capitalismo, pero tenemos que dialogar con el capital y el capitalismo. Estamos parcialmente excluidos del Estado, pero también tenemos que interactuar con el Estado. Estamos divorciados de nuestras propias realidades porque tenemos que sorbrevivir. Además, tenemos que trabajar juntos. Tenemos que convertirnos en cooperativas, tenemos que juntarnos en asociaciones. Incluso sin ser un sindicato, o una Unión de Trabajadores, tenemos que unirnos para poder negociar en mejores términos con las fuerzas que nos gobiernan. Considero que la Economía Solidaria tiene una influencia muy importante y marcada en mi forma de concebir el desarrollo. Sí, probablemente hay muchos más que me estoy saltando ahora mismo, pero desde luego algunos de los que he mencionado.

Scott Ferguson:  En 2021, cuando te presentaste a las elecciones presidenciales de Ecuador y estuviste a punto de ganarlas, la prensa destacó que hubieras sido el presidente más joven de la historia del país. No obstante, para nosotros resulta tanto o más extraordinario que hayas ocupado el cargo de Director del Banco Central de Ecuador con tan solo 24 años de edad. ¿A qué se debe esta situación? En primer lugar, ¿qué te llevó a dedicarte a la política monetaria?

Andrés Arauz: Sin duda debería mencionar a mi director de tesis de maestría, Pedro Páez Pérez. Él fue muy importante en mis primeras etapas de desarrollo profesional. De hecho, obtuve mi licenciatura en Ciencias en la Universidad de Michigan Ann Arbor, en matemáticas y economía, y después volví a Ecuador y empecé a cursar una maestría en ese país. Por lo general, el orden suele ser el inverso: la gente obtiene un título a nivel local y luego hace una maestría en el extranjero. En mi caso, lo hice al revés. En realidad, fue muy, muy útil porque cuando ingresé en la FLACSO, una universidad latinoamericana que tiene sedes en distintas partes de la región, en mi caso Ecuador, creo que todos mis profesores iban a convertirse en ministros de finanzas, planificación, desarrollo, banco central, etcétera. Mi director de tesis, Pedro Páez, había sido investigador del Banco Central, de modo que cuando se convirtió en Ministro de Políticas Económicas, yo pasé a ser su asesor.  De hecho, tenía 22 años cuando fui asesor del Ministro de Políticas Económicas. Yo estaba a cargo de lo que llamábamos la nueva arquitectura financiera, que básicamente proponía una transformación del sistema financiero nacional, pero también trabajábamos en la transformación del sistema financiero sudamericano y sus instituciones. Trabajé con él en muchos de esos temas, y llegué a conocer el Banco Central desde fuera. Fui asesor del ministerio, pero casi todo mi trabajo tenía que ver con el Banco Central. De modo que pude criticarlo constantemente y presionarles para que hicieran cambios, etcétera. Cabe mencionar que, antes de todo esto, yo había trabajado ya en el Banco Central. Trabajaba como experto en estadísticas de balanza de pagos, y mi trabajo me permitía ver las transacciones individuales de dinero que entraban y salían del país. Pude ver nombres de personas, nombres de empresas, y ese conocimiento siempre ha sido valioso para mí porque cuando un economista va y encuentra las estadísticas, ve un montón de números, ve un montón de agregados, intenta construir una historia en términos generales, en conceptos generales. Pues bien, cuando yo veo estadísticas, y estos números, no veo historias generales ni conceptos generales. Veo personas. Veo empresas. Conozco su comportamiento. Conozco sus patrones. Conozco exactamente de quién estamos hablando gracias a la experiencia que tuve hace más de 15 años. Así que eso es definitivamente una ventaja cuando se construye la política, cuando se sabe lo que compone las estadísticas, y en qué medida es también sólo palabrería y cuánto es en realidad la construcción de estadísticas rigurosas. Siempre he pensado que las estadísticas, y por tanto la contabilidad, son absolutamente cruciales si realmente quieres hacer un análisis económico riguroso. Por eso a veces me río cuando veo a colegas que presentan modelos econométricos muy bonitos y utilizan números como si fueran una especie de ciencia exacta y pura, mientras que muchas de esas estadísticas son pura invención y tienen grandes deficiencias, o deficiencias muy grandes y significativas. He escrito bastante sobre los problemas de las estadísticas monetarias y de balanza de pagos. En fin, retomando el tema, yo fui asesor del Ministerio de Políticas Económicas, y ahí tuvimos un gran problema porque el Banco Central de Ecuador había sido dirigido, quizás durante dos décadas, por la gente más conservadora y ortodoxa del país, y con claros vínculos hacia los banqueros más poderosos. Así que en 2008, bajo el gobierno de Correa, redactamos una nueva Constitución de Ecuador, que supuso un proceso muy interesante de democratización legislativa. Tuvimos miles y miles de personas que propusieron enmiendas, y cambios, y redacción, etcétera, de la Constitución. Y al final, realmente pienso que la Constitución ecuatoriana es una obra de arte. Es muy progresista, está orientada al futuro, y una de las cosas que hizo la Constitución fue modificar la naturaleza del Banco Central. Dictó que el Banco Central ya no sería independiente. Ya no sería autónomo, que sería responsable democráticamente ante las fuerzas democráticas, y por lo tanto formaría parte del poder ejecutivo. Ahora bien, también somos un país dolarizado, pero con un Banco Central que no es independiente, que estaba dirigido como una rama, en efecto, del gobierno ejecutivo, y el Presidente era un economista doctorado. Bien, así que este fue un momento muy especial en esa época. Y si ese sujeto quería que el Banco Central también cumpliera con los nuevos mandatos constitucionales, que también cambiaron para el Banco Central. Por ejemplo, la inclusión financiera es un objetivo constitucional, no sólo la inflación o lo que sea. Existe una lista de mandatos constitucionales para el Banco Central. Entre el personal del Banco Central no habría nadie que entendiera, y mucho menos que estuviera en consonancia con los nuevos objetivos constitucionales. Así que como yo tenía formación monetaria y estaba especializado en esos temas, y conocía el banco central tanto desde dentro como desde fuera, porque había podido vivir dentro de su marco, pero también criticarlo desde fuera. Llegué a ser director general de la banca, que es básicamente el encargado de las operaciones del Banco Central. Fue un momento muy feliz para mí porque era bastante joven, pero ya se me podía considerar, quizás, un experto en asuntos de la banca central. Además, conocía el funcionamiento del sistema de pagos, las áreas de gestión de reservas, los sistemas de pagos internacionales y las instituciones financieras. Poseía excelentes conocimientos de contabilidad, algo fundamental para dirigir un banco central. Además, tenía la orientación política correcta respecto a cuáles eran las transformaciones clave que tenía que lograr dentro del Banco Central para, en lugar de destruir la institución, potenciarla para que cumpliera estas nuevas funciones constitucionales. Así que desempeñé un papel clave en la transformación del Banco Central para convertirlo en lo que sigue siendo hoy, aunque ahora tengamos, de nuevo, un gobierno conservador. Pero como introdujimos cambios muy importantes, inclusive en la cultura misma del Banco Central, creo que es difícil que puedan revertir todo eso. Así es como surgió todo esto. Es una historia muy bonita, y por desgracia creo que difícilmente podrá repetirse en cualquier otra parte del mundo, pero hay muchas cosas que, al margen, pueden hacerse para utilizar el inmenso poder que tiene cualquier banco central en cualquier sociedad para democratizar esa sociedad, para democratizar sus economías.

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Billy Saas: Pasar de ser un crítico de la gestión del Banco Central a alguien que, de hecho, lo dirige, ¿te ha traído sorpresas o lecciones aprendidas en tu nuevo papel dentro del banco? ¿Hubo alguien que ocupara tu lugar como crítico desde fuera? ¿Y cómo fueron esas críticas hacia tu trabajo?

Andrés Arauz:  Pues, sinceramente, no. En aquel momento no hubo fuertes críticas porque, como he dicho, íbamos avanzando muy deprisa.

Billy Saas:  Claro.

Andrés Arauz: La academia en Ecuador estaba dominada por el pensamiento neoliberal de los neoclásicos y no se pensaba realmente en una política monetaria heterodoxa, entre otras cosas. El sistema de pagos era algo que estaba completamente al margen de la discusión, fuera del debate. No había nada de eso. El papel proactivo del Banco Central en la economía había quedado en el olvido durante los últimos 20 o 30 años, y así sucesivamente. De modo que los académicos, incluso los de derecha, no tenían ni idea de lo que estábamos haciendo. Examinaban los balances y no podían entenderlo. Ni siquiera sabían cómo leer los balances, porque durante mucho tiempo habían dejado de lado ese tipo de formación. Así que los primeros años no hubo realmente ninguna crítica, pero no porque no sintieran que algo iba mal, sino porque no sabían qué hacer al respecto. Además, habíamos expulsado de nuestro país al FMI y al Banco Mundial. Expulsamos al Banco Mundial del país. El FMI seguía en el país; ocupaban una gran oficina en el Banco Central y ni siquiera pagaban alquiler. Así que dijimos: “no, si no pagan alquiler, los echamos del edificio”. Y por supuesto, tampoco tenían mucho acceso a lo que ocurría dentro del Banco Central. De modo que no había nada que pudieran hacer o decir durante ese periodo porque estábamos haciendo cambios en las cañerías del sistema. Por ejemplo, estábamos trabajando en la democratización del sistema de pagos mediante algo tan sencillo como la adaptación de los requisitos de telecomunicaciones para conectarse al sistema de pagos, y para poner a disposición de las cooperativas de crédito una versión ligera del software. En Ecuador, teníamos más de 600 cooperativas de crédito que funcionaban, pero no estaban incluidas en el sistema de pagos. Por tanto, no podían ofrecer el mismo tipo de servicios financieros, transaccionales, pagos de salarios públicos, etc., que los grandes bancos. Así que, simplemente democratizando el sistema de pagos, se produjo una revolución en la base de la pirámide, donde las cooperativas de crédito rurales de repente se convirtieron en una fuerza importante en el sistema económico. Estos sujetos formaban parte del sistema de Economía Solidaria, por lo que también integraban otro sistema de valor. No solamente bancos capitalistas, ¿verdad? Sólo democratizando el sistema de pagos -algo que hicimos al margen de la opinión pública o de los medios de comunicación- pudimos introducir cambios importantes. Ahora bien, cuando empezaron a darse cuenta, me refiero básicamente a académicos de derecha, expertos de la oposición, etc., fue cuando iniciamos el lanzamiento de lo que llamamos el sistema de dinero móvil. Ecuador fue el primer Banco Central de moneda digital. Hoy día es una novedad. Pero nosotros hicimos esto hace 10 años, y el proyecto empezó en 2009. O sea que esto fue hace como 15 años, 14 años. Modificamos la normativa para que los ciudadanos, cualquier ciudadano, solo necesitara un número de identificación nacional, su cédula de identidad, como único requisito para abrir una cuenta en el Banco Central. La moneda digital del Banco Central se llamaba por aquel entonces, dinero móvil. Se diseñó de tal manera que, quizás, fue otra muestra de mi forma de concebir la tecnología, las tecnologías apropiadas, en lugar de las tecnologías de vanguardia o lo último en innovación. Hay que hacer que la tecnología se adapte a las necesidades de la gente, no…

Scott Ferguson:  Interrumpa.

Andrés Arauz: Exacto, entonces contábamos con este dinero móvil que funcionaba en los teléfonos más básicos, sin necesidad de tener un smartphone, sin necesidad de tener un plan de datos. Basta con marcar un código corto, y tenías acceso a todo un sistema para realizar transacciones. Y ahí fue cuando la oposición derechista empezó a criticar. Yo ya estaba fuera del Banco Central cuando se lanzó, pero fue entonces cuando empezaron a darse cuenta de algunos de los principales problemas. En parte, porque una de las figuras principales que reclutaron fue un antiguo miembro del Banco Central, que luego pasó a trabajar para la Asociación de Banqueros Privados y ahora trabaja en el FMI. Así que esta persona es quizás el único que pudo educar a la derecha en cuanto a lo que realmente estaba sucediendo. Y ahora está solo unos 10 o 14 años después, escribiendo sobre lo que hicimos en 2009, 2010 y 2011 con una perspectiva crítica. Pienso que les llevó un tiempo entender lo que estaba pasando. La gente, cuando piensa en un país dolarizado, suele decir: ” perdiste tu política monetaria y estás arruinado”, etcétera. Eso no es cierto porque cuando entramos en el Banco Central, y cuando yo era asesor en el Ministerio de Políticas Económicas, dijimos mira, por supuesto que una dolarización ortodoxa elimina todas esas herramientas y posibilidades y políticas y uno simplemente renuncia y dice: “Renuncio a todo y dejo que los mercados dominen”. Pero con una dolarización heterodoxa, estas forzado a ser creativo.Tendrás una ventaja, y es que dispondrás de una moneda estable, lo que en realidad supone un reto para muchos países en desarrollo que intentan aplicar una política económica heterodoxa. Se producen devaluaciones, depreciaciones, la gente pierde la fe en la moneda a causa de los expertos y los mercados que reaccionan rápidamente. Sin embargo, cuando se tiene una economía dolarizada y una moneda estable, se puede ser un poco más creativo sin preocuparse por estos ataques especulativos, porque no hay nada que atacar. Entonces se empieza a jugar con cuestiones concretas que dependen de la creación de crédito, del papel de los bancos en la sociedad, del funcionamiento del sistema de pagos, de la velocidad de circulación del dinero y del funcionamiento del mercado de valores. Se puede ser más creativo sin preocuparse de cuestiones tales como ataques especulativos. Por ejemplo, tenemos un país vecino, Colombia. El Presidente Petro también es economista. Está llevando a cabo una política heterodoxa. Pero, naturalmente, los ataques especulativos contra la moneda colombiana están ahí, y tienes un Banco Central ortodoxo que no está ayudando ni contribuyendo en esa misma orientación heterodoxa. Así que es mucho más difícil ser heterodoxo cuando no tienes todas las piezas alineadas.

Scott Ferguson: Entonces, ¿continúas criticando la dolarización, a pesar de tener un enfoque más sutil, creativo, heterodoxo y experimental a la hora de mover y crear instituciones, y desarrollar distintas estructuras en un país dolarizado?

Andrés Arauz:  Por supuesto. Sí, soy crítico. Para empezar, hay que entender que existen muchas dolarizaciones, ¿no? Soy crítico, rotundamente, por ejemplo, de la hegemonía del dólar. Así que esto es geopolítico. Se trata de una cuestión colonial. El sur no tiene por qué usar una cuenta en Nueva York o en Miami para hacer pagos entre Uruguay y Perú. ¿Por qué? Pues por la hegemonía del dólar, y por el hecho de que la hegemonía del dólar contribuye a medidas imperialistas como las sanciones económicas, medidas coercitivas unilaterales que están destruyendo países enteros. Además, si pones la hegemonía del dólar junto con sistemas transaccionales como SWIFT que son un monopolio global, y si les cortas SWIFT, también estás cortando de manera efectiva. Y básicamente se está convirtiendo en un arma. El dinero como arma, y la cañería del sistema utilizada como arma, soy absolutamente crítico con la hegemonía del dólar. Seguiré siéndolo, y trataré de construir alternativas porque no creo que el mundo tenga que someterse a la moneda de un solo país. Pienso que tiene que ser un sistema global, y eso significa ir hacia un sistema monetario económico más democrático, de base multilateral. Tal como lo soñaron hace décadas, hace casi 100 años, pensadores tan importantes como Keynes: tienes el Bancor, un activo monetario global. Desde luego, hay actores clave del poder. No podemos negarlo, pero adoptemos un enfoque más equilibrado. Ahora bien, esa es una cuestión que tiene que ver con la dolarización. Por ejemplo, la dolarización de las transacciones internacionales, del comercio internacional, etcétera. Luego está la cuestión de las economías domésticas y la adopción del dólar como medio de pago doméstico. Como he dicho, una cosa es el dólar como unidad de cuenta. Otra es el dólar como medio de pago físico real que la gente utiliza en la calle. Creo que incluso si se estás dolarizado, como mi país, lo mejor es intentar sustituir el dólar físico utilizado como medio de pago interno por medios de pago electrónicos, y mantener los dólares físicos como reservas internacionales para el actual sistema internacional que exige el uso del dólar estadounidense. De este modo se liberan dólares que se utilizan para pagos internos y que realmente no son necesarios para importar equipos, tecnología y recursos de los que no se dispone en el propio país. Así que creo que hay matices en todo esto. Y aunque soy un crítico de la hegemonía del dólar, creo que tenemos que reconocer que hasta que eso cambie, el dólar juega un papel clave en América Latina, y básicamente en el 99% de las transacciones internacionales de la región. En la región, muchos precios internos están vinculados de facto al dólar, por ejemplo los de la propiedad inmobiliaria, los automóviles y, por supuesto, la tecnología importada, y eso se extiende al resto de los precios de las economías. Así que el dólar está ahí. Ahora, ¿cómo optimizar eso? ¿Cómo ganar grados de libertad? De lo que se trata es de conseguir cierto espacio político, es decir, un poco de soberanía en ese contexto. Y eso es independiente de si eres un país dolarizado, o simplemente una economía de mercado normal con una moneda nacional. Pero se tiene que cumplir las reglas de la hegemonía del dólar. Así que creo que hay muchas similitudes en ambos enfoques, y creo que se puede ser crítico, y también un pensador proactivo, y un responsable político, en ese contexto.

Billy Saas: De modo que estás sacando el mejor partido de la situación, trabajando en una economía dolarizada, pero es evidente que, cuando la economía ecuatoriana se dolarizó, no tenían en mente este tipo de ventajas. Has criticado la decisión del presidente Jamil Mahuad, la decisión de la administración ecuatoriana, en 2000 y en 2001, de abandonar el Sucre y adoptar el dólar como moneda del Estado. ¿Podrías explicarnos cuáles fueron, en tu opinión, sus motivos? ¿Por qué fue una mala idea para Ecuador en aquel momento?

Andrés Arauz: Fue una mala idea porque se trataba de una confabulación. Ahora Mahuad acaba de sacar un libro, y hay gente que está investigando mucho. Marco Naranjo también ha dicho que esto fue una conspiración. Él fue el que estuvo planeando la dolarización cinco años antes. Hay informes desclasificados del gobierno de Estados Unidos que dicen que buscaban activamente la dolarización de varias economías en América Latina. No es una coincidencia que Ecuador aceptara una base militar estadounidense en Manta en 1999, y que fuera dolarizado en el año 2000. Sólo hubo cuatro meses entre ambas decisiones y, a menos que se crea en cuentos de hadas, eso es bastante fácil de vincular en términos de economía política internacional. Ahora bien, Mahuad fue un pésimo presidente, sobre todo por lo que le hizo al pueblo de Ecuador. Él fue financiado por banqueros. Colocó banqueros en los ministerios, en el Banco Central y en todas partes. Banqueros privados, que no dejaron sus cargos de banqueros mientras eran burócratas del gobierno a la vez. Por lo tanto, un montón de conflictos de intereses, políticas repugnantes, y así sucesivamente. Él empezó básicamente a rescatar bancos cuando llegó la crisis, lo cual no fue un accidente. Nuevamente, las crisis no son desastres naturales en el sentido de que existe una circunstancia imprevista. Las crisis financieras son de naturaleza antropogénica; son provocadas por el hombre, son diseñadas, por así decirlo. Y existe mucha investigación sobre las crisis financieras, especialmente de Hyman Minsky, y todos sus discípulos, y las personas que lo han estudiado, sabemos cómo surgen las crisis, y cómo se desarrollan, y luego cómo se resuelven finalmente. Así que en lugar de prevenir la crisis, en lugar de resolver la crisis, Mahuad básicamente comenzó a bombear toda esta cantidad de dinero para los banqueros, pero al mismo tiempo, no cerró la cuenta de capital o no puso restricciones de cambio. Así que lo que los banqueros hicieron inmediatamente fue recibir todo este dinero de salvataje en Sucres y, literalmente, pasaron por la puerta giratoria del Banco Central y retornaron los Sucres y compraron dólares. Ahora bien, si de la noche a la mañana se produce este aumento de la demanda de dólares debido a la enorme oferta de Sucres, sin ninguna restricción del tipo de cambio, sin ninguna restricción de la cuenta de capital, por supuesto, se va a producir una devaluación, una depreciación de la moneda local de forma inmediata. Pero no se trata de algo que requiera una mente brillante. Esto es algo muy, muy básico. Y lo hicieron de todos modos para debilitar a propósito la moneda local y justificar la medida de dolarización, que había estado en marcha durante bastante tiempo. Así que ahora, Mahuad 24 años después está tratando de salir y decir: “Oh, mira, yo quería una economía dolarizada. Miren lo que hubiera pasado si el Sucre se seguía devaluando”, etcétera. Pero lo hicieron a propósito. No es que fue un accidente y curó la enfermedad. Es que ellos crearon esta crisis para justificar la medida, por lo que no estaban pensando en los usos creativos de la dolarización. No tenían ni idea del funcionamiento real de la economía dolarizada ni de la lógica de balance que se puede aplicar. Estaban trabajando, básicamente, asumiendo que se renunciaría a la política monetaria, y que sería una dura restricción a la política fiscal, también. Básicamente, dijeron, si tienes dólares, entonces el Banco Central ya no puede conceder préstamos al gobierno. Y entonces, vamos a matar de hambre a la bestia, y así justificaremos nuestro programa de privatización, y así sucesivamente. Fue una agenda neoliberal muy intencionada. La ley de dolarización se escribió fuera de Ecuador. Se redactó en Washington DC, en el FMI, y luego se envió por fax a Ecuador para ser copiada e implementada. Es una historia muy larga, la historia de cómo se implementó la dolarización. Pero ellos no se imaginaron que íbamos a ser lo suficientemente inteligentes como para encontrar vacíos legales y soluciones creativas. Por ejemplo, y voy a mencionar esto rápidamente, a partir de 2009, el Banco Central de Ecuador comenzó a conceder préstamos al gobierno, a pesar de que estamos dolarizados. Esto les dejó completamente atónitos porque era como: “¿No se supone que la dolarización prohíbe al Banco Central crear dinero de la nada?”. ¡No! Aún se pueden crear dólares, ¿verdad? Todavía se pueden crear dólares en el registro contable de un Banco Central. Son sólo dólares contables, ¿verdad? Desde luego, no se pueden imprimir dólares físicos, pero sí se pueden crear dólares en el registro contable y hacer que se muevan en la economía nacional. Por supuesto, eso crea un problema con la balanza de pagos, las reservas internacionales posteriormente, pero entonces tienes que tener una política de balanza de pagos proactiva, como, de hecho, cualquier país en desarrollo debería.

Scott Ferguson: ¿Acaso no ocurre lo mismo con los eurodólares?

Andrés Arauz: Sí, eso es exactamente. La cuestión es que, cuando son bancos privados los que lo hacen, nadie tiene problemas con que creen dólares en sus bancos, y en los libros de contabilidad. Así es como funcionan los sistemas bancarios de dólares offshore, en general. Yo uso el término “xenodólares” para ser más etimológicamente correcto. Pero sí, así es exactamente como funciona. Lo que no les gustó es que ahora una institución estatal, que era el Banco Central, estuviera haciendo exactamente lo mismo, quizás con más cuidado, con más supervisión, con parámetros claramente definidos bajo un sistema democráticamente responsable que lo que estaban haciendo los bancos privados, que era crear dólares ecuatorianos al hacer préstamos. Eso es algo que sin duda no tenían en mente en el año 2000. Cuando se dolarizó la economía, se produjo una crisis enorme en materia de precios. Durante el año siguiente, los precios relativos se alteraron mucho. De la noche a la mañana muchas actividades económicas dejaron de ser competitivas, y Ecuador podría haber colapsado, incluso como país, salvo por una cosa, y es que la crisis de finales de los 90 y la dolarización crearon una migración masiva de millones de ecuatorianos. Perdimos casi el 15% de la población que se fue a vivir a Estados Unidos, a España y a Italia, y luego empezó a enviar remesas a casa. De modo que fue esta moneda fuerte que venía del extranjero la que básicamente salvó al país de la catástrofe.

Scott Ferguson: Has sido un firme defensor del desarrollo de una moneda regional en Sudamérica llamada S-U-R, el “Sur”. Esta moneda sustituiría al dólar en la cooperación y el comercio internacionales. ¿Podría compartir con nuestros oyentes un poco sobre la moneda “Sur” y lo que su adopción significaría para países miembros como Ecuador?

Andrés Arauz:  Entonces, “Sur” es en efecto una iniciativa del presidente Lula, del ex presidente y ahora ministro de Finanzas, Fernando Haddad, y de su equipo. El “Sur” no es una moneda como el euro que quiera sustituir a las monedas nacionales. Eso es algo en lo que tengo que insistir desde el principio: no es una moneda que pretenda sustituir a las monedas nacionales. Es una moneda complementaria. Es una moneda complementaria regional que quiere contribuir a la dinámica del comercio intrarregional. Bien. En este momento, un país como Argentina, para comprar productos de primera necesidad o equipos a Brasil, tiene que tener dólares en sus reservas, y luego tiene que transferir esos dólares a un banco brasileño para obtener el equipo, la máquina, o lo que sea, desde Brasil. ¿Por qué? ¿Por qué? Entonces, claro, la lógica de eso es que los dólares no están en maletas o en cualquier lugar. Los dólares son simplemente cuentas en bancos de EE.UU. en el extranjero. Esta dinámica está creando una fuga de capitales institucionalizada porque tienes que tener un fondo de liquidez, un montón de dinero básicamente depositado en el extranjero, que no puedes utilizar para tus propias necesidades vinculadas al desarrollo. Por tanto, al crear el “Sur”, básicamente estamos estableciendo un sistema de pagos con una unidad de cuenta regional, el “Sur”. Aún tenemos que hablar de cómo vamos a valorarla, pero lo más probable es que esté vinculada al DEG, el Derecho Especial de Giro. De este modo, el “Sur” evitará tener que utilizar dólares estadounidenses para las transferencias internacionales, es decir, las transferencias internacionales intrarregionales. Podremos utilizar esta moneda para nuestros fines. Repito, no se parece al euro en el sentido de que sustituye a la moneda nacional. Más bien se parece, aunque no me guste tanto utilizar este ejemplo, a la Unidad Monetaria Europea, el UME, que fue un antecesor del euro. Se trata de una moneda compuesta por una cesta de divisas cuya idea es evitar el uso de una moneda regional adicional para el comercio interregional. Sin duda, pienso que esto creará cierta flexibilidad y espacio político para que los países puedan liberar parte de sus reservas y utilizarlas para tecnología y equipos que no están disponibles en la región; cosas que quizá necesitemos importar de Estados Unidos, Europa o Asia. A primera vista, no parece tan ambicioso. Lo que yo propongo al grupo de trabajo es que empecemos con algo más ambicioso, que es permitir los pagos en el sistema “Sur” desde cualquier cuenta bancaria de la región -otras veinte cuentas bancarias de la región- y en tiempo real, como está funcionando el sistema brasileño de pagos Pix. Ya disponemos de la tecnología. En realidad, no tenemos que inventar nada. Lo único que tenemos que hacer es conectar los programas informáticos, los indicadores y los parámetros, y podemos ponerlo en marcha de la noche a la mañana. ¿Y por qué es esto tan importante? Porque en Sudamérica, cuando la gente piensa en la integración regional, a veces cree que se trata de un asunto de políticos y cumbres presidenciales, que se reúnen una vez al año, se juntan todas las banderas y se abrazan, etcétera. Pero tenemos que hacer esto más tangible y construir la integración regional de tal manera que realmente forme parte de la vida de la gente. Y la forma de hacerlo es, en mi opinión, creando un sistema de pagos democrático en el que se puedan hacer transferencias dentro de la región, expresadas en “Sur” y en tiempo real. Eso supondrá un gran salto competitivo en comparación con el sistema actual, basado en el dólar y en el sistema SWIFT.

Billy Saas: Eso es muy útil. Centrándonos un poco más en la situación local de Ecuador, en los últimos años se han producido importantes levantamientos indígenas, que de hecho se remontan a la década de 1990. Además, la semana pasada la Confederación de Nacionalidades Indígenas de Ecuador (CONAIE) convocó más protestas después de que uno de sus líderes, el presidente de la CONAIE, fuera detenido y encarcelado. La CONAIE respaldó tu candidatura y la de 2021, e imagino que te gustaría volver a contar con ese respaldo. ¿Podrías contarnos un poco sobre tu perspectiva de la recién creada “Sur”, y de una UNASUR revitalizada, y de qué manera servirán y promoverán los intereses de los pueblos y nacionalidades indígenas de Ecuador? Pensando en términos tangibles, ¿cómo mejorará esta moneda complementaria la vida de los indígenas ecuatorianos?

Andrés Arauz: Primeramente, la CONAIE es una organización que realmente respeto. Pienso que tienen décadas de organización política y de trabajo. Por desgracia, a partir de 2003, concretamente, se vieron infiltrados y contaminados por diferentes agencias de inteligencia -locales, vecinas y extranjeras- para tratar de disolverla porque se estaba convirtiendo en una fuerza muy poderosa, y claramente tenían una agenda de izquierda. Durante el gobierno progresista de izquierda de Correa, existió mucha tensión con la CONAIE, pero durante mi candidatura, pudimos encontrar puntos en común, y reconocer algunos de los errores históricos que habían cometido las fuerzas progresistas, que permitieron que estos intereses extranjeros penetraran en un movimiento tan valioso. Ahora bien, no tuve el respaldo de toda la CONAIE. En aquel momento tenía el respaldo del Presidente de la CONAIE, y digamos que tenía buenas relaciones con el resto. Pero en concreto con los pueblos indígenas amazónicos de Ecuador, que es la CONFENAIE. Este año, tuvimos protestas en 2022 por diversos temas, entre ellos, de manera importante, el precio de la gasolina y el combustible. Por supuesto, hubo un paquete o un paquete de acuerdos que el gobierno concertó con la CONAIE, pero el gobierno, por supuesto, ha continuado con su agenda neoliberal, porque para eso está un banquero privado. Probablemente habrá más protestas. Ahora con el gobierno, la corrupción bancaria rampante de Lasso probablemente saldrá a la luz en 2023, y veremos un cambio allí. Así que eso es lo que está pasando en Ecuador. En el caso de Ecuador, mi propuesta siempre ha sido construir lo que se llama el bloque histórico, es decir, consolidar las mismas fuerzas que apoyaron la nueva Constitución de Ecuador en 2008. Eso fue decayendo con el tiempo. Necesitamos reconstruirlo y que vuelva a ser fuerte. Entonces eso implica un acuerdo, un acuerdo político, social y económico con el movimiento indígena y la Revolución Ciudadana que es el espacio político al que yo pertenezco. Ahora bien, la UNASUR que ahora está en estado zombi, pero que no lo estará por mucho tiempo ya que en los próximos días, veremos a la UNASUR tener un renacimiento, sobre todo con el liderazgo de Lula. En mi opinión, una de las razones por las que la UNASUR fracasó -y quiero subrayar que ésta es mi perspectiva- fue porque no tuvo un efecto material o tangible en la vida de las personas. Se quedó en una idea general que rondaba sobre todo los círculos políticos. No fue un concepto enraizado a nivel cultural. Yo considero que la UNASUR no puede ser sólo una integración de políticos o de Estados, tiene que ser una integración de los pueblos. Y utilizo este término a propósito. Es necesario que los pueblos de América del Sur sientan que esto es realmente algo útil para ellos. Creo que la forma de hacerlo es, en primer lugar, que el SUR permita todas estas transferencias que he mencionado, en tiempo real, denominadas en la unidad de cuenta, lo que tendrá un impacto material en el comercio de la región. Las pequeñas y medianas empresas apoyarán esta iniciativa. Además, habría un pilar educativo que permitiría a los estudiantes participar en un programa de intercambio de un año de duración en cualquiera de los países de la región, tanto para estudiantes de secundaria como universitarios. Eso también sería muy concreto. Lo tercero es la iniciativa de Evo Morales, ex Presidente de Bolivia, denominada “Runasur”. Runa, en Kichwa y otras lenguas indígenas, significa persona, y es, por supuesto, una referencia a una integración indígena del Sur. Pienso que ahí tenemos una oportunidad clave en cuanto a las necesidades urgentes del cambio climático, la biodiversidad y, sobre todo, el respeto a los pueblos indígenas. Así que pienso que eso también será un pilar clave para reforzar la integración de los pueblos. Ojalá pueda convertirse también en una integración de los movimientos sociales. Por qué no, en lugar de tener 12 sindicatos de trabajadores en un sector económico específico, simplemente tener un sindicato de trabajadores regional con 12 secciones, o con secciones locales. Al igual que una gran organización, ya que las empresas transnacionales funcionan todas de esa manera; operan en diferentes países, pero todas responden a la lógica de la sede central. Eso es lo que deberíamos hacer en cuanto a los sindicatos de trabajadores, los movimientos de mujeres, los movimientos estudiantiles, los pueblos indígenas, y en general, las organizaciones que responden a la mayoría de la gente y de nuestro capital. Entonces esperemos que, no necesariamente la UNASUR porque es un espacio más institucional, la “Runasur”, que es el espacio de los pueblos pueda tener también una unión política hacia adelante. Por eso es importante que los pueblos indígenas de Ecuador también apoyen esa iniciativa.

Scott Ferguson: ¿Existen detractores de estos sistemas monetarios complementarios, ya sean de derecha, izquierda o centro? Y si los hay, ¿qué les responderías?

Andrés Arauz: Por supuesto que hay detractores. Gente que piensa y cree que siempre debemos conformarnos con la hegemonía del dólar y basar toda nuestra economía en las necesidades de los intereses de Estados Unidos, y que están felices de tener su doble residencia en Miami y en otro país latinoamericano. Por desgracia, esto suena caricaturesco, pero es así. Bolsonaro era un supuesto nacionalista y presunto hincha de la camiseta brasileña. Incluso antes de dejar la presidencia, se fue a vivir a Orlando, Florida y se puso el sombrero de Mickey Mouse. No sé si lo vieron, pero también se puso la camiseta de fútbol de Estados Unidos.

Scott Ferguson:  oh, sí. Lo ví.

Andrés Arauz: Quiero decir que para los latinoamericanos que son aficionados al fútbol, y acabamos de ver a Argentina ganar la Copa del Mundo, es algo realmente simbólico. Es bastante malo. Eso muestra cómo estos nacionalismos fascistas en América Latina afirman que la integración latinoamericana es negativa, pero de alguna manera llevar la camiseta de fútbol de Estados Unidos es positivo. Carece de todo sentido, pero así es como piensan. Esto es lo que tienen en la cabeza. Y ahí es donde están sus billeteras, y sus cuentas bancarias, y donde están las propiedades. Lasso tiene 140 propiedades en el condado de Broward y Miami Dade, en Florida, por lo que esto es lo que son. Por desgracia, las élites son más de Miami que de América Latina, y tendremos que afrontar esa lucha, mostrar esos contrastes y hacer que se produzca esa transformación.

Scott Ferguson: ¿Y qué pasa con el centro izquierda y la izquierda? Porque pienso que nos hemos topado con muchos críticos y fuerzas de oposición, ya sea en el movimiento obrero británico, economistas obreros británicos, o gente de izquierdas de los medios de comunicación y activistas en Estados Unidos que no piensan con las teorías poskeynesianas del dinero endógeno, piensan realmente en estos modelos hidráulicos anticuados, incluso clásicos, de redistribución finita del dinero. ¿Te enfrentas a ese tipo de críticas por parte de interlocutores de centro izquierda e izquierda?

Andrés Arauz:  Sí, por desgracia, no existe suficiente educación sobre cómo funciona el dinero. Ya has abordado este tema ampliamente en el pasado, y sí, todos tenemos que enfrentarnos no sólo a una idea radical, sino que también tenemos que deconstruir los supuestos teóricos previos que incluso nuestros compañeros o camaradas mantienen en su día a día. Una forma lógica de entender la elaboración de políticas, o la economía, o el dinero para de alguna manera reconstruir desde cero y decir: ” Bien, ahora olvida todo lo que sabes sobre esto y empecemos de nuevo”. Sí, eso existe. Por suerte, creo que la pandemia y antes la crisis financiera, dieron lecciones sobre ¿qué es la escasez? ¿Qué es la escasez de dinero? ¿Qué es el dinero, de dónde viene, y así sucesivamente. Ahora, es muy fácil señalar eso. Basta con mostrar un gráfico o incluso mostrar ejemplos. Resulta mucho más fácil que antes. ¿Y sabes qué más? El criptoespacio, a pesar de que no entiende o no quiere entender el dinero endógeno, al menos ha abierto la mente de la gente en términos de la discusión sobre el dinero. De modo que lo que han hecho es popularizar la cuestión del dinero hasta el punto de que ahora la gente tiene una mentalidad más abierta. Y eso también es importante, y también ha sido clave para abrir las puertas a estos enfoques heterodoxos, el dinero endógeno, la TMM, el poskeynesianismo, etcétera. Pienso que, también en los círculos académicos, gente influyente y expertos han admitido el hecho de que así es como funciona el dinero. Por ejemplo, el famoso documento del Banco de Inglaterra, y así sucesivamente, y estamos llegando a ese punto. Todavía creo que tenemos mucho trabajo por hacer en términos de cómo el sistema de educación formal aborda el tema del dinero y los libros de texto y demás. Si vas a un clásico Econ 102, un curso de introducción en la universidad, todavía te lavan el cerebro con otro tipo de cosas. Aún nos queda mucho por hacer en cuanto a currículos y universidades, sobre todo en los países en desarrollo, que necesitan saber más de esto. Pero pienso que definitivamente hemos avanzado mucho, inclusive con la gente de centro y centro izquierda de la región. Que, por cierto, los poskeynesianos son bastante fuertes en Brasil, y eso también es importante.

Billy Saas:  Impresionante, pienso que otro aspecto que preocupa a algunas personas que podrían estar interesadas en el “Sur” pero preocupadas es: ¿qué ocurrirá cuando las mareas políticas vuelvan a cambiar? Esperemos que no lo hagan nunca, ¿verdad? Pero supongamos que el Sur se construye, se pone en práctica y los logros de la izquierda se pierden en los próximos años. ¿No podría ser la “Sur” un arma contra los países de la región? ¿Qué le dirías a la gente que podría tener ese tipo de preocupación?

Andrés Arauz: Mi forma de abordar la elaboración de políticas es, por supuesto, la planificación. Cuando quiero llevar a cabo estas grandes transformaciones, por ejemplo cuando estaba en el Banco Central o en otros espacios, como el ministerio de desarrollo, la planificación es fundamental. Improvisar es malo. Hay que planificar. Es necesario hacer un plan a corto, medio y largo plazo. Es necesario tener en cuenta los riesgos y planificarlos. Y algo que la mayoría de los tecnócratas olvidan es, para aquellos de nosotros que tenemos un poco de influencia marxista, la correlación de fuerzas. ¿Cómo es la economía política? ¿Cuál es la economía política dentro de esto? Se trata de pensar en la sostenibilidad en términos de economía política. ¿Será esto reversible o no? ¿Verdad? Ahí es cuando empezamos a tener algunos problemas de aplicación con algunos compañeros y colegas de la izquierda, porque simplemente asumimos que vamos a tener el poder, y vamos a mantener el poder para siempre, o durante mucho tiempo, y luego la gente simplemente se acostumbra a esto de una manera u otra. Esto no funciona así. Tenemos que asegurarnos de que la economía política sea sostenible en el tiempo para que las fuerzas, las fuerzas políticas y económicas, lo mantengan en el tiempo. Como en el ejemplo que les di de las cooperativas de crédito, no me imagino a Lasso, el banquero, Presidente de Ecuador, incluso después de llegar al Banco Central, intentando apagar el interruptor que desconecta a 600 cooperativas de crédito del sistema de pagos. Él recibirá una especie de rechazo masivo y huelgas, y no va a suceder, ¿verdad? Por tanto, necesitamos alcanzar ese punto de irreversibilidad en términos de economía política, y también en términos de uso del sistema. Así que si tres o cuatro personas utilizan el sistema, como sea, lo desconectarán y ya está. Pero si consigues que mucha gente lo utilice, por eso creo que debería formar parte del sistema de pagos regional y conseguir que las empresas, las pequeñas y medianas empresas en concreto, utilicen el sistema de pagos “Sur”. Necesitamos un sector dinámico. Necesitamos que incluso las fuerzas capitalistas apoyen el sistema diciendo: esto es mucho más barato que utilizar el sistema SWIFT basado en el dólar. Y tener también ese incentivo. Necesitamos crear una especie de agentes que defiendan el sistema, incluso cuando los políticos de izquierdas estén fuera de juego. Ese es el tipo de construcción de procesos que tenemos que lograr, tanto en términos de “Sur” como de la UNASUR. Por eso el pilar económico también tiene que existir, y no sólo los otros pilares de integración que se dieron en el pasado, como la unión militar, o la unión sanitaria, o la unión democrática, o lo que sea. Todo eso puede desaparecer en cuanto se vayan los políticos. Cuando tienes el tejido de la sociedad, un tejido económico y productivo, que necesita el sistema regional, entonces seguirá avanzando y se convertirá en el sistema dominante. Se convertirá en un proyecto duradero y sostenible. 

Scott Ferguson:  En diciembre publicaste un importante informe para el Centro de Investigación Económica y Política (CEPR) bajo el título “Putting Climate At The Core of IMF Governance”. Para concluir nuestra conversación, ¿te importaría dar a nuestros oyentes una idea de lo que defiendes en ese proyecto? 

Andrés Arauz: Bueno, en primer lugar, estoy muy agradecido al CEPR por abrir las puertas a mis contribuciones, a mis pensamientos, a todo lo que pueda hacer para coincidir en cuanto a nuestras prioridades en un ámbito económico y político. Llevo más de una década estudiando el FMI. He visto al FMI cara a cara y estoy muy familiarizado con algunas de sus políticas, que coinciden en gran medida con algunos de sus temas, como los DEG. Creo que los DEG son un instrumento muy importante que, aunque no sea perfecto, debemos seguir impulsando.

Billy Saas: Derechos Especiales de Giro, ¿podrías hablarnos un poco de los Derechos Especiales de Giro?

Andrés Arauz: Los DEG, o Derechos Especiales de Giro, son dinero internacional, moneda internacional, que se crea de la nada. Es dinero endógeno. Y es dinero político: se creó como un tratado internacional para sustituir al oro y al dólar estadounidense como activo de reserva en los años sesenta. Por tanto, es lo que más se asemeja a una moneda internacional, aunque en la canasta de los DEG, el dólar estadounidense tiene un gran peso, como el 40%, o algo así. No importa, porque tendrá que reconocer las realidades de las potencias mundiales. Y esperemos que algún día el “Sur” forme parte de la canasta de los DEG. De hecho, eso es algo que yo propongo como uno de los objetivos a largo plazo de “Sur”. Hemos estado trabajando con el CEPR para promover el uso de los DEG. Asimismo, con otras organizaciones como Latindadd, la Red Latinoamericana de Justicia Económica. Otras organizaciones de todo el mundo como Oxfam, Arab Watch, etcétera. Realmente, se ha creado una gran coalición en la sociedad civil, y las personas que piensan y proponen cuestiones de política económica utilizan los DEG más allá de su estrecha calidad de activos de reserva monetaria. Escribí un manual para Latindadd diciendo, mira: Los DEG pueden convertirse realmente en un instrumento de política fiscal. Entonces, eso abre la puerta para que exista una coordinación entre el Banco Central y el Ministerio de Finanzas, aunque sea un tabú que muchos quieren ocultar y del que no quieren hablar hasta después de la pandemia. En fin, me gustan mucho los DEG, y quiero seguir explorándolos, escribiendo sobre ellos e incorporándolos a las discusiones generales. Pero este otro asunto, este artículo sobre situar el clima en el centro de la gobernanza del FMI, surgió porque empecé a leer mucho sobre el lavado verde del FMI, especialmente en el RST, el Fondo para la Resiliencia y la Sostenibilidad. Han sacado una estrategia climática, etcétera, etcétera. Desgraciadamente, la mayor parte es una especie de lavado verde: básicamente dicen que van a trabajar en cuestiones climáticas, pero no lo incorporan realmente a la lógica principal del funcionamiento del sistema monetario como podrían. Por ejemplo, no mencionan el hecho del petrodólar, el privilegio exorbitante del emisor del dólar que puede adquirir necesidades energéticas extrasomáticas de los petroestados simplemente imprimiendo su propio dinero frente al resto del mundo, y cómo eso se relaciona con las emisiones históricas de CO2 en nombre de Estados Unidos. Así que hay muchas cuestiones que son sistémicas en términos de la relación entre el clima y el dinero que el FMI no está tocando ni siquiera con un bastón. Me pareció interesante decir: bueno, si nos tomamos en serio el cambio climático, si nos tomamos en serio un cambio estructural sistémico en relación con el clima, hablemos de cómo la gobernanza del FMI incide en ello. No sé si han visto esto, pero la agenda de Bridgetown, que básicamente está siendo promovida por la Primera Ministra Mia Mottley de Barbados. Ella dice que necesitamos más DEG para poder invertirlos en el clima, porque si nos limitamos a esperar a que los países ricos nos den dinero, eso nunca ocurrirá. Los países pobres no tienen dinero por sí mismos para hacerlo, porque se necesitan divisas fuertes. La segunda mejor alternativa son los DEG, que pueden crearse de la nada. Tenemos dinero para invertir en la lucha contra el cambio climático. Hagámoslo. Y por supuesto, luego los países ricos dicen: jajaja, no, quizá más tarde, pensémoslo… Y hacen como que no oyen. Todo eso podría pasar si el sistema de gobernanza del FMI cambiara un poco. Ahora mismo, en el FMI, sólo hay un país que tiene poder de veto sobre la decisión de crear más DEG, y ese país es Estados Unidos. Se puede tener poder de veto con el 15% de los votos, y Estados Unidos tiene el 17%. Así que hay que cambiar eso. Es preciso conceder más influencia a los países en desarrollo, y especialmente a los países vulnerables al cambio climático, porque son los que están más desesperados por hacer que las cosas cambien y sucedan. Así que en este artículo, con mis coautores, proponemos cambiar la fórmula de cómo se distribuye la cuota de voto del FMI. Cómo se asignan los votos dentro del FMI, entre los diferentes países. Todo lo que hacemos es muy sencillo. Hay una fórmula con cinco variables: PIB, reservas, apertura, cantidad de comercio, etcétera. Y tienen una variable extraña llamada variabilidad de los flujos de capital. Tengo estas cinco variables, y seguro que los países más grandes se llevan la mayor parte de los votos, pero simplemente añadimos una variable más, que son las emisiones históricas de CO2. Decimos que mantenemos las mismas variables y dividimos la variable de apertura por las emisiones históricas acumuladas de CO2 de ese país, de modo que podamos incluir su grado de responsabilidad ante el cambio climático como parte del formulario del FMI. Utilizamos métricas objetivas y no ambiguas publicadas por el Instituto de Potsdam para el Clima para medir la contribución del país al cambio climático a través de las emisiones acumuladas de CO2. Por supuesto, como era de esperar, la cuota de voto de Estados Unidos en el FMI cae del 17% a un 6%. La de China también desciende significativamente hasta el 6%. En general, todos los países ricos disminuyen significativamente, y los países en desarrollo, aumentan significativamente su cuota de voto, especialmente los pequeños Estados insulares en desarrollo. Así que los que corren el riesgo de ser destruidos, los que corren el riesgo de desaparecer por la subida del nivel del mar, son en realidad los que más aumentan, de alrededor del 2% a alrededor del 20% de la cuota de voto del FMI. Esto tendría un impacto significativo en todo el sistema monetario, en las prácticas de préstamo del FMI, en la lógica del poder dentro de la institución, y realmente tendría un impacto transformador en cómo el mundo, cómo el planeta, se enfrenta al cambio climático. El FMI es una poderosa institución con un billón de dólares de poder de préstamo. Eso sin contar la cantidad de dinero que puede crear a través de los DEG, y sin contar la influencia que tiene sobre los mercados financieros, y sin contar la influencia que tiene sobre los responsables políticos locales en términos de las ideas del dinero, las ideas de la formulación de políticas, las ideas de la gestión fiscal, la política monetaria, y así sucesivamente. Pienso que si arrancamos desde el núcleo, podemos tener efectos de largo alcance. Por supuesto, no soy ingenuo al pensar “oh, vaya, ¿cómo no se nos ha ocurrido esto y que EEUU acepte este cambio de la noche a la mañana?”. Eso no va a ocurrir. Pero al menos estamos planteando el debate para que podamos comprender la verdadera magnitud de esta realidad.

Billy Saas:  Por supuesto, incluiremos un enlace sobre el CEPR y sus otros trabajos. Andrés Arauz, ha sido un absoluto placer hablar contigo. Muchas gracias por estar con nosotros en Money On The Left.

Andrés Arauz:  Gracias a todos. Espero que tengamos otra oportunidad de compartir más historias sobre los CDBC y lo que está ocurriendo en ese ámbito. Yo también estoy muy involucrado en ese campo. Estoy asesorando a una empresa tecnológica llamada Nym sobre ese tema. También me gustaría hablar de la creación de sindicatos, de la inclusión financiera en el sector solidario y del papel que el dinero desempeña en él. Así que sí, en general, me encantaría compartir esto en otra ocasión con ustedes y ha sido un placer conversar con todos ustedes.

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Emily Reynolds of The Buffalo Institute for Contemporary Art (graphic art)

Political Economy of ‘The Rehearsal’ (New Transcript!)

Cohosts Charlotte Tavan (@moltopopulare) and Will Beaman (@agoingaccount) discuss the reflexive and imaginative political economy of Nathan Fielder’s HBO series, The Rehearsal. The show points towards an apophatic ethics of social provisioning, presenting an ambiguous portrait of care, production, and human agency. This portrait remains irreducibly and collective, in excess of the powers and intentions that constitute social belonging.

Transcript: Mike Lewis

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Transcript

Will Beaman  00:00

Hey everyone, this is Will Beaman from Superstructure podcast and Money On The Left Editorial Collective. And I have with me my Money On The Left collaborator Charlotte Tavan.

Charlotte Tavan  00:24

Hi! Hi Will, good morning.

Will Beaman  00:27

Good morning. Yeah, it is. That’s very nice of you. Because it is morning for me, and I think it’s almost midnight for you.

Charlotte Tavan  00:37

Yeah, but I had a nice nap. So I’m letting you have priority because I feel worse for you.

Will Beaman  00:43

There’s like a sliver of the day that we’re both awake. And yet somehow we do find a lot of time to talk.

Charlotte Tavan  00:52

Yeah, we’ve attempted this recording a lot of times.

Will Beaman  00:58

So for listeners who are wondering why this is going so well, that’s actually no accident because we have rehearsed this exact Zoom call 13 times.

Charlotte Tavan  01:14

In different rooms of the house…

Will Beaman  01:17

With actors playing both of us. And the reason for this joke is that we’re talking about The Rehearsal.

Charlotte Tavan  01:30

Yeah. Nathan Fielder’s The Rehearsal.

Will Beaman  01:33

It’s a fascinating show, and several people have reached out to us since the show started, being like, “I hope that you’re going to do something about this, because this is like the most Money On The Left show ever.”

Charlotte Tavan  01:49

Oh, I didn’t know that. That’s so cool. That makes sense.

Will Beaman  01:51

Yeah. I exaggerated a little bit. I’ve had it twice. Two people have reached out. Okay.

Charlotte Tavan  01:58

That’s awesome.

Will Beaman  01:59

Yeah. And that’s half of the people that I know really. So.

Charlotte Tavan  02:03

Yeah.

Will Beaman  02:05

Yeah. And everyone else on Twitter is just a part of my rehearsal, like an unwilling member.

Charlotte Tavan  02:13

Yeah.

Will Beaman  02:15

But anyway…

Charlotte Tavan  02:16

You’re just things to me. You’re just little things in the computer.

Will Beaman  02:21

Yeah, exactly.

Charlotte Tavan  02:23

Part of my master plan.

Will Beaman  02:24

You’re all extras in my show. So let’s back up and talk about what this show is. I guess. Yeah. Like to contextualize it. Start with maybe like, who is Nathan Fielder? And what is Nathan For You? Which is the show that kind of comes before this? Because I think that in a lot of ways, The Rehearsal is commenting on Nathan For You. And I’ve seen a bunch of Nathan For You. But I think that you’re the resident Nathan Fielder scholar here.

Charlotte Tavan  03:06

Thank you.

Will Beaman  03:08

And I say that because I hope that he hears this and reaches out to you.

Charlotte Tavan  03:15

That would shake me to my core.

Will Beaman  03:22

I wasn’t sure if when Nathan reached out to me…

Charlotte Tavan  03:29

Yeah, exactly. I do love Nathan Fielder, though.

Will Beaman  03:35

Yeah, so who is Nathan Fielder?

Charlotte Tavan  03:37

So I actually had practice explaining this to somebody at a pub last night. So I think it’s gonna go well. So he’s a comedian from Toronto, Canada, who…I think he started off doing a lot of — he’s one of those people who, if you look on his YouTube channel, he’s kind of just kept everything up there for the past 15 years. And you can see that he’s been actually quite prolific and hard working for a long time. But he has this drive to make content constantly. Although he did have a bit of a break. But yeah, so his first show that he kind of hit it big with was called Nathan For You, which was a comedy program that was essentially a reality TV show format in which he gives advice to failing businesses, in and around LA, on how to succeed. As this character is him but like an exaggerated version of his own certain characteristics. He has an awkwardness and, you know, people are always wondering, like, “is he acting?” but yeah, it’s like a version of him. And he gives these businesses ridiculous advice, playing this straight man the whole time, and they think it’s a real reality TV show. They go along with it, and they end up doing and saying stupid things. And it’s really, really, really funny. But yeah, that show went for about four seasons and got bigger and bigger, and the budget just kept on getting bigger and bigger. And he just kept on attempting more and more ridiculous stunts, including commenting on the media itself and experimenting in ways that he could manipulate the media for business. Stuff like that.

Will Beaman  05:36

Yeah, so he’s very, I guess we could say, reflexive and perhaps neurotic about the medium itself, that he is kind of acting within.  And I think that there’s a parallel that we could draw here between something that happened earlier in the 20th century, with reference to, I mean, really, with a lot of experimental genres of film. But I think that what this borrows from, particularly, in the kind of category of experimentation is a documentary form that was responding to the kind of mainstream documentary forms of its day, which is Cinéma vérité. French for “cinema truth.” Basically, the idea of Cinéma vérité was the fact that a documentary was being created and wasn’t hidden from the characters or from the audience. Everything was above board and self aware. And, in a way, all of the paradoxical questions of that self awareness were like very heavy themes in it. So these questions that Nathan will bring up about “what is a reality show?”, basically are, I think, going to interact with the reality show form in a similar way. And a lot of the signatures of the reality show form, in particular the confessionals, actually do come from this longer history of vérité documentaries where people will stare directly into the camera, and the camera is supposed to be us. And that kind of implicates or raises the question of, how do we relate to the characters? Right, and how do we relate to this show as a production?

Charlotte Tavan  05:51

Yeah. Yeah. And Nathan is super aware of this, about how the medium forms the themes and experience of the viewer and how we see everything. It’s not just the content he’s creating, but how he’s just super, super aware of that and reflexive about that. And he’s always talking about it…Nathan For You is supposed to be like a sillier show than The Rehearsal, which we’ll go on to discuss, but yeah he’s super in tune with that, I feel.

Will Beaman  08:35

Yeah, absolutely. And so like you said, Nathan For You gets more self-reflective and more meta commentary on its own forms. The problems and paradoxes and questions of what it means to be making a show like that, because I think a lot of people responded by saying that the show is exploitative or…

Charlotte Tavan  09:05

Mean.

Will Beaman  09:05

Yeah, that it’s mean.

Charlotte Tavan  09:08

Which it kind of is. I love it but, yeah.

Will Beaman  09:09

Yeah, I mean, there is some of that for sure. And I think that one of his responses in Nathan For You that then also gets picked up in The Rehearsal and kind of different ways: in Nathan For You, he plays a very cringy version of himself where I think he’s at least implicating himself in whatever kind of embarrassment there is. But it’s an open question of does that cancel out the kind of dickish-ness of the form, right? And I think that, yeah, that kind of increasing self-reflexiveness, it sort of hits its peak at this episode, the last episode of Nathan For You: Finding Frances, which you’ve seen a bunch of times. So, maybe we can…how does that go and how does it end? Because I think that that actually provides some continuity, then, for where The Rehearsal picks up.

Charlotte Tavan  10:03

So, “Finding Frances” was like a feature length special that was the final episode of Nathan For You in which one of the actors from–and this is really interesting, because it’s not a new guy–he takes one of the actors that he took the piss out of, in an earlier episode, who played like a Bill Gates impersonator that was meant to drum up popularity for a business. And he was really, really funny. So basically, Nathan got him back on the show, and apparently the premise is that he and Bill were recording, like DVD commentary, and then Bill Heath, the subject of “Finding Frances” has started talking about his high school sweetheart, who he has always been in love with and has never, ever forgotten about and swore that she’d loved him till she like till her grave, I think was the line. So Nathan is like, you know, maybe I should like, give a little back. How about like, I take this, like, nice old man Bill and I use all of the money and resources that I have at my disposal, which he specifically says, to help him find his high school sweetheart. Like, what better use of my money and time. And so they kind of go on this journey together, “Finding Frances”, his high school sweetheart, and in typical Nathan Fielder fashion, he complicates everything. And there’s just layers upon layers of tricks and lies. And he has to pretend that they’re filming a sequel to the film “Mud” in a high school to get access to their archives. Yeah, he makes Bill Heath pretend he’s from the town of Dumas, and puts on a fake high school reunion and stuff like that. As the show goes on, Nathan starts to realize that he’s being lied to, do you know what I mean?

Will Beaman  12:48

Mhm.

Charlotte Tavan  12:49

It’s almost like he, being continually accused of manipulation and lying and exploitation, but then it starts to become apparent that Bill Heath is not being completely honest with him. And Nathan doesn’t have full control over where this project is going. And there are points where he’s just like, “I literally don’t know what I’m doing here. We’ve just been filming random things for a week. Like zoos and trees and stuff.”

Will Beaman  13:21

Yeah, and this is so interesting because I feel like one of these complications here is that Bill has his own life and his own agenda. And yet at the same time, he is and everybody is being enlisted into this TV show. Right? For Nathan. And there’s a kind of an interesting, I guess what you could call, there’s a kind of meta continuity here, across all of these kinds of different worlds, that people have that sort of deviate and then come back to each other, right? Where even thinking about who Bill is and what he discovers that his wife, he finds out, has been married. Or not his wife, sorry, his…

Charlotte Tavan  14:26

His fantasy wife. He did want to propose to her, they do rehearse that.

Will Beaman  14:31

Yeah. And so this fantasy is part of Bill’s interior world, but it can actually be blown up to huge significance in this medium. But, yeah, he finds that his fantasy wife, high school sweetheart, has been married, has had a bunch of kids, has kind of been out living her own life, and then the whole time she’s also been a character in his story. Right? And he’s a character in Nathan’s story. But I think, as we’re getting at with Nathan not having full control over this, it’s not just like a Russian nesting doll with Nathan’s story at the peak of it.

Charlotte Tavan  15:23

Yeah.

Will Beaman  15:24

Where, ultimately, there’s one master director. I think that part of how this is working in conjunction with that vérité style of implicating yourself in the world, is that the director of Nathan For You, and these kinds of problems and paradoxes of control and controlling people and exploiting people, aren’t inherently one directional. Right? They go across all of these different directions.

Charlotte Tavan  16:02

And like Bill Heath is an actor. I think that’s significant as well.

Will Beaman  16:06

Yeah, totally. So with this continuity across–and The Rehearsal will call these, basically, rehearsals. Right? But we could say in the case of Nathan For You, these continuities and discontinuities across episodes as to who is a character and who is not. You have these characters who come back. There’s a sense with Nathan situating himself, and all of these characters in our world, where he’s a documentary or a TV show maker, right. It’s sort of like, what is continuing if it’s not an episode, per se, but it is nevertheless something that is very social, right? And he continues to be caught up in these people’s lives, even when he’s not working.

Charlotte Tavan  17:12

Yeah, like Macy is a good example of that in that show, as well, in “Finding Frances.” Initially, he hires an escort to help Bill rehearse for meeting his fantasy high school sweetheart, but Nathan just ends up like, that becomes a relationship and dynamic in and of itself. It also has that like, she’s working, she’s an escort, he’s paying in cash, but at the same time, she’s part of the story on the show, but then she has her own other dynamics going on. And then like, why is this even part of the show? Like, yeah, it’s interesting.

Will Beaman  17:58

It’s really interesting. And I think that that is, one of the most, that part especially feels a lot like The Rehearsal. And so, maybe then jumping from Nathan For You to The Rehearsal. I think like Nathan For You, The Rehearsal, he sort of is starting from the same character, right? Where he is somebody who has a budget and a TV show to help people with real life problems. But instead of struggling businesses, the scope is just kind of life in general. Which is quite interesting. So I mean, how would you contrast Nathan For You with The Rehearsal? Or maybe how does The Rehearsal go further?

Charlotte Tavan  18:58

Well, I mean, the character Nathan is changed in The Rehearsal. I feel like that starts happening in “Finding Frances”: he kind of presents himself as like, Okay, now this is me being earnest. Like he’s still the same Nathan, but he’s being earnest and being more vulnerable, I guess.

Will Beaman  19:21

Yeah. There’s such an earnestness about it. And part of it, I think, is that there’s a kind of behind the scenes deconstruction of how the show is even being made in the first place where it almost at times feels like a documentary about its own making. A little bit where he’s like, you see him with all these computer monitors watching things that have been recorded or watching things that are being acted out at the same time. Part of the nature of this is that his character is a little bit more voyeuristic than, at least at first, there’s a separation between him and his clients, I guess where his clients are all preparing for difficult conversations or difficult life events. And the premise, basically, is that he, with his unlimited HBO budget, will create down to the detail, like absolute models and replicas of that situation and stage endless, what he calls rehearsals for that moment, with an actor playing whoever the characters need to talk to. And all along the way, he sort of is like the voice in the characters’ ears a little bit during the rehearsals. He’s not supposed to be part of The Rehearsal in the way that a director is not supposed to be part of a film, necessarily, but then of course, what we’re watching, he is a part of.

Charlotte Tavan  21:16

Yeah, he’s like a part of it. But again, he’s constantly reflexive about how he is part of it.

Will Beaman  21:24

Right

Charlotte Tavan  21:24

And constantly fucking up and then like saying, “Oh, I fucked up.” Which is something he kind of started doing in Nathan For You, as well. The example I always think about is the dumb Starbucks episode where he tries to help a failing coffee shop by saying, “let’s just imitate Starbucks.” And then he just ends up running a fake Starbucks for no reason. And then at the end, he’s kind of like, “Oh, I just realized that I got a bit caught up in myself here.” And like, “I’m sorry, bye.”

Will Beaman  22:05

Yeah, and that’s spoiler alert, I guess, for anybody who’s listening. Sorry, this came a little bit late into the episode, but, there will be spoilers. Because that sort of is the arc of The Rehearsal, in a way, where all of these rehearsals kind of continue and they compound on each other. And at one point, I think it’s episode three, they start to overlap with each other where he has multiple rehearsals going on at once. One of them is for this woman, Angela, whose original purpose was she wanted to see what it’s like to be a mother, and so they planned for over the course of several months to simulate a fake house and do child rearing. At first with an actor, but then the actor leaves. And then it ends. So Nathan steps in to play the father role, as well as the director role.

Charlotte Tavan  23:25

Although, was that guy an actor?

Will Beaman  23:30

Are any of them actors?

Charlotte Tavan  23:32

Yeah we don’t know. But he was enlisted via a dating app.

Will Beaman  23:37

No, you’re right. Yeah, yeah, yeah. No, totally. These are linguistic ambiguities, I say, covering my ass.

Charlotte Tavan  23:48

Yeah. They’re all actors.

Will Beaman  23:52

Because yeah, in the context of the show, they’re all actors. But then also, part of what’s going on here is that there’s some way where this kind of social anxiety and nervousness about your performance doesn’t have a starting and stopping point that’s clear, right? Like where Nathan will sometimes be director or sometimes an actor in the, like, relative to the show and the scene that he’s performing, he’ll insert himself in the scene sometimes as an actor, but regardless, his acting never stops. And it becomes very interesting when there’s multiple rehearsals, and he’s acting in one of them, because that sort of begins to resemble a work life balance, where he has his day job, which is this rehearsal that he’s not acting in, and then his home life. What’s the difference between being at home and being at work? While at home, it’s your own rehearsal versus when you’re at work it’s someone else’s rehearsal. Right? It’s this idea, and I think we’ll get into this: it sort of is playing with the boundaries between work and leisure in a way that I think is familiarizing these as being as hard and set as we think of them being. Anyway, we’ll get into that, because I think that acting is like a very interesting figure for this. But first, I guess, I want to take a step back and just talk about what’s been written about The Rehearsal so far. Because in preparing for this episode, obviously, one of the places to start besides watching the show is sampling all of the articles that have been written about it. And there have been a whole bunch, and I think we only really want to talk about a few, but I think that these are emblematic of the range that we saw. Yeah. So do you want to start with the first one?

Charlotte Tavan  26:21

Okay, so this is kind of on the super, super critical, shitty end of the…

Will Beaman  26:32

Yeah, this guy hates the show.

Charlotte Tavan  26:34

This guy really hates the show, and we’re not entirely sure that he watched the whole show, either.

Will Beaman  26:40

It definitely seems at points like, the first few episodes were viewed, and then there’s a kind of a hand wavy thing at the end that’s like, and for the rest of the show. And it’s after Episode Two, and it’s one sentence at the end.

Charlotte Tavan  26:57

Totally. So the title is, Richard Brody: “The Cruel and Arrogant Gaze of Nathan Fielder’s The Rehearsal,” which I think you know, that gives you an idea of like…

Will Beaman  27:12

The entire thesis…

Charlotte Tavan  27:16

And that’s like, basically what it says. “As a filmmaker, Fielder displays interest, not in any physical process unfolding over time…

Will Beaman  27:25

Which is exactly what TV is supposed to be about: capturing a physical process unfolding in time. That’s actually like a funny…that sounds like a very experimental documentary form.

Charlotte Tavan  27:41

Yeah, I know. Just real time, like a CCTV camera.

Will Beaman  27:47

Like city symphonies or something. Yeah.

Charlotte Tavan  27:50

But yeah…

Will Beaman  27:51

You wrote in parentheses “what does this mean?”

Charlotte Tavan  27:56

That was my main comment. Yeah, “he revels in his own thoughts as he tailors the conditions of his subjects’ lives to fit his storytelling.” Which again, did you watch the show? Like, that’s just the opposite of what is happening in the show, I feel. Can I read another?

Will Beaman  28:17

Yeah, please, let’s jump around and get a real sampling.

Charlotte Tavan  28:25

This is my favorite bit. So this guy seems to have like, a.) an idea that this TV show is supposed to be a documentary. Like an actual very serious inquiry. Which it is, but like…

Will Beaman  28:45

It definitely can be read as a documentary, but I think he means it in like, he’s looking at like…

Charlotte Tavan  28:52

David Attenborough, right?

Will Beaman  28:52

Like, the most expository mode of documentary.

Charlotte Tavan  28:56

Yeah.

Will Beaman  28:56

And then being like, “this show is messing up at being a documentary.”

Charlotte Tavan  29:03

Yeah, exactly. My really specific and strange idea of what a documentary should be and how I want to be made to think about things. This is an example of that, “Angela presents herself as a devout Christian. She displays an obsession with the dangers of satanic cults and gives voice to some remarkable conspiracy theories regarding the power of the devil in daily life. Yet his gimlet-eyed dubiousness about these ideas remains retentive and incurious, without any probing of causes and sources, and without the scathing political satire of Borat and subsequent movie films.”

Will Beaman  29:49

I’ll admit this is no Borat.

Charlotte Tavan  29:55

It’s definitely no Borat 2.

Will Beaman  30:03

Jesus Christ. Yeah, I mean, I don’t know, he’s seething. Like he hates it so much.

Charlotte Tavan  30:10

Really angry.

Will Beaman  30:11

Gimlet-eyed dubiousness. Well, I just looked up what gimlet means, and it’s an eye with a piercing stare. So that sounded less like, I don’t know…

Charlotte Tavan  30:26

Gimlet sounds like a goblin. Like a little Goblin.

Will Beaman  30:31

His beady little eyes.

Charlotte Tavan  30:36

But it’s still, yeah, it’s not very nice anyway.

Will Beaman  30:41

Yeah. And, you know, we should say that, I think, at a very superficial level, he’s drawing on a theme in film studies which is the potential violence and sadism of the camera. And not just of the camera, but of the voice of the film. And this is a problem that cinéma vérité documentaries are very concerned with. You can contrast it at the extreme end with like a Ken Burns documentary where you have this kind of voice of God narration that it’s very clear what the preferred reading of the film is. And really, I think that there’s a way to talk about cinema history in general that is sort of wrestling with, you know, not to be precious or exaggerate about it, but like, the trauma of being hit over the head again, and again, with like a very codified way of making films where it’s supposed to be very, very clear and unambiguous what you’re supposed to think. So in the documentary form, that’s, you know, Ken Burns “In the Civil War…” But also, you can think back to classical Hollywood, right? Where what kind of forms is the kind of best practices in Hollywood that are then enforced by codes and regulations, and the kind of monopolistic structure of the industry that kind of gets broken in the 60s when people have handheld cameras, and they can kind of go off on their own and do, well, cinéma vérité documentaries, among other things. But all of these conventions were about, they would say, hand holding and making it legible and accessible to the audience, right? Audiences aren’t supposed to be confused by what they’re watching. It’s supposed to be very clear who’s a good guy, who’s a bad guy. The voice of the film is very unambiguous.

Charlotte Tavan  33:11

By leaving it ambiguous, you open it up to the devil or something.

Will Beaman  33:16

Well, right. And it’s so funny that you say that, because this really becomes kind of codified and kind of stuck this way during the Prohibition era. So there really is a moralistic and like Christian language around. Yeah, like, especially thinking of these city centers where, what are these lower and middle class people watching? There’s an anxiety that they’re going to be corrupted or something like that.

Charlotte Tavan  33:51

We were talking about criticisms of Euphoria before as being like that.

Will Beaman  34:00

Yeah.

Charlotte Tavan  34:03

“Gimlet-eyed dubiousness.”

Will Beaman  34:08

That gimlet-eyed bitch! But, yeah, right. There was a New Yorker review. It’s always The New Yorker. This is also The New Yorker that we’re reading from. I don’t think it was…this one is Richard Brody. But I think the last one was Naomi Fry who also has a Nathan For You review that we’re not going to read because this one is just kind of more cartoonish-ly mean. But, yeah. I mean, she takes issue with Euphoria being like, “I can’t tell what the motivations of these characters are, so they messed up. So I hate that.” There is kind of that impulse here a little bit like, “I don’t know, he’s just letting things unfold rather than telling you.”

Charlotte Tavan  35:11

Yeah, but then he also complains that he’s telling you what to think via the voiceover

Will Beaman  35:16

Yeah that in doing so, it is the ultimate in exploitation.

Charlotte Tavan  35:23

Yeah. Yeah. Just like taking issue with him not like trying to explore Angela’s Christian fundamentalist beliefs in a serious way. And that is just so funny.

Will Beaman  35:39

Yeah, I mean, it really does become such a theme. And actually, like, I think that she has one of the best lines in the series, which you see this at the beginning of one of the days in the house, where she’s praying, and she says something like, “God, you are guiding this rehearsal. It’s not Nathan. It’s not any of us, it’s you.”

Charlotte Tavan  36:13

“And let Nathan know that no matter what happens, it’s you in the end that’s guiding this,” and like, yeah.

Will Beaman  36:19

Yeah. And, obviously, I’m sure she means this in the kind of Christian fundamentalist way. But I do think that there’s kind of a, I think, from the point of view of Nathan, including it in the show, there is like a mystical borderline theological argument that is being made here about no rehearsal, or no action or no camera can fully dictate everything in the world.

Charlotte Tavan  36:59

Yeah.

Will Beaman  37:00

Or you could think of this with, I mean, this language of Nathan’s cruel and arrogant gaze. The spectatorial gaze is like superficially drawing on this idea of the cinematic male gaze.

Charlotte Tavan  37:18

As opposed to Borat.

Will Beaman  37:22

Yeah, Borat, which is the people’s gaze. Oh, my God, actually Borat as like shitty faux populism in contrast to this is really funny to think about. That he would say that Borat is, it’s being directly subversive in some way where this is like, “what is Nathan doing?”  “It’s not even clear who he hates.” That’s the main question. Yeah so this history of thinking about and criticizing the dominant preferred reading in a film, and how different elements of film form conspire to foist that on you, the viewer, is like a long running theme in film theory. In a past episode, even, we’ve talked about an article about the cinematic male gaze by Laura Mulvey, and this gets picked up by bell hooks. Sort of the argument, also, is that this is reinforcing a kind of spectatorial gaze that’s biased in the favor of the cinematic gaze, which is a patriarchal gaze, right? So the spectatorial position is male coded. And in a certain way, it’s meant to shore up an anxious masculinity, that in order to feel the full degrees of its freedom and independence and ability to do whatever it wants, needs to make a show of manipulating and punishing and objectifying whatever’s on screen. And certainly, I would say that that’s being taken up as an anxiety in the show. But I do think that this article is drawing on it very superficially. It seemed very much in danger of saying the essence of a camera and the essence of a gaze, is this, like, phallic penetration or something. And I don’t think that that’s, you know, I mean, both Mulvey and especially bell hooks, also write about counter gazes, and other viewing positions. And these can be articulated as being like a counter phallic gaze, or something, and there definitely is…I feel like that’s a very RadFem reading of it. But there also is just a kind of a re-situating the gaze in a world of gazes, right? And these don’t have to, you know, maybe there’s a different relationship to viewing than mastery in the first place.

Charlotte Tavan  37:47

Yeah, yeah. It’s one of those shows where once you finish the whole thing, and then you realize that you didn’t even have mastery over how you were even spectating it in the first place, I feel. I rewatched it, and there were moments in it that I feel like have to be intentional, or regardless, there were moments in it where I was, like, having seen the last episode, now rewatching this I have so many different feelings about it. I mean, you kind of get that with a lot of that kind of media, but like, yeah. Spoiler alert, the final episode about this kid who didn’t have a dad or a father figure in his life ends up like forming a real bond with him and doesn’t really seem to actually understand the concept of acting or realness, or fakeness. And gets upset and feels abandoned. And Nathan kind of has to reject this child, in a way, or in the way that the child wants, and they’re just like…

Will Beaman  41:33

Right, yeah, that’s really well put.

Charlotte Tavan  41:35

When you really watch it after having seen what it’s like, you watch scenes and you see that child before he becomes more of a serious subject in the final episode. Because this child is one of the child actors that is hired to play Angela’s son.

Will Beaman  41:55

Yeah, there’s like a rotating cast of 12 child actors throughout this whole arc.

Charlotte Tavan  42:00

There are like hundreds. Well, there’s like dozens. There’s babies to teenagers to adults.

Will Beaman  42:13

There’s a funny parallel there with the dumb Starbucks episode where the premise of the dumb Starbucks episode of Nathan For You that you know, “we couldn’t copy Starbucks, unless this was categorized as a parody. So technically, this is a museum.” And I feel like there’s a similar, playful, like, Huh, that’s a legal problem that’s getting in the way of life. And in this case, it’s literally child labor laws. Allowing a child actor to perform in four hour increments, which means that for every single day, he has to have like six kid actors.

Charlotte Tavan  43:01

Yeah, he’s got like, a fake baby, like a robot baby that goes from a certain time that babies can’t work past that he controls the robot baby. And then he hires a guy to sit up all night and press a button to make the baby cry that would mirror the crying of a real baby, I think, that they’re also observing. It’s crazy. It’s so good. But yeah.

Will Beaman  43:29

Yeah, and this is a different temporality and like a different rhythm, but it almost does kind of remind me of, I mean, Nathan, literally is an employer, or at least he’s questioning whether he’s an employer, right? He’s like, what does it mean to be an employer in the same way? Like, what does it mean to be a director? What does it mean to be an actor? But employers, if you zoom out, maybe not, maybe they don’t switch actors or, you know, switch employees, like three times a day. But, you know, obviously, people move around from job to job. And institutions nevertheless continue to continue to last, right? So, if you were to look at any other business, which I think is a central theme here, is the production of a TV show is kind of analogized to all forms of production, and kind of all societal forms. And so, in the context of something that’s not a TV show, we kind of expect that all institutions are run in an ongoing way by a whole host of people who come and go. This is another example of, like, it’s sped up and that makes it funny. But there are a lot of these kinds of uncanny semblances that I think are really interesting. Yeah. It’s like the fake bar that he builds in the first episode, he actually just opens and runs as a bar in the end.  Yeah.

Charlotte Tavan  44:24

In a building and then creates a little tunnel and puts signage out, and the public just walk in and start drinking in this bar that is just running now like.

Will Beaman  45:27

Yeah, so I think we wanted to take kind of a Goldilocks approach here where, you know, this article  was too mean. And we’ll get to the one that was just right. Not really just right. But like, to the edge of, then, where I think we want to step in.

Charlotte Tavan  45:45

Pretty good.

Will Beaman  45:46

Step in pretty good, yeah. To use another HBO phrase. I’m sorry to the listeners for us. Yeah. So this next article, this was in Vulture, and it’s titled, “Nathan Fielder’s Dazzling, Horrifying Trial Run of Reality” is by Kathryn VanArendonk. So this review, unlike the last one, at least sees that something self reflective is going on here that’s not just a kind of enlisting other people in his own kind of cruel gaze, or whatever. But still, this is like a pretty negative review where she writes “By episode four, when Fielder turns the whole thing into an unending spiral of self consciousness,  The Rehearsal starts to look like a stunning display of narcissism more than anything else. It is solipsism disguised as its opposite. How could that not be repellent?” And then later, she says, “but there is at least one level on which The Rehearsal is unquestionably commenting on something beyond the strange recesses of Fielder’s mind. Everything Fielder does is an unadorned version of how all reality TV works. We’re uncomfortable because we can see the mechanics of it, but nothing is actually different. People consent to play along with the production, often built as a social experiment for their possible game. Participants of Love is Blind, don’t know how they’ll be edited. Real Housewives give their consent, but how much power do they have to say no once their lives are warped by the franchise? People on The Circle sign up knowing they’ll be manipulated. Does that make the manipulation okay?” And I think that this is already miles ahead of the last article in a lot of ways. Because I do think that this resemblance is really important. And she’s definitely picking up on something in the show.

Charlotte Tavan  48:11

And yeah, and that was even the same in Nathan For You, he’s trying to expose the real mechanics behind television all the time. That’s part of what’s so fun about it to watch, as well.

Will Beaman  48:27

Yeah, and I think that your description of the “Finding Frances” episode, I think, gets this across really well that these problems of power and control over how this will go and consent and like all of these things, they don’t just start and stop in a very clean way with the director. Right? Because in that show, Nathan realizes that he’s being lied to.

Charlotte Tavan  49:06

Totally, Yeah.

Will Beaman  49:08

And he feels manipulated in some way. But I don’t think that the point is to just flatten and level it and say that, “Well, we’re all manipulating each other. So everyone’s a sinner,” you know, our infinite Liz Brunig rejoinder.

Charlotte Tavan  49:27

No, and Nathan never says that either. He doesn’t really pose himself as a victim either in these sins. Not that I really like that language. But yeah, he’s just saying this is happening. And he’s always making a point of showing people calling him a liar. And you know how he responds to that.

Will Beaman  49:53

Yeah, he’s fixated on how inescapable that danger feels.

Charlotte Tavan  49:58

Yeah.

Will Beaman  49:58

I think. And that is sort of the structure of the show, a little bit, is trying out every possible variation or way that something could go and then realizing that even then, you really don’t know.

Charlotte Tavan  50:17

I find that sentence like…”Real Housewives give their consent, but how much power do they have to say no once their lives are warped by the franchise?” It’s like, I see what they’re saying, and some reality TV shows are quite harmful to people. But what does that mean? Like no one has the power to say no when their lives are warped by anything in that way.

Will Beaman  50:44

Right. Exactly. Exactly. And that is sort of, I think, why this goes beyond just reality TV. And I think that he’s showing us not only how all reality TV works, but also I think how all institutions and life work.

Charlotte Tavan  51:09

Yeah. He’s literally going like, Oh my God, did I permanently emotionally damage a child?

Will Beaman  51:20

Yeah. Which then is him basically being a parent? Right?

Charlotte Tavan  51:26

Yeah, exactly.

Will Beaman  51:27

Concerned about whether or not, you know, did I just mess up?

Charlotte Tavan  51:33

I think that’s what the Real Housewives thing reminds me of. That’s like, as a parent, I’d find sentences like that chillin like shit happens, basically.

Will Beaman  51:48

Yeah, and I mean, God knows, it’s easy for parents to wring their hands about, you know, did I make the right choice? And life choices, if you’re a parent, become charged with people depending on you directly. But I think that there’s a way where that is being sort of extended, in all these kinds of heterogeneous ways to not just being a parent, but being a friend. Being an employee. Being like, both in and out of what we normally think of as this kind of hard distinction between work and leisure, where you are either on your own time, so it’s self care, right, and everything originates from you. Or, you’re alienated from that, and instead, you exist solely for your boss, instead. And I don’t think that in this show…I think that that’s being complicated, rather than refuted fully, right. Because, in a certain way, there’s nothing but anxiety about these power disparities, so it’s sort of the opposite of saying that they don’t matter. It’s like, actually, it’s the only thing that matters, it’s all we can think about. But it goes so much in that direction, that this awareness of power disparities and responsibility for how you will warp other people’s lives or impact other people, continues well beyond any one rehearsal, right? Even when you’re alone, and you’re reflecting, there’s a way where that reflection is a social reflection, right? You’re reflecting on how you are in your life with other people, right? I don’t think that we have a form of going through life that’s not minimally self aware, and self reflexive.

Charlotte Tavan  54:17

Which is acting, as well. I feel like.

Will Beaman  54:22

Yeah, totally.

Charlotte Tavan  54:25

Socially aware of what you’re doing, and in relation to the context and scenario, like that’s everything that we do, really.

Will Beaman  54:36

Yeah, totally. Yeah. And so like, is acting just anxiety? Or at least it’s an anxious action. Right? We can…like it’s interesting even though these words are so kind of similar, but one is more open ended and the other is more narrow.

Charlotte Tavan  54:57

Yeah, it’s just like having concern.

Will Beaman  54:59

Yeah, yeah, having concern, and there’s a sense of like, obviously, we resent having concerns that were not given to us in a fair way. You know, I used to have a job that I hated. I resented being concerned about all the stupid shit that I had to be concerned about throughout the day. But that’s different, I think, from resenting the fact of having to be concerned with things in the first place. But I do think that, certainly within like, a lot of leftist political traditions, you know, we’re Money On The Left, so we think about these kinds of things there. There certainly is a tradition of seeing that dependence and that concern as if it comes before individual consent in some way, then that means it’s reducible to violence. And that means that it’s bad, right? Or at least the benchmark, the ideal situation, is no one has to be concerned about anyone else unless they decide, oh, it would be fun to care about others. Whereas, I think that what you’re articulating about acting here, as this kind of ongoing reflection of yourself in the world, precedes caring about any particular thing, right? It precedes any one rehearsal.

Charlotte Tavan  56:44

I just like the quote in this article, which is like, “The Rehearsal starts to look like a stunning display of narcissism more than anything else. It is solipsism disguised as its opposite.” Like, I just think that that’s so the wrong way around.

Will Beaman  57:02

Yeah.

Charlotte Tavan  57:03

Like, it’s completely the flip of that. It’s like a reflection disguised as narcissistic solipsism. Do you know what I mean? For comedic effect, occasionally, because it is also, you know, designed to make you laugh and be self-deprecating.

Will Beaman  57:23

Yeah, it’s not just that this is the inside of Nathan’s mind. It also, by analogy, is the inside of a lot of people’s minds, or at least these are kind of the problems.

Charlotte Tavan  57:35

Alright, so, the next article, and this is the not-just-right, but like pretty good.

Will Beaman  57:43

Yeah. Right. Which is as good as we can get from rehearsing.

Charlotte Tavan  57:47

Yeah, yeah, exactly. And this is by Alissa Wilkinson, and it’s called “What Nathan Fielder’s The Rehearsal Says About Us.” And so this article, kind of drawing on the work of Jewish philosopher called Martin Buber who worked with these concepts called “I-it” and “I-Thou”. Basically getting to the heart of subjectivities, how we experience the world versus like our relationship with things in the world. What can the media do with that? She’s kind of making the argument. Do you want to explain the concepts of I-it and I-Thou?

Will Beaman  58:32

Yeah, well, we can read the paragraph. You don’t have to reinvent the wheel.

Charlotte Tavan  58:41

Yeah, thank you.

Will Beaman  58:43

Okay, now we’re recording. Yeah, so Alissa Wilkinson writes, “Buber — a not-so-incidentally Jewish philosopher” just as Nathan is also a Jewish philosopher, on our reading, too. “is probably best known for his work I and Thou, which has exerted tremendous influence on 20th-century thinkers and which marries existentialism and theology. I have to oversimplify to a fault here, but in essence, Buber says human experience is embodied in two pairs of words: “I-it” and “I-Thou.” These distinguish between the way we experience the world and the way we enter into relationships in it. (In his framework, this all eventually points toward God.)” Which is, I think, also hinted at in this show.

Charlotte Tavan  59:36

Yeah, this is something I’m only thinking about now that we’re recording this, but yeah, the show is very theological.

Will Beaman  59:44

Yeah. And it’s theological in a way that’s very, like multiple religions. I think that he’s, and not in a way that is like flattening, that is like so materializing theology that the questions don’t even matter and it’s all just like a completely horizontal plane of like cultures or something. Because I think that he’s also teasing out how these different, you could say, religious voices are kind of, you know, that are in dialogue and like a fraught dialogue are kind of approaching similar questions. But yeah, so she writes, “A layer of human existence takes place in what he terms “I-it,” which is how I experience everything that I can observe and describe and put into a category in the world: the aforementioned tree, the aforementioned barista, and quite possibly people in my life as well. They are objects that I experience as a means to my own end. I look at it. I project onto it my feelings, my assumptions, the things I am sure I know about them. I am, literally, objectifying them.” In some ways, I think, this is just the same argument as that first article, right? The I-it thing, which is “The Cruel and Arrogant Gaze of Nathan Fielder’s The Rehearsal.” Where just the act of putting a camera on something is this kind of looking, and…

Charlotte Tavan  1:01:31

Pure exploitation and…

Will Beaman  1:01:34

Yeah, objectification. But she seems to kind of distinguish between that and another way of relating which, according to this philosopher is I-thou, and she seems to associate that with in person relationships that have the complexity of intimacy, and all of these things that a camera can’t possibly capture. So she writes, “Then there is the “I-Thou” layer, which is when I have a relationship with not an object, but another subject — an entity that isn’t there to fulfill my objectives and goals, but into whom I am asked to invest myself. This requires intimacy, mutuality, openness, and, yes, empathy. To put it in Jamison’s terms, it is where the border between you and I may be crossed, where we can no longer project onto one another because our relationship is dynamic, allowing for each of us to defy categorization and be who we are. You are whatever category you identify with, but that is not all you are.” And, I mean, on on the one hand, this sounds a lot better, and I think what we want to say, but it strikes me as a bit odd that, as we’ll see, she kind of goes through and basically identifies the show as just showing a bunch of I-it relationships that fail to meet that kind of higher level of I-thou. And I guess it’s odd to me, because it’s not like when you’re hanging out with somebody in person, you have that kind of full mastery or identification with them as a subject, either, right?

Charlotte Tavan  1:03:29

No, or even the people that you know the best, people project onto you and yeah.

Will Beaman  1:03:36

So I think what we want to get at here, and I think our reading of the show, is that that kind of projection, on the one hand, is unavoidable. But on the other hand, it doesn’t necessarily lead to this kind of stupid objectification. And you would think that she was getting here because at the end, she says, “you are whatever category you identify with, but that is not all you are.” Right? That there can be multiple layers of projected meanings and categories and things like that. But I think that she’s thinking in terms of some kind of absolute immediate subjectivity. That is not abstract because it’s a little bit like it’s an agreement between two parties. You know, that’s like, doesn’t involve a camera or like a third party infrastructure or anything like that. Doesn’t involve a pre existing system of categories and languages and stuff. It’s just two people who see and understand each other kind of perfectly. And it’s just odd to me, because I don’t think that that really…

Charlotte Tavan  1:04:59

Oh, yeah. I’ve got so many relationships like that. I’m next level, we don’t even talk anymore. We just like to look into each other’s eyes.

Will Beaman  1:05:13

Yeah, well to avoid that, we close our eyes and just touch our brains. It’s a little bit like AirDrop, except it’s purely from the base biological.

Charlotte Tavan  1:05:32

Yeah.

Will Beaman  1:05:33

Yeah. So to substantiate that characterization of the rest of the article, she writes about Nathan’s attempts to try to understand people’s emotions and what makes them tick, she writes, “But all he manages to do is look at them as fitting into categories that he can relate to through another category. Director and actor. Co-parent and co-parent. Teacher and student. Daddy and Adam. Mommy and Remy.” And it’s especially odd to me that mommy and Remy is the last one because I know a lot of parent-child relationships in person that are Mommy and Remy.

Charlotte Tavan  1:06:18

Yeah, the thing is everyone’s like, “Oh, he tries to do this, but he fails.” But I think the point is that to achieve I-thou and stuff, all it is, is trying. Do you know what I mean?

Will Beaman  1:06:33

Yes, exactly.

Charlotte Tavan  1:06:34

All it is, is like what we’ve discussed about what is the definition of acting: it’s just being conscious about and having concern for another person’s subjectivities. Do you know what I mean? It’s not something you achieve. It’s not something that you can achieve. It’s just something that you try to achieve because that is how we make human social connections?

Will Beaman  1:07:01

Yeah, it’s something you take responsibility for trying to do, right, which is what I version is not doing, right. That’s not taking responsibility for trying, that’s just kind of the illusion of complete mastery. Right, which then needs to be violently shored up through the male gaze and blah, blah, blah. And so getting to the end of the article, then she writes: “I hate to say the thesis of The Rehearsal is to escape screens and touch grass a little more, but I don’t think it’s not. Nathan looks at us in the poster, but he isn’t looking at us; he’s looking at a camera. And we’re looking at a picture on a screen. He can’t see us; we can’t see him. It’s when the I-it transmutes to I-Thou that real emotions start to flow. “Could it be,” he says aloud in the finale, “that the path to forgiveness lies in someone else’s eyes?” And it just is odd. Again, it’s odd, because I feel like she clearly is getting an I-Thou identification out of the show. This is absolutely like she’s speaking to what his kind of complicated intentions might be, but then also beyond what the intentions are, whether or not they’re failing or succeeding, right, which is exactly what I-It doesn’t do. Right. It’s that, like you said, trying, right, that kind of contemplation.

Charlotte Tavan  1:08:44

And that’s all he does in the show. That’s like, the entire point of the show. It’s like, he’s constantly changing his mind, changing categorizations, learning new things about himself that he impacts, you know, learning new things by himself that he realizes are changing. Like the way he does his projects.

Will Beaman  1:09:06

Yeah, and she’s right how she focuses on it being very negative, right? Like, he is showing, in a way, a process of failure in the sense of ruling out, you know, “well, that didn’t work. I’m gonna try this. Oh, but then I thought of this other thing that created a problem. So we had to hire another actor.” And this kind of increasingly complicated provisioning structure that has to keep being elaborated. But I think one of our central theses about the show is that maybe we can move now from the reviews to really get into, is that that negative approach isn’t just like a nihilistic like everything is meaningless kind of thing. Because, I mean, just, I feel like this can even, in some sense, just be empirical. Right? Like a lot of people derived a lot of meaning from this. Right? Like, it’s not really like a process of failure. Or if it is, it’s that failure fails. Right?

Charlotte Tavan  1:10:25

Yeah.

Will Beaman  1:10:27

People talk about language failing. But the thing is it also fails to fail completely. Right? Like there always is still an effort there that’s part of the world, right? And is additive in some way.

Charlotte Tavan  1:10:45

Yeah. And even if he fails an original goal, he creates a new goal. So it’s like…

Will Beaman  1:10:49

Yeah, right. Which in a certain way, I think is this kind of complicated relationship to infrastructures and rehearsals and this ambiguous question of who are the rehearsals for, right? Because we have, on the one hand, a replica of a restaurant or something where he will replay the same night over and over and over again, towards the specific end. But what does the restaurant do? Right, a restaurant opens at the same time every day, has the same peak hours, and kind of rehearses the same night over and over again. But it’s not towards a specific end. Or you could say it mediates a lot of people bringing their own specific ends into it. Which is this kind of idea of infrastructure without a kind of a positive object necessarily, that it exists solely for. Sometimes care is just an open ended question of infrastructure.

Charlotte Tavan  1:12:01

Yeah. And then it fills itself in a way like people came into the bar.

Will Beaman  1:12:08

Right, exactly. And they all came from different places, right. And they’re coming and going to do different things. And, yeah, and all of that.

Charlotte Tavan  1:12:18

If you build them, they will come.

Will Beaman  1:12:20

I mean, it is sort of, like…

Charlotte Tavan  1:12:22

That’s not great business advice, but like, you know…

Will Beaman  1:12:25

Well, he doesn’t make a lot of Craigslist ads, doesn’t he? Isn’t that sort of what the show is doing? Yeah, and the show itself is an invitation for us, I think, to watch it a certain way. We can watch it in the I-it way and be like, “oh, this is just pure sadism watching people be objectified by a camera” and “this is just like watching Jackass” or something, but we also are invited to take the show seriously, at the same time, right? Like, if you build something ambiguous with a lot of different layers of meaning, people will kind of play around in that.

Charlotte Tavan  1:13:19

Oh, yeah, and I’ve definitely seen some responses on Twitter that I feel are enjoying it on a different level. I’m not saying it’s lower, I’m just saying it’s different.

Will Beaman  1:13:32

“Oh, look at that one. She’s so stupid. Oh, wow look at that. She’s doesn’t even know she’s on a TV show.” That’s my gawking onlooker voice. But yeah, so maybe to frame the kind of different themes that we want to get into. I think I really want to just spell out this negative approach of ruling out a bunch of things without positing a specific point. Right, which I think is where that article kind of falls short, in my opinion. Because there’s not a specific thing that the rehearsals are for, or there’s not a specific read on a character or there’s not like a specific object, that must mean that the rehearsals are showing that no matter how much you try, it’s meaningless.

Charlotte Tavan  1:14:45

Yeah, like he didn’t go in with some idea of what TV should be or what relationships should be. He just went with it and decided to find out. Which is not nihilistic. It’s like exploratory.

Will Beaman  1:15:08

Right, that’s such a good word. Yeah. And so tying this to an earlier Money On The Left content, especially from our collaborator, Scott Ferguson, has talked a lot about the negative or apophatic mode. Apophatic being kind of a theological corollary of negative as he’s using it. But so basically, this idea of a negative or apophatic mode of criticism is, you know, this gets contrasted with basically a positive or theological kind of corollary of this is cataphatic tradition, which is about basically stating positive truths. Right. So the show is about this. Whereas the negative method is more just about showing what it’s not over and over again, and sort of, in philosophy, I mean, the kind of very classic example of somebody who performs a negative methodology would be Socrates, right? Who likes to have these long conversations with people where he pretends that he doesn’t know what he’s talking about and he just asks them questions that show that they don’t know what they’re talking about.

Charlotte Tavan  1:16:29

Like Nathan

Will Beaman  1:16:30

Literally like Nathan.

Charlotte Tavan  1:16:31

Like he literally does that in his early shows. Do you know what I mean?

Will Beaman  1:16:35

Totally.

Charlotte Tavan  1:16:35

He’s just like, “oh, so like, you drink your grandson’s piss? Okay.”

Will Beaman  1:16:41

Yeah, that’s so funny. Because probably there was like a half hour of build up to where that would make sense in the show to like, ask somebody.

Charlotte Tavan  1:16:52

Yeah.

Will Beaman  1:16:56

But like, that’s what Socrates does, though. Like, 30 minutes into a dialogue, people are like, “I guess fish do live in the water.” And it’s like, “but do not ducks also live in water?” Whatever. But yeah, so like one reading of what Socrates is doing, which some of his contemporaries found really annoying, and they actually put him to death because he was so annoying. So there’s something to this probably. But he gets parodied by Aristophanes in this dialogue, The Clouds, as like, basically just this nihilistic troll who is just asking a bunch of dumb questions and coming up with increasingly stupid answers for no reason other than just basically because he’s a grifter. That actually is what the argument against him is that he’s corrupting the young men of Athens. Right?

Charlotte Tavan  1:18:04

He’s a huckster!

Will Beaman  1:18:04

Yeah, he has followers that he’s fooling with his non-positive dialogues.

Charlotte Tavan  1:18:05

He’s like a 4chan Moderator.

Will Beaman  1:18:05

Jesus Christ. But yeah, whereas I think the idea for us, and certainly, without getting into Socrates, because that really was just like a throwaway example, but there’s a lot of different traditions that read different things into him. But for us, I think we want to say that, okay, yes, there’s not some kind of positive truth that the dialogues are leading to, but there is a sort of truth that he’s kind of playing out by showing that it can’t be named directly, right? Or maybe, if you can point to it, it can only be by analogy. And I think that one of the things that we want to say, which is going to come out in a lot of the different themes that we talk about in this show is that Nathan’s constant undermining his own premises, and adding things, and stuff like that, is building towards and especially as we get to Episode Six, it really does build towards some really deep truths. I’m thinking of this conversation that he has with this child’s mother because the child actor was in the show, and he worries that the child was taking the show too seriously, and he’s asking the mom “but how do you know that the kid will be okay?” And she kind of gives us sort of a negative or like, not positive answer. Right? Which is just a kind of a “I just know,” and it’s sort of like “I have to know,” right? Because that’s what being a parent is.

Charlotte Tavan  1:20:15

I just find anyone who feels that show is nihilistic, I just find it hard to believe that they watched the final episode to be honest. It really becomes so earnest and he does state some positives, like, because he does, he says, “forgiveness is in the eyes of somebody else.”

Will Beaman  1:20:33

Yeah.

Charlotte Tavan  1:20:33

Like, he is trying to find meaning. That’s like, really obvious to me. I don’t know.

Will Beaman  1:20:39

Yeah. And interestingly, “forgiveness is in the eyes of somebody else” is like him saying, “I don’t know what forgiveness is.”

Charlotte Tavan  1:20:47

Exactly, yeah. It’s in the eyes of everyone.

Will Beaman  1:20:51

Like, he’s positing something that’s not positive. Right? It’s a risk, right? It’s like a risk that you have to take, because, ultimately, it’s not fully in your hands, right? Whether you’ll be forgiven, whether the kid will turn out okay, whether the rehearsal will go well.

Charlotte Tavan  1:21:12

Whether the claw takes your pants off and exposes you to a bunch of children…

Will Beaman  1:21:17

While a police officer stands by ready to arrest you, making you officially a child molester. But yeah, let’s talk about that kind of arc, maybe? Yeah. So the first thing that I think I wanted to talk about is this distinction between work and leisure that is kind of blurred in the show. And in The Rehearsal, it’s kind of interesting, also, going back to this idea of acting as being a sort of, like, middle position between working and not working. Right? You see in the show that Nathan’s internal monologue and his, I guess, external acting continues across all these different settings, and across all these different roles. So it’ll be, “cut. the scene is over.” And then we follow Nathan into the editing room, where he walks into a room that’s full of a bunch of people, and he’s all anxious, and he’s trying to manage a social situation, right?

Charlotte Tavan  1:22:33

He’s got that laptop in the sling thing that everyone seems to be kind of just like…in a lot of the articles I’ve seen, they’ve used the image of him standing in a busy room full of people with the laptop strapped to his chest thing, you know what I mean? Like, so they’re trying to like, I think visually, they’re making the argument like he’s the puppet master kind of guy. That’s something they’ve really focused on rather than like the other people. Do you know what I mean?

Will Beaman  1:23:12

Yeah, totally.

Charlotte Tavan  1:23:15

They’re ignoring the agent…all of the articles just are ignoring them, he’s trying to draw attention to the infrastructure of the show and the production and stuff. And I feel like a lot of the reviews just kind of ignore that. And they’re thinking about TV the wrong way. I don’t know.

Will Beaman  1:23:30

Yeah, well, and walking around like a group of people with a laptop strapped to your chest, it is a little bit like a parody exaggeration of how we use our phones a little bit too. Right? Where it sort of is this halfway position between, it’s not quite a phone, because it’s bigger than that. And we’re associating it with him working. And it also is a little bit like what’s he working on? He’s working on these like neurotic flowcharts that he’s scrolling through during the conversation and stuff like that. But, yeah, so I don’t know, I think it’s on the one hand, it’s taking the phone more seriously, as an…

Charlotte Tavan  1:24:17

Yeah, thinking about that, like, if that was just him with a phone it would look completely different. Different vibe.

Will Beaman  1:24:21

Right. Yeah. Which I think in a certain way, this is getting us a little bit at like, you could look at this a different way and see, like a very common critique of neoliberalism, right, which is that you’re always on. You’re always having to, you know, monitor social media, monitor your LinkedIn, gather credentials, and use apps 24/7. And so you’re kind of being controlled that way. And in a way that’s true. Obviously, like there is something to that. But I also think that this is an extension of his kind of neurotic process of self reflection, which is a social process, right? There’s no just full interiority in this show. Interiority is always, how should I act? Right? Or how did that go? It’s not even grounded in anything particular, it just is kind of engaged in the world.

Charlotte Tavan  1:25:28

This bit of the article that’s like “Nathan (if not Fielder himself) spends almost all of The Rehearsal flopping around trying to feel and experience the world in a real way.” That’s like, what all of us are doing.

Will Beaman  1:25:40

Yeah, right.

Charlotte Tavan  1:25:41

Like that’s literally the best you can do.

Will Beaman  1:25:46

Yeah, in a certain way, right. Like he is showing a kind of feeling of falseness, or an authenticity that we can all relate to.

Charlotte Tavan  1:26:00

Yeah, it doesn’t feel like we’re not experiencing the world in the right way. Like, with enough joy or emotion.

Will Beaman  1:26:08

And whatever that phrase that you read, like, flopping around the world aimlessly or whatever, like, that’s me, like, I think I totally am, yeah. Like a fish on the deck of a boat constantly.

Charlotte Tavan  1:26:21

Like a goldfish Pokemon.

Will Beaman  1:26:26

Seaking. No, Magikarp!

Charlotte Tavan  1:26:28

Magikarp, yeah! bloop bloop Yeah.

Will Beaman  1:26:37

So yeah, Nathan has this internal monologue. And kind of external acting that the monologue is related to, and that is never off, right? And that’s a common criticism of neoliberalism. And in some way, I think that what neoliberalism gets critiqued for, I think that that also is kind of like he is being critical of it, right? Like, he’s showing that this kind of need to manage everything, even though it is sort of what we’re all always doing all the time. It doesn’t need to be anxious.  Like, it doesn’t need to be as anxious as it is. I don’t know, I feel like a part of this, that we haven’t talked about, is that there’s a coming of age theme here. The show, as it goes on, of course, is like passing all these milestones in his own kind of development. And, at one point, he has his parents come, and he’s practicing being a parent, and he’s learning and he’s learning acting from kids. And he’s learning parenting from other people, right. From other actors.

Charlotte Tavan  1:28:06

He’s reflecting on his previous serious relationship as well.

Will Beaman  1:28:11

Yeah. And I think it’s interesting that scene in the last episode, or that problem in the last episode, where it’s unclear whether the child fully understands that this is a performance and that Nathan is not really his dad, and Nathan worries that that’s going to be exploitative. Right? Like, that’s a coming of age moment for the child. But also what that coming of age moment is, is teaching the child what acting is. In a certain way, that’s what adulthood is, right? Is acting. And this kind of neurotic, like, I feel like there must have been times, also, where people told Nathan that like, you need to grow up or something. Right. When he gets ringed out by that actress who plays his rehearsal co parent or something. And she’s like, you know, “you’re never gonna feel anything that’s real…This is just what you do all day?”

Charlotte Tavan  1:29:15

The one who pretended to be Angela, yeah, yeah. That was harsh, yeah.

Will Beaman  1:29:25

So there’s this ambiguous question of work and leisure, and is he really acting? Is he not acting? But then there’s also these ambiguities as to, whether or not he’s acting, who is he acting for? Right, like, is he the director? Or is he in someone else’s rehearsal when he’s in his own rehearsal? There’s like a, I’m trying to think of some kind of examples of like, I do think it’s not fully clear exactly like, it’s not like there’s just a director at the top of everything where he is the puppet master or something. Because he is also like the client of the show.

Charlotte Tavan  1:30:21

Totally. I think the “Finding Frances” episode kind of brings that up because he’s kind of like going along with somebody else’s project.

Will Beaman  1:30:33

Yeah, that’s the perfect example. Yeah.

Charlotte Tavan  1:30:36

Yeah, he wasn’t like pulling the strings there. I mean, it was obviously to a degree, but a lot of it was just like being passive.

Will Beaman  1:30:46

To the degree that we all are, and maybe this can get us into this question of money, and just kind of how the show treats money, right? Because at first glance, it doesn’t seem like it’s really a show about money, except kind of implicitly, I would argue in a lot of ways. But one of them is that a lot of memes that you see online about the show are like me if I had Nathan Fielder’s budget…

Charlotte Tavan  1:31:15

Oh, yeah. And he knows. He comments, he makes jokes about his huge budget. Like it’s a thing.

Will Beaman  1:31:25

I’m reminded, also, of that plotline in the first episode where he has like a fake blog called thrifty boy that’s all about “here are free things that you can do in the city,” and there actually is a whole team behind that blog, right? But the blog also ends up organizing a free meeting that happens in a park between two characters. A meeting that happens at a bar. Basically not totally free activities. But like, as he says, thrifty, right? And activities that are paid for by somebody, in the sense of like, if you meet somebody at a park, there are people who are paid to maintain the park.

Charlotte Tavan  1:32:20

Yeah.

Will Beaman  1:32:22

If you meet somebody at a bar, that bar was built. And it costs a lot more money to build it than your drinks cost. And so there’s this kind of interesting way in which, on the one hand, to be thrifty is to be using infrastructures that cost a lot of money to do right, but they’re infrastructures that didn’t cost you money, specifically.

Charlotte Tavan  1:32:53

Well, that’s like the whole joke about Nathan For You, as well. Do you know what I mean? He’s like, “Oh, we’re gonna make your business money.” But then all of his solutions actually cost like a shit ton of somebody else’s money. Like usually sometimes his or do you know what I mean? You know what’s a really funny example of that? So an episode in Nathan For You is probably like one of my favorite ones, which is the tax rebate collection scheme episode, which is where he has this idea to make this this independent petrol station money by saying “oh, we’re the lowest gas prices in America, but like put after rebate in the fine print.”

Will Beaman  1:33:41

Right.

Charlotte Tavan  1:33:42

And then, to collect the rebate, you have to go through this insane process where you have to mail it, and the only mailbox is at the top of this nearby mountain, and you have to hike up it, and it’s like an overnight trip, and he tells all these riddles and stuff. And then it’s like, he expects nobody to take the rebate, but then like, I think like four people end up staying overnight. And he keeps on having interviews with them, like reality shows style, where it has a confessional, but then underneath will have their name and then “rebate collection amount,” and they’re all like spending 24 hours of their lives trying to get back like $11 or something. But what happens is like, it kind of turns into like a divorce counseling session. Do you know what I mean? Like, he’s created this infrastructure. And it just got filled…it’s these people just talking about their relationships and bonding, and then the next day he’s like, “there never was a rebate. This was just like bonding.” And they were all like, “yeah, that’s what we thought.” We were just in it for lifelong friendships, but there’s something to that. All of this money created this infrastructure that looks useless. The joke is like, obviously this is not saving money in that sense, because they’re all like, spending 24 hours of their lives trying to get back like 14 or 11 dollars or whatever. It’s not like going to work for the business, obviously, because nobody’s going to facilitate that on a constant basis. But it still ended up serving a purpose for people that isn’t usually, formally accounted for in that way.

Will Beaman  1:35:49

Yeah, absolutely. And I mean, even just taking that back to just the MMT kind of main point that gets made, right, is that money, in its most bare form, just as credit that’s created out of nothing: it’s not profitable. Right? Like, it’s not actually about making a profit. Credit is a gift, right? You just mark something on the paper, and you say, “here you go.” And so in a way, even though we do have all of these neoliberal governments that want to push austerity, and so they insist that every piece of infrastructure has to somehow make money in order to justify existing or something like that. I mean, when you take a wider view, it’s so kind of, I mean, that’s just like the misanthropic person that you know, who’s like trying to nickel and dime arbitrarily about, “well, I, you know, I’m not gonna help clean this, because, you know, an hour ago, I did this other thing.” That, like, maybe is true, but it’s also there’s a way in which it’s subjective, right, and it’s missing a lot of ongoing social dependence anyway that it’s already nested within. So you can have infrastructure that’s made not particularly to make money, right, it just costs money. And it just costs money in order to be funny. But then, also, you don’t know what it’s being used for, necessarily, right. So like, there’s an intention, but then you can’t actually police what people talk about in your cafe, or like, what role it plays in people’s lives.

Charlotte Tavan  1:37:58

Totally. Like, for example, this is like a public square around where I live, well in like a more gentrified neighborhood. And it’s like, supposed to be like a piazza style square, but like, all these young people use it for skateboarding. And then some people are angry about that, they’re like, “this is public money. I don’t want it to be used for skateboarding.” But it’s like, that is what it’s being used for, right? And “that doesn’t help our property prices, that doesn’t help our, like, you know…”

Will Beaman  1:38:32

Yeah. And it becomes a little bit similar to copyright sorts of arguments that people make. That’s like, “well, that’s so similar to something that I did where my intention wasn’t for it to be used or for it to inspire you to do something derivative of it, or something like that,” But, actually, to use something or consume something or whatever, right. Like, that’s no straightforward thing, right? There’s an element of kind of creative imitation of what you’re supposed to do with it, that is also a little bit freestyling and what you want to do with it, as well. Which, if we’re talking about political economy, right, like, it’s the whole issue with “use values” for things is that these are, just in terms of the semiotics and stuff, these things have multiple purposes and meanings and the sign can be interpreted in a lot of different ways and go into a lot of different things. And then on the other hand, you can have, like in the first episode of The Rehearsal, Nathan wants to get…what’s the name of the character in that first episode, the trivia guy?

Charlotte Tavan  1:40:05

Kor. Like K-O-R.

Will Beaman  1:40:09

Right, right. I remember that. Yeah. Or yeah, like in the first episode, Nathan is trying to teach Kor, his client, the answers in this trivia game without Kor knowing that that’s what he’s doing. And so there’s this whole thing where Nathan is arranging these hangouts and walks in the park and using all this mix between infrastructure, and then also paid actors who are like plants around who will feed him information, you know, randomly tell him where the world’s tallest building is. And like that kind of thing. It’s this ambiguous thing where Nathan has multiple intentions for the outing. Right? And Kor doesn’t necessarily know any of them. And he certainly doesn’t know that he’s being fed answers, right. And Nathan is taking a little bit of a risk there. But that’s also a risk that is kind of an unavoidable risk, right? Like, in the sense that you never know what someone else’s wants or intentions are when you go to hang out with them. Or like there’s all kinds of ways in which that ambiguity of like, if we’re hanging out and there’s two people and one of them is like, “Oh, is this a date?” And the other person isn’t sure that that’s a date, right? Like, that’s a similar kind of anxiety?

Charlotte Tavan  1:41:44

Yeah, totally.

Will Beaman  1:41:48

And it’s not like dishonesty isn’t implicated as a potential problem there, right? Like, it could be that this was supposed to be a date, and one person is gaslighting the other person. Or it could be that this was very clearly not a date. And one person is trying to project that onto the situation. Should probably have named that one first so I don’t sound like an incel. And then yes, sometimes it’s not a date.

Charlotte Tavan  1:42:23

Mostly, you get friend-zoned.

Will Beaman  1:42:33

But yeah, there’s this kind of constant question of is Kor able to fully consent to being in Nathan’s show? Is he in Nathan’s show when they’re just going on these walks? Is he in Nathan’s show when they’re off the clock or whatever? And ultimately, who’s paying for it? Right? Who’s footing the bill? And all of these are questions that have a lot of different answers, depending on how you look at them. Right? Like, the money is coming from a lot of different places. There’s something that people are trying to get out of being on the show that will kind of give them what money can give them. Right, which is kind of access to the world in a certain way. Yeah. So like, there’s all these moments where it’s not clear exactly like whose production is this necessarily?

Charlotte Tavan  1:43:35

Yeah, the word production, it’s interesting in this and it’s like a big theme. I think it’s a big theme in all of his shows, like, just in the obvious way, which is that he’s always talking about behind the scenes or not so behind the scenes, like production, right? It’s being played, who is doing what we’re, what infrastructure is there, but then also like, yeah, like, who is producing the show?

Will Beaman  1:44:03

Right there political economy questions of production, too.

Charlotte Tavan  1:44:07

Like production, as kind of creative or monetary provisioning, which is like not being done by Nathan, necessarily.

Will Beaman  1:44:20

Right? It’s including Nathan, but it’s also including all these other infrastructures that like, if acting as a middle position between working and just kind of free time or interior reflection or something like that. I feel like this broader sense of production that includes both paid actors and people who are walking by and parks that just happens to be created and like all of these things, we’re getting at something that’s a little, again, less positive and more apophatic society as production. Right? And like as a kind of a microcosm of just heterogeneity, right? Like, you know, different jobs and non jobs and actors and directors and you know, everybody walking around being a director and an actor and some people not knowing each other. And it’s in that context, with all of these different registers of production, that that experience of acting continues. Right, like Nathan is acting as a director, and he’s acting as an actor, and he’s acting as the editor.

Charlotte Tavan  1:45:48

He’s taking actions and making decisions.

Will Beaman  1:45:53

Yeah, and that acting versus actions is so kind of interesting, too, because I feel like when we talk about actions, we’re thinking about, like, doing a thing, right? In like, such a specific, it’s like a physics metaphor.

Charlotte Tavan  1:46:08

Yeah.

Will Beaman  1:46:09

Like a force pushing something. Like that metaphor for a will being exercised. But when we talk about acting, instead of taking action, acting is much more passive and ambiguous than that.

Charlotte Tavan  1:46:26

Yeah.

Will Beaman  1:46:27

Like, it’s not just reducible to somebody exerting their will. Right?

Charlotte Tavan  1:46:33

“Action this memo!”

Will Beaman  1:46:38

Yeah, because there’s a bigger question that acting involves, which is, how am I going to exert my will? If we even do want to stick with that language of exerting a will. That still has to be decided and given form and…

Charlotte Tavan  1:46:57

And usually by other people, as well.

Will Beaman  1:46:59

Yeah, by a whole production, right. Like, that’s a collective effort.]

Charlotte Tavan  1:47:03

Yeah.

Will Beaman  1:47:05

In all these ways, yeah. And so similarly, I think that there’s a narrow political economy definition of production that’s like what happens in the workplace. And then we kind of expand that more with like, okay, and then we also talk about social reproduction, although often social reproduction is framed as kind of what happens at home to reproduce the workplace.

Charlotte Tavan  1:47:35

Exactly.

Will Beaman  1:47:36

Where everything is still kind of centering primary production, and then kind of the secondary appendages or something like that.

Charlotte Tavan  1:47:43

Yeah. Or concepts like unproductive labor, which is, again, it’s so reductive.

Will Beaman  1:47:48

Yeah, right. It’s that question of: productive towards what? And in this show, it’s unclear what things are being productive towards because everybody has different goals, and they don’t know where it’s gonna go. And so I think that maybe the richer definitions of production, you already brought up audio and video production, which I think is really important here because the timing isn’t clear. Like when you’re watching a TV show, you don’t know when it was edited. The acting you do see, but you don’t see the process of what was cut out, when it was cut, what’s on the B-roll. There’s all this stuff that happens off screen, and not just off screen, but you don’t even know when it happens. I feel like the temporal ambiguity and murkiness of “when did things happen?” Just as it unfolds, it implicates more and more things from longer and longer times ago, and like for more and more distant places, and it’s dizzying, and it’s overwhelming, right? But again, following this negative kind of apophatic method, the point is not to come to a positive answer of when was this produced?

Charlotte Tavan  1:49:22

Yeah, like in the last episode of Nathan For You “Finding Frances”, it opens with him doing the DVD commentary for the previous episodes of the show, in this like, behind the scenes way. Yeah.

Will Beaman  1:49:38

Right. Totally. Yeah. And he’s always keeping that layer alive and ambiguous in the show where that layer of editing and of him being a showrunner talking about the show that he’s making right now. Where it’s not really clear. Like in film studies, we’ll say what is the diegesis of the film, like the world of the film that the characters live in, as opposed to the world that we live in. So a diegetic soundtrack would be a soundtrack that actually is playing from a radio in the frame, whereas an actual soundtrack that we hear would not be that. And so he’s implicating the show in our world by talking to us in the world that is not of the show, right? Like he’s talking to us during the production process. And I mean, maybe one definition of what the diegesis of a show is it’s like, the diegesis is not the production process in its fullest sense, I guess. But even then it’s kind of an unstable term, right? Because acting is also part of a production process, even if it’s like, the real thing, or whatever. Anyway, TV shows aren’t our real life, that’s not an interesting thing for me to come to, I guess.

Charlotte Tavan  1:51:20

Lots of people are very interested in that with Nathan For You, though, like, if you go on message boards, everyone is very concerned about how real elements of it were, who is acting, who is not acting, and stuff. l think that does speak to how open he leaves those questions.

Will Beaman  1:51:43

Totally, yeah. And then I guess another meaning of production is like a theater, right? Like, there’s a theater meaning of production that is, I would say, a little bit like that audio video thing, in the sense that a theatrical production includes what’s on stage and what’s off stage. Right? Like, if you say, I saw the production of something, you’re not just talking about, like, I saw a bunch of scenes. You’re talking about “I saw an orchestration of this play,” right? And there’s also a way where in theater, and certainly there are theater genres and traditions…you think of like, The Rocky Horror Picture Show where the audience is part of the production in a way that they really kind of call attention to, right? Where there’s kind of calling and response and that kind of thing. But here also, I feel like there’s all kinds of ways where we, as an audience, are part of the show, too, a little bit. Because certainly in this reality show form, the characters are anxious about how they will look to us?

Charlotte Tavan  1:53:16

Yeah. And he’s anxious about, yeah, how he looks to us. He’s constantly, it’s like he’s defending himself to the audience, or like, trying to explain his motivations to the audience constantly.

Will Beaman  1:53:31

Yeah, it’s like a long confessional. It’s like production in this very broad sense of the word that’s irreducible to the will of the director or the will of a boss, right? Because it kind of refers to everything a little bit. Even if it’s not referring to everything in a flat way, like we’re all on the clock, and we can never leave or something like that. In a certain way, it’s like nothing but everybody not being quite on the clock. Right? Where he’s anxious is, you know, “I wasn’t sure if she was really here for the show, or just to be on vacation.” Right? There’s an anxiety that people can never actually fully be at work. And maybe that’s a good thing, right? Yeah, these are all really kind of open questions.

Charlotte Tavan  1:54:32

Yeah. Like, he’s like attempting to survey her at certain points, but, you know, realizes that it’s kind of pointless.

Will Beaman  1:54:41

Right. Which is then of course ironic because all that we’re doing as audience members is surveilling her.

Charlotte Tavan  1:54:48

Yeah.

Will Beaman  1:54:49

And surveilling him and surveilling everything. And he’s in the world surveilling people too, right? I think it’s interesting that he’s a spectator in the frame a lot of times, watching a conversation play out and then interjecting. Yeah, I feel like we’ve said a lot and this might be a good place to start wrapping up. I’m not sure how we want to like…

Charlotte Tavan  1:55:17

Well, I think we can just leave it open a la Nathan Fielder.

Will Beaman  1:55:21

Ooo, I like that. Yeah. Let’s leave this open. That concludes today’s rehearsal.

Charlotte Tavan  1:55:28

Yeah. Thank you so much.

Will Beaman  1:55:31

Thank you.

Charlotte Tavan  1:55:32

This has been such a fun project. And also we love you Nathan, if you ever hear this.

Austin Credits with Jonathan Wilson (White Paper and Podcast Interview)

For this special episode of Superstructure,  cohosts Will Beaman (@agoingaccount) and Andrés Bernal (@andresintheory) are joined by Jonathan Wilson (@DeficitOwl24601) to discuss his new white paper, “Proposal for a Local Currency Issued by the City of Austin,” which proposes a complementary currency for the city of Austin called Austin Credits.

Jonathan’s proposal contributes to a developing conversation in the Austin City Council, which was tasked by recent legislation with exploring possibilities for new public banking and payments structures by a resolution. The conversation delves into the proposal’s legal design and implementation strategy, while also contextualizing its political meaning and stakes for progressive politics. 

Proposal for a Local Currency Issued by the City of Austin: A White Paper by Jonathan Wilson

In 2022, the need and desire for alternative visions of economic organization is higher than it has ever been. Undemocratic national governments and international crises have taken agency and power away from local communities and diminished their ability to protect and nurture their citizens as they see fit. In the United States, the prevailing economic ideology at the national level has committed to trading quality of life for nominal price stability, pursuing policies which deliberately exacerbate unemployment and refusing to make robust use of programs to provide liquidity to local governments. The time to develop local alternatives to this system is now, and this white paper will explain one such vision. In addition to providing a basic means of funding and payments for local governments and their citizens, this proposal aims to provide a new lens for how people view cooperation and interdependence. By illustrating how valuable assets can originate from negotiated credit relationships, this white paper shows how communities can express their values among themselves and between each other, opening up new possibilities for local and global solidarity.

Resolution 20220324-057, passed by the Austin City Council on March 24, 2022, directs the City Manager to explore how financial innovations can improve government processes and better serve Austinites, through (among other things) public payments platforms, public banks, and local complementary currencies. This proposal outlines how  the City can (i) increase income and employment for Austinites, (ii) increase financial inclusion by providing a privacy respecting method of electronic payment for the unbanked and maintaining an affordable means of financing and emergency liquidity for low income Austinites, and (iii) allow the City to fund public works. One way to accomplish these goals is to issue a valuable electronic financial instrument called the Austin Credit or “AC”. In order for Austin Credits to be valuable enough to supplement incomes, allow the City to create employment, and serve as a vehicle for financial inclusion, the City must ensure that they are in demand and marketable. To ensure that Austin Credits increase financial privacy, the City will provide an option to load Austin Credits onto an anonymous stored value card. Finally, in order for Austin Credits to serve as a source of financing and emergency liquidity, the City itself will serve as a lender of first resort for Austin Credits.

Of all these requirements, the most important is that Austin Credits are demanded by members of the public. The primary demand for Austin Credits will stem from the fact that the city will accept Austin Credits for all payments to the city, including utilities, public transport, local taxes, fines, and fees for any city-sponsored events on a one-to-one basis with the dollar (moving forward, I will use the term “City Bills” to refer to these payments and “City Services” to refer to actions by the City that people are paying for). To further encourage use and widespread acceptability of the Austin Credit, the city will offer a small discount of 5% for paying City Bills in Austin Credits rather than in dollars. Historically, there is precedent for a credit towards taxes or government services at a local level retaining its value so as to become a fungible, money-like object. In the 1930s, American cities which were  short on dollars circulated tax anticipation scrip which could be used to make any payment to the city. Additionally, during the Civil War, until the government stopped them, individuals used United States Postal Service stamps as a replacement currency, knowing the stamps would always have some real value so long as the post office accepted them.

To give Austin Credits value beyond paying for City Bills, the City needs to encourage acceptability of Austin Credits by businesses. The easiest way to do that is by offering businesses which agree to accept Austin Credits a small discount on their City Bills. For example, a grocery store that agreed to accept Austin Credits as payment would register with the city and receive a 5% discount on their City Bills. Additionally, businesses that agree to pass any part of this savings onto their customers would receive an additional discount on their City Bills. For example, a store that offered its customers a 2.5% discount when they pay in Austin Credits would receive an additional 2.5% discount, for a total discount on City Bills of 7.5%. Additionally, Austin Credits would be free to transfer within the Austin Credit system, meaning stores would save money whenever someone paid in Austin Credits instead of credit or debit cards. This not only gives the grocery store an incentive to accept Austin Credits but it gives their customers an incentive to acquire Austin Credits and save them.

To respond to this incentive for Austin Credits, residents would be able to buy Austin Credits directly from the City, but Austin Credits would also exist on a web and app based platform that would allow users to request and transfer from one another, similar to pre-existing payment apps, like Venmo, Paypal, and Square. Users would have the option of connecting their bank accounts or credit cards, and there would also be a market function in the app and website called the Austin Credit Online Marketplace where users could buy and sell Austin Credits with dollars, similar to a foreign exchange market. Just like with Venmo and Paypal, users would pay no fees for transfers within the AC system, and if users wanted to take money out of the AC system by transferring it back to their bank accounts, they could do so for free if they the standard option which goes uses the Automated Clearing House and settles in three days, or they could make instant transfers for a small fee. The purpose of this market is to give the recipients of Austin Credit a way to convert to dollars if they need to, which enhances the liquidity and desirability of the Austin Credit. Additionally, several public buildings in the City would have indoor and outdoor machines that dispensed stored value cards carrying Austin Credits in various denominations.

Once Austin Credits become widely accepted in the City and their demand and value is established, the City can begin offering personal loans in Austin Credit, providing an affordable source of financing for Austinites. Because the purpose of these loans would be to enhance the purchasing power of Austinites, the terms of these loans do not need to be structured with the goal of maximizing revenue. Rather, the terms should be geared towards encouraging Austinites to demand and save Austin Credits. To those ends, Austin Credit loans should have three essential features. First, the rate of interest should be zero. Keeping this rate at zero ensures that consumers will prefer to borrow Austin Credit. Because legal tender laws would require the City to accept dollars in payment for public debt, to incentivize people to pay loans in AC, the zero-interest rule would be contingent on people paying the loans back in AC. Second, instead of charging interest, to encourage frugal use of this credit facility, the City can simply charge small late fees for missed payments. Third, all loans in Austin Credit issued by the City must be collateralized by surrendering Austin Credit in an amount equal to 10% of the loan value prior to the loan being issued.

For example, if someone wanted to borrow 200 AC, he would have to surrender collateral of 20 AC and would receive the loan at 0% interest. Because the loan would carry no interest, he would prefer this loan over a payday loan, and because he needs to keep at least 20 AC on hand to qualify for the loan, he is encouraged to save at least some of the Austin Credits he receives. This feature of Austin Credit loans capitalizes on people’s natural tendency towards precautionary saving. To prevent the potential for abusing this loan facility, each resident would only be allowed to have one of these loans outstanding at any given time. In this way, residents who take out these loans will be encouraged to pay them off, not only to receive their collateral back, but also so they can qualify for another loan. Additionally, although anyone would be able to set up an AC account, only permanent residents of Austin would be able to access these loan facilities.

The value of personal loans would be capped at 5,000 AC, but eventually, the goal should be for the City to offer secured loans to allow residents to finance the purchase of large items, such as cars and homes. For these consumer loans, there would be a much higher maximum loan value, but there would be a minimum down payment amount of 35%, and the loan would be secured by the asset being purchased. Because saving for large purchases is empirically the second most important reason people save money, incentivizing Austinites to save Austins Credit by offering them a 0% loan in exchange for a large down payment will be a very powerful way to bolster demand for Austin Credits.

Once this system of acceptability, transferability, and loans has been established, leading a private sector demand to hold and save Austin Credits, the City can start using Austin Credits to supplement income and create employment. The City should establish a system that allows residents to vote on new public works projects which will pay workers in Austin Credits. As the Austin Credit system gains adoption, the City can gradually increase the amount of projects offered until it can guarantee a job paying in Austin Credits for all Austinites who want such a job. The revolutionary potential of allowing local residents to vote on spending projects that are not tied to direct and immediate taxation or borrowing cannot be understated. As long as there is idle labor and the demand for AC is not exceeded, such a program would create a means for residents to democratically participate in non-zero-sum development, motivated by the needs of communities and not merely the profit motive, strengthening the City’s economic environment and its sense of community. Moreover, the Austin Credit can be used to recognize work that is already being done but is currently undervalued or uncompensated by issuing AC to community service organizations. Additionally, the City can issue Austin Credits to the elderly, the disabled, and parents of minor children to supplement their income.

The structure of the Austin Credit system should allow people who receive income from the City in Austin Credits (either from public works jobs or from supplemental payments) to sell them for dollars if they wish. Because Austin Credits grant residents a discount on their City Bills of 5% and a discount at participating businesses of 2.5%, if enough people are using Austin Credits, they should trade in the Austin Credit Online Marketplace for around $1.00. The logic here is that if I have 100 Austin Credits, I should be able to use it to buy products valued at $105 from the City and at $102.50 from participating businesses. If I want to buy something from outside Austin, I may want to sell my Austin Credits for dollars, but unless there is an emergency, I will avoid selling my Austin Credits for significantly less than the value I transferred to pay (either in dollars or in labor) for them. Let us assume that I offer to sell 100 AC for $101. If Austin Credits have not been over-issued, other Austinites who want to buy something from the City or from a business who accepts AC should accept the offer to buy 100 AC for $101 for two reasons. First, 100 AC will allow them to buy products valued at $102.50, so they have essentially gained $1.50 in value simply by doing the transaction if they spend their Austin Credits in Austin. Second, the $101 price I offered is less than the $102 ($100 plus $2 transaction fee) they would have to pay the City if they purchased the 100 AC directly from the City. The only people who will insist on paying less than $1.00 to buy 1 AC in the secondary market will be people who do not have an immediate need to buy something from the City or from a business  that accepts AC. For this reason, encouraging private sector adoption is key because the more places people have to spend AC, the less need there will be to sell AC at a discount. 

The promise of redemption from the city will guarantee that Austin Credits have some value, but to protect this value, the City must avoid issuing too many Austin Credits. If the private sector has a net desire to save 1,000 AC, and the City net issues 1,200 (net issuance being the remaining outstanding Austin Credits after redemption), then residents will begin selling Austin Credits at a discount for dollars. If this happens, the first person to sell his Austin Credit–the person who receives the 1,001st AC–will receive a good price for it, but the last person to sell his Austin Credit–the person who received the 1,200st AC–will suffer a significant loss. That first seller might be able to sell his Austin Credit for 99 cents, but the last seller might only get 80 cents. Consequently, if the private sector has a net desire to redeem and save 1,000 AC, and the City Issues no more than 1,000 AC, each recipient of an Austin Credit will have a financial asset valued at approximately one dollar. However, if the City issues more than this net redemption and savings desire, then at least some recipients of Austin Credits will find themselves holding a financial asset valued at less than what they exchanged for it. Either they will have bought Austin Credits directly from the City that are now worth significantly less than one dollar, or they will have provided labor to the city that is now worth less than the value they placed on that labor. For example, if the City pays workers 20 AC per hour but issues too many AC, causing the value of the AC to drop by 25%, those workers might have valued their labor at around $20 per hour, but they now hold a financial asset worth only $16.

Similarly, in order for this value creation not be a net loss for the City or an indirect transfer from some citizens of the City to others, the private sector must save a number of Austin Credits that is greater than the discount given to those who pay City Bills in Austin Credits. For example, imagine the citizens in total have a City Bill of $100, and the city issues 95 AC in exchange for $95 of goods and services and offers a 5% discount on City Bill payments. If the citizens redeem all 95 of their Austin Credits to pay their $100 City Bill, then the City has essentially foregone $5 in value. In this scenario, if the city had simply never issued the Austin Credits, they could have simply accepted $100 to pay off the $100 City Bill, paid the same $95 for the goods and services, and had $5 left over. Avoiding the problem of foregone revenue is important for the City because it still has bills and liabilities denominated in USD (for example, it must pay payroll tax to the US Federal Government, and it must purchase garbage trucks from Waste Management, Inc., which is headquartered in Houston, Texas and will likely not accept AC in payment). On the other hand, if the City issues 100 AC, and the private sector redeems only 90 AC at the standard 5% discount, then the City has effectively gained about $5 in value. A City Bill of about $95 would require 90 AC to pay at a 5% discount. If the City pays for $100 of goods and services with Austin Credits, then provides $95 of City Services, which the private sector purchases using 90 AC, then the difference between the value received by the City (the $100 of goods and services) and the value given by the City (the $95 of City Services) results in a net gain by the City of $5. Because the City and its citizens benefit if not all of the Austin Credits are redeemed, some of the value from the Austin Credit System can be thought of as partially analogous to breakage revenue, the profits businesses recognize when their gift cards are purchased but not redeemed.

Therefore, to protect the financial health of the City and to maximize the value of the financial assets given to Austin residents, the City must structure the economy of the Austin Credit  to maximize the desire to save Austin Credits. As stated above, there will be a basic underlying precautionary motive to save Austin Credits because they will allow residents to benefit from a small discount on their City Bills. Additionally, residents who want to take out loans in Austin Credits will be incentivized to save Austin Credits to surrender as collateral to allow them to qualify for larger loans. In addition to these precautionary and financing motives, the City should encourage saving Austin Credits by only selling Austin Credits in predetermined amounts with a small, fixed transaction fee of $2. At any point, a member of the public should be able to buy Austin Credits at the price of one Austin Credit per dollar, but if they can always buy the exact number of Austin Credits they need for every transaction, they will never need to save any. To remedy this, the City should only sell Austin Credits through its online platform or at its stored-value card dispensing machines in moderate but equitably sized lots. To illustrate, let’s assume the lot size is 50 Austin Credits for the sake of simplicity. In that case, if a person has a monthly City Bill of $25, they will have to purchase 50 Austin Credits at once by spending $52 dollars. After paying 23.75 AC to extinguish their City Bill (leaving them with 26.25 AC), this person will have about 1.25 more Austin Credits than they need to pay their next City Bill. They could spend those AC on something else, but this would mean that the following month they would need to purchase additional Austin Credits and pay another $2 fee. 

Additionally, any one person or common enterprise will only be able to use USD to purchase a maximum of 1,000 AC directly from the City using its online platform in any given month. This minimizes arbitrage opportunities and limits people’s ability to buy AC immediately before redeeming them in payment of City Bills, which would otherwise diminish any need to save AC. Together, these elements form a structure that incentivizes residents to save at least some of their Austin Credits or to seek Austin Credits from sources other than the City, which means they will request Austin Credits in payment from other members of the public, further fueling the demand for Austin Credits.

The aforementioned fixed-lot issuance, loan policy, AC purchase limit and transaction fees are best described as non-interest monetary policy, meaning they influence the volume of Austin Credit financial transactions without primarily relying on charging interest to borrow money or paying interest to those who already have money. However, the City must also have rules for fiscal policy, meaning it must have a rigorous system to decide how many net Austin Credits it will issue in any given period. Because the measurement of value created by the City and held by its residents will be the residents’ desire to save Austin Credits and value them at or near the price paid for them, the City will know that it has issued too many Austin Credits if the number of Net Austin Credits Saved, or “NACS”, does not increase from one period to the next. NACS will be defined as the number of Austin Credits issued by the City minus the amount of Austin Credits accepted in payment by the City, and if this number is positive, it is multiplied by the fair market value of the Austin Credit as a percentage of a USD, as determined by sales on the Austin Credit Online Marketplace.

Now that I have defined what I mean by Net Austin Credits Saved, I will explain how the city will adjust its number of Net Austin Credits issued (Austin Credits issued excluding loans given) in response. The process is very simple: in any given period, the City may issue an additional number of Net Austin Credits equal to the change in Net Austin Credits Saved in the previous period. To illustrate, consider the following example. In Year Zero, before any Austin Credits exist, NACS is zero by definition. If in Year 1 (the first year of the Austin Credit program) the City issues 400 AC, people spend 300 AC and AC are traded on the Austin Credit Online Marketplace for $.95 each, then the NACS for Year 1 is 95 (400 minus 300, all multiplied by .95). The difference between NACS for Year 1 (95) and NACS for Year Zero (0) is 95; this means that the City can safely increase the number of Austin Credits it issued by 95 in Year 2. If in Year 2, the City follows this advice and issues 495 AC, and the NACS for Year 2 is 180, then the net change in NACS will be 75 (180 minus 95 equals 75), and the City can increase spending by 75 in Year 3. If the City issues an additional 75 AC in Year 3 (for a total of 575), but NACS for Year 3 remains at 175, then the net change in NACS is zero, and the City should not increase the rate of Austin Credit issuance in Year 4. 

The purpose of adjusting the total issuance of Austin Credits in this way is to ensure that issuance of AC increases when the citizens desire to save AC increases and that issuance of AC decreases when the desire to save AC decreases. It is impossible to perfectly predict the net desire to save Austin Credits going into each new year, but aligning the additional issuance with the actual saving desire of the previous period should be an acceptable proxy. Initially, the net issuance of AC needs to reflect the availability of real resources which can be purchased with AC and grow gradually. The City should start by limiting AC issuance to some small fraction—perhaps 5%—of the combined revenue of the City and the businesses that agree to accept AC. This would ensure that even if no one wanted to save AC at the outset, the supply of AC would not exceed the supply of things one can buy with AC, so people can become accustomed to viewing the AC as a stable unit of account. As the use of AC grows among the population, this formula will allow the supply of AC to naturally grow around the same pace as the people’s desire to hold it.

Because the goal of this project is to increase income for Austinites, if the change in NACS is ever negative from one period to the next, the City should not immediately reduce the number of Austin Credits it issues in the next period. It should first adjust non-interest monetary policy for at least 1 year. For example, if in Year 4, NACS declines from 175 to 140, instead of reducing Austin Credit Issuance by 35 in Year 5, the City should increase the collateral requirement for Austin Credit Personal Loans and the down payment requirement for Austin Credit Consumer Loans to encourage more saving. These increases should be proportionate to the negative change in NACS. For example, if NACS declines from 175 to 140 from Year 3 to Year 4, this reflects a decrease of 20%. Consequently, in Year 5, the City should increase the collateral requirement and the down payment requirement by 20%. For example, the collateral requirement might rise from 10% to 12%, and the down payment requirement might rise from 35% to 42% (each a 20% increase from baseline). Only if this does not work in Year 5 should the City be allowed to reduce the number of Austin Credits it issues in Year 6. Once the change in NACS resumed being positive, the down payment and collateral requirements would revert to their original values.

In addition to protecting the value of the Austin Credit, the City must ensure that the AC system benefits low income people and increases financial inclusion by giving access to financial services to those who do not already have it. The primary reason people are unbanked is a lack of income; public jobs programs and supplemental income paid in AC will help address this concern. Another reason some people remain unbanked is the combined effect of having no permanent addresses and no identifying documents. To address this concern, the City should partner with shelters and other facilities that service the unhoused to verify resident-status for people who want to open AC accounts with permanent resident privileges. Another reason that people are unbanked is physical distance from a bank, and a distrust of traditional financial institutions. To address this concern, the City should maintain manned or automated kiosks where people can purchase AC stored value cards and troubleshoot problems with their AC account at every City building that is open to the public.

As well as increasing financial inclusion at the local level, the City can use the Austin Credit to create economic solidarity with other cities or organizations. As this form of local complementary currency becomes more popular, the City can make agreements with other currency issuers. These could come in the form of swap lines, some form of reciprocal receivability of their currencies, direct exchange of surplus resources, or other forms of cooperation. Such agreements between two local communities could strengthen both and emphasize the interdependence of their residents.

If the City takes these steps in the correct order (establishing the value of the AC, protecting the demand for it, then slowly expanding issuance to meet that demand), it can create a financial instrument that enriches the population of Austin and increases financial inclusion. The combined result of all these measures will be an economy where use, exchange, and value of the Austin Credit gradually increases over time, allowing the City to increase income, employment, and credit access for Austinites while reducing its own costs, fulfilling the vision set out by the City Council when they passed Resolution 20220324-057.

Appendix: Is any of this legal?

Federal Constitutional Issues

Article I, Section 10, Clause 1 of the U.S. Constitution forbids states from issuing “bills of credit.” This is sometimes referred to as the clause which prevents states and localities from issuing their own money. However, the term bill of credit does not simply refer to any note or debt-like instrument, or indeed any instrument which circulates between individuals. The Supreme Court, in Briscoe v. The Bank of the Commonwealth of Kentucky, 36 U.S. (11 Pet.) 257, 314 (1837), held that a bill of credit is “a paper issued by the sovereign power, containing a pledge of its faith, and designed to circulate as money.” This definition contains three parts, (a) issued by the state, (b) containing a pledge of the state’s faith, and (c) designed to circulate as money, and an instrument must meet all three to be considered a bill of credit. The simplest way for the Austin Credit to be constitutional will be if it avoids meeting the second and third part of the definition.

We will begin by examining part (b) of the definition; Briscoe goes into great detail on what is meant by a pledge of the state’s faith. Id. at 320. One issue before the court was whether the notes issued by the Bank of the Commonwealth of Kentucky, of which the state of Kentucky was the sole shareholder and provider of capital, were issued on the faith of the state. Id. The Court held that the capital of the bank, even though it was in part derived from the state, had its own income stream, and together with the contributions of the state “constituted a fund to which holders of the notes could look for payment, and which could be made legally responsible” for redemption of the notes. Id. The fund was in possession of the bank and under the control of its president and directors, not under the control of the state. Id. Most importantly for the purposes of the Austin Credit, the Court held that “whether the fund was adequate to the redemption of the notes issued, or not; is immaterial to the present inquiry. It is enough that the fund existed, independent of the state, and was sufficient to give some degree of credit to the paper of the bank” (emphasis added). Id. at 321. Additionally, every holder of the bank’s notes had the legal right to sue the bank to enforce payment. Id. For these reasons, even though the state of Kentucky accepted the notes of the bank in payment of taxes, and in discharge of all debt to the state, the notes were not bills of credit. Id.

From Briscoe, we can derive the general rule that an instrument is not a pledge of a state’s faith if there exists some fund which is legally distinct from the state, which has any source of income independent of the state, and which holders of the instrument can sue to redeem the notes. To conform to the requirements of Briscoe, the City, through statute, will establish a permanent, charitable trust called the Austin Credit Trust whose stated purpose is to aid in the economic development of the City of Austin by redeeming Austin Credits for U.S. Dollars forty years after the date of their issuance. In Texas, under Brazos County Appraisal Dist. v. Bryan-College Station Reg’l Ass’n of Realtors, 419 S.W.3d 462 465, “providing services to aid in economic development for a local community” is that a valid purpose for a charitable trust. The trustee will not be authorized to make payments to the City. The terms of the trust will also state that holders of Austin Credit are persons with a special interest in the enforcement of the charitable trust and will have the right to bring suit to enforce the trust by redeeming the notes. The City, in a separate statute, will be required to place money in the trust every year, but, the trustee will be directed to invest the money in the trust in U.S. Treasury Bonds, so that the trust will have its own stream of income, independent of the City. Because the trust will be a separate legal entity with its own stream of income from investments which cannot be sued and from which the City cannot withdraw funds, the Austin Credit will not be a pledge of the faith of the City of Austin. Instead, it will be a pledge of the faith of the Austin Credit Trust.

We now turn to part (c) of the definition, which requires that an alleged bill of credit be designed to circulate as money. The case preceding Briscoe, Craig v. Missouri, 29 U.S. 4 Pet. 410, 432 (1830), which Briscoe relied upon without overruling, explained that an instrument which circulates as money is one which is “intended to circulate between individuals, and between government and individuals, for the ordinary purposes of society” (emphasis added). Additionally, a later case, Houston & Texas Central Railroad. Company. v. Texas, 177 U.S. 66, 89 (1900), holding that a warrant issued by the state of Texas was not designed to circulate as money, relied partially on the fact that “when the warrants once came back to the treasurer of the state, they were not to be reissued.” From these two cases, we can derive the general rule that an instrument cannot be described as intending to circulate as money if there is no circulation between government and individuals because the instrument is redeemed without being reissued. Austin Credits will be extinguished once used for payment, therefore they cannot be reissued and will consequently not circulate between government and individuals. Thus, Austin Credits are not designed to circulate as money.

Because the Austin Credit will neither be a pledge of the city’s faith nor designed to circulate as money in the specific context of the constitutional prohibition on bills of credit, the Austin Credit will not violate the United States Constitution. Requiring the existence of a separate fund which will pay out in dollars will require the Austin Credit Trust to have some dollars on hand, but this will not eliminate spending flexibility for two reasons. First, Austin Credits are designed with various incentives to save them built-in. Second, the City could make the face value of AC significantly below the purchase price for AC. For example, the City could sell AC for $1 that had a cash redemption value of $0.05 while still accepting AC at $1.05 when tendered in payment of City Bills. Because they would be accepted by the City at the $1.05 price in payment of City Bills, AC would trade with a fair market value much higher than $0.05, but the chance of a cash-run on AC would be virtually eliminated.

State Constitutional Issues

The City of Austin is a “home rule” city, meaning it is authorized by the State of Texas to do anything which Texas law does not prevent it from doing. Because Austin Credits will carry some legal obligation by the state, they will be classified as “public securities,” which are defined by Texas Government Code § 1201.002 as “an instrument, including a bond, certificate, note, or other type of obligation authorized to be issued by an issuer under a statute, a municipal home-rule charter, or the constitution of this state.” Because they are public securities, Austin Credits must conform to the requirements of the Texas Government Code.

There are certain types of public security which the Texas Government Code authorizes all local governments–even ones that do not have home rule powers– to issue, under certain limitations. For example, Section 1431.002 of the Texas Government Code authorizes municipalities to issue anticipation notes. However, this statute places restrictions on anticipation notes that make it not the best means of issuing the Austin Credit. Fortunately, because Austin is a home-rule city, it does not have to rely on Section 1431.002’s anticipation note authorization. Instead, it can rely on Section 1201.002’s authorization to grant an instrument authorized under a municipal home-rule charter. Article I, Section 3 of the Austin City Charter is incredibly broad and grants it the ability to “pass ordinances and enact such regulations as may be expedient for the maintenance of the good government, order, and peace of the city and the welfare, health, morals, comfort, safety, and convenience of its inhabitants.” The Austin City Charter regulates the issuance of bonds, but nothing within it governs the issuance of notes, so there are no city-level prohibitions on the Austin Credit in the Austin City Charter. If there were, the charter would need to be amended by a majority vote before the Austin Credit program could be established.

At the Texas State level, the relevant statute is Texas Government Code § 1202.003, which requires the issuer of a public security to submit a proposal to the Texas Attorney General, who must confirm that the public security was issued in conformity with the law before it can be issued. Many of the legal requirements surrounding public securities govern the calculation of interest. However, since Austin Credits will not pay interest, these regulations are inapplicable. The one that is applicable is Texas Government Code § 1202.021, which requires that the public security authorization designate a registrar who will keep records of the public security. This statute states that “a home-rule municipality with a population of more than 100,000” can be the registrar of its own security, so this will not be an issue. The City merely has to designate itself as registrar for the Austin Credit.

Texas State Law grants immense discretion as to the terms of a public security. Tex. Gov’t Code § 1201.021 and 1201.022 read as follows:

§ 1201.021

“A public security may:

(1) be issued in any denomination;

(2) bear no interest or bear interest at one or more specified rates;

(3) be issued with one or more interest coupons or without a coupon;

(4) be issued as redeemable before maturity at one or more specified times; and

(5) be payable:

(A) at one or more times;

(B) in installments or a specified amount or amounts;

(C) at a specified place or places;

(D) under specified terms; and

(E) in a specified form or manner.

§ 1201.022

(a) A public security may be:

(1) issued singly or in a series;

(2) made payable in a specified amount or amounts or installments to:

(A) the bearer;

(B) a registered or named person;

(C) the order of a registered or named person; or

(D) a successor or assign of a registered or named person;

(3) issued to be sold:

(A) at a public or private sale; and

(B) under the terms determined by the governing body of the issuer to be in the issuer’s best interests; and

(4) issued with other specified characteristics, on additional specified terms, or in a specified manner.

(b) The governing body of a county or municipality that issues bonds that are to be paid from ad valorem taxes may provide that the bonds are to mature serially over a specified number of years, not to exceed 40.”

These sections grant a great deal of flexibility to the issuer of a public security. Particularly, the fact that public securities may be payable under specified terms and in a specified form or manner necessarily means that the city can limit their redemption to credits against City Bills. This section also implies that a public security must have some maturity period and redemption, which out of an abundance of caution, we interpret to mean that there must be some way for holders of the public security to get cash, but there is no maximum statutory maturity period that applies to all forms of public security. At the longer end, maturity dates for bonds tend to be 40 years, which is why 40 years is the period at which Austin Credits may be redeemed for cash from the Austin Credit Trust. Although the Austin Credit is not a bond, the 40 year maturity provides a failsafe in the event that the Texas Attorney General does decide that Austin Credits are a type of bond secured by the ad valorem taxes of the municipality. However, because Austin Credits are ultimately payable from the Austin Credit Trust, it’s not clear that the regulations surrounding bonds apply. Most likely, because Austin Credits are not direct promises by the City to pay money, they are public securities which do not fall into any statutorily defined subcategory, but the 40-year maturity is intended as a show of good faith that should bring them into general compliance without causing them to be restricted by provisions which are more specific to certain types of public security. In the worst-case scenario, we would use the authorization to issue Anticipation Notes. However, since Austin Credits would be used for general operating expenses, under Tex. Gov’t Code § 1431.009, they would need to mature within one year of receiving approval by the Texas Attorney General. This would limit flexibility, but would not be fatal. As described in the section above, dealing with Federal Constitutional issues, Austin Credits are designed with various incentives to save them built-in, and the City could make the cash redemption value of AC significantly the City Bill redemption value. For example, people could buy 1 AC for $1, but the cash value would be $0.05, although the City would accept them at $1.05 when people paid their City Bills. This would effectively make them anticipation notes with a negative 95% base interest rate and a conditional 5% interest rate; the relevant statutes only define a maximum interest rate, not a minimum one. Because they would be accepted by the City at the $1.05 price in payment of City Bills, AC would trade with a fair market value higher than $0.05, but neither the City nor the Austin Credit Trust would ever need to worry about a cash run on AC, and the AC would qualify under the anticipation note provision.

Food, Money & Democracy

Money on the Left: History, Theory, Practice
Vol. 1, No. 1 (2022)

ISSN 2833-051X

“Food, Money & Democracy: Cultivating Collective Provisioning for Resilient & Equitable Communities of Work”
By Benjamin C. Wilson, Taylor Reid & Max Sussman

Abstract

Coordination rights, or the right to coordinate, is an emerging concept in law and political economy that establishes who is permitted to engage in economic coordination and who does not. Coordination rights are fundamental to the process of building resilient communities and determine whether social provisioning systems are “collective” or “concentrated.” In concentrated provisioning systems, decision-making is consolidated in the hands of a few actors who tend to prioritize profit-seeking over environmental and labor concerns, leading to inequality and ecosystem degradation. Collective provisioning systems instead involve rich human experiences that foster cooperation and a holistic approach to production that improves environmental and social wellbeing. We demonstrate these differences through comparative analysis of industrial agriculture and alternatives such as the La Via Campesina movement for Food Sovereignty, the Black Cooperative Movement in the U.S., and restaurant reactions to the early days of the COVID-19 pandemic. Unfortunately, what is also displayed is that without reliable access to monetary resources collective provisioning systems are vulnerable to financial crisis and collapse. Alleviating these vulnerabilities requires that monetary systems themselves also adopt collective coordination principles. Accordingly, we present small and medium-scale monetary experiments that use food systems as a way to build community capacity. These experiments challenge the exclusionary nature of the dominant profit-driven mode of financial coordination and illustrate the potential of community-driven and socially beneficial frameworks for increasing resilience, equity, and health in our communities.

Click here for PDF.

Benjamin C. Wilson is associate professor of economics at the State University of New York College at Cortland and Research Scholar for the Global Institute for Sustainable Prosperity.

Taylor Reid is an Associate Professor of Applied Food Studies at the Culinary Institute of America in Hyde Park, New York.

Max Sussman has been a chef for over 20 years. He was formerly the chef de cuisine of Roberta’s in Brooklyn, New York. With his brother Eli he has co-authored 4 cookbooks and owns Samesa, a fast-casual Mediterranean restaurant in New York City. With his wife Kate he founded Bog & Thunder, a regenerative food travel company based in Ireland.

See our Instructions for Authors page, if you are interested in submitting or pitching an essay to the journal.

Varn Vlog with Scott Ferguson

Scott Ferguson joins Varn Vlog to discuss his approach to critical theory, aesthetics and politics. Special thanks to C. Derick Varn for permitting Money on the Left to re-publish the interview here.

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The Unfathomable Cruelty of Biden’s Latest Afghanistan Executive Order

By Mitch Green

Originally published to Substack

Biden has decided to steal raid $7 billion of Da Afghanistan Bank reserves currently frozen by US financial institutions. The motivation for this guileless heist is two fold:

  1. Set aside $3.5 billion for humanitarian aid in Afghanistan
  2. Make available $3.5 billion for claimants in ongoing 9/11 survivor’s lawsuits

The grotesqueness of this Executive Order has layers that I’d like to unpack. I’m tempted to use the Matryoshka Doll as a metaphor here, but the layers of horror are not cleanly nested so much as they are woven in and out of the policy situation. Let’s examine some of them in turn.

Horror #1: Raiding Da Afghanistan Bank’s reserves undermines the entire Afghan economy

Despite the title, Executive Order on Protecting Certain Property of Da Afghanistan Bank for the Benefit of the People of Afghanistan, dispossessing the central bank of these reserves is a direct threat to Afghan welfare. As Dr. Shah Mohammad Mehrabi, economist and former central banker for Afghanistan explains, freezing these reserves has undermined the payments system in Afghanistan as well as the very ability for the central bank to fulfill its institutional obligations of providing liquidity and price stability.

Effects of Freezing Foreign Exchange Reserves

Billington: The main subject that you have been dealing with, as have we, is that the U.S. Federal Reserve and several European banks have $9.5 billion in reserves which belong to the Afghan Central Bank. This money does not belong to the banks that are holding it, but it’s being frozen for political reasons and disagreements with the new government in Kabul, which makes it essentially a form of illegal economic warfare. Could you describe the impact of this on the people of Afghanistan and what actions you have taken to attempt to free these funds?
Dr. Mehrabi: Here is an important point about freezing Afghan foreign exchange reserves. It has contributed to economic instability which I predicted back in September. I predicted a number of things would occur, and they have all come into being, because now there is data to substantiate what I had already predicted in September. At that time, I predicted the currency would depreciate—it has depreciated by more than 14% since August. I also predicted that food prices would increase to double digits—and double digit has occurred. The Price of wheat has gone up by more than 20%, flour has gone up by over 30%, cooking oil has gone up by 60%, and gasoline has gone up by 74%. 
In the banking sector, I also said at that time that it needs liquidity, and to bring liquidity, it is very important that the reserves must be released, I said, to stabilize prices and to prevent a further collapse of the afghani, which is the national currency. 
The 14% currency depreciation hits mostly consumer purchasing power. It puts people in a position where they cannot buy the basic necessities of life. Also, the asset prices of all these goods have gone up.
 Also, I said that imports would decline, and that has occurred. There was a reduction in demand for these imported goods, and consumption has declined significantly because people have no access to their own money in the bank. On the top of that, they don’t have jobs. Many lost their jobs; they did not earn any income and then higher prices further suppressed the demand for buying goods and services.
So that’s what you see: hunger and starvation has come into being.

I have emphasized key parts of the transcript above to drive home the effects of removing significant sums of reserves from the central bank’s toolkit. This interview was recorded last December, before Biden decided to loot these funds, thereby permanently removing them from play. So, it follows that the conditions will only deteriorate further. Hunger and starvation has come into being, but not spontaneously. No, this was caused by the policy of freezing those assets and the new move threatens to turn the screws further.

Whither the women and children?

Last summer when the withdrawal was underway, most narratives went something like this: “Sure, the war was long and costly, but we told the woman and children of Afghanistan we had their backs. Now we’re leaving them to die.” The implication was that to withdraw was to abandon them, and so if we want to honor that promise we need to stay in perpetuity. In one sense, there’s some truth to this: the withdrawal did leave a gaping whole of demand in the economy and the desire to kneecap the central bank was not on the table while present in occupation. This fact reveals an aspect of this horror: the threat of permanent occupation as the only means by which vulnerable Afghans, of which woman and children serve as an evocative proxy, can have a meaningful chance at life. Not life and liberty. Just life, partly.

Now, rather than take measures to aid in the viability of the Afghan economy to function, the Biden Administration is decided to harm it further. Again, here is Dr. Mehrabi capturing this hypocrisy.

“We talk about the issue of women and so on—women and children are the first people suffering from this. They are not able to buy goods and services. On the one hand, if we argue, that we want to provide humanitarian aid, but we are going to choke off the economy as well—those are two opposite arguments. The arguments do not really make sense. On the one hand, you say, I want to help with humanitarian aid, but I’m going to choke off the economy so that the ordinary Afghans will not be able to have access to food and basic necessities.”

This hypocrisy should be brought to the fore in any serious policy discussion on Afghan welfare. Modern human practices no longer recommend holding a dog’s snout in their own excrement to show them how they’ve misbehaved, but the jury is still out on how to train The Blob. NB: Dogs are lovable and incapable of cold malice.

But, the Executive Order aims to use half of the loot for humanitarian aid for the benefit of the people. It says so right in the name!

This would be funny were it not so disastrous and misguided. You cannot address the immiseration of Afghans resulting from, in part, the temporary restraint of its central bank, by hobbling it to do a one-shot aid package. This is absurd and anyone advising the President on the economic soundness of this concept should be stripped of their credentials and floated out to sea. $3.5 billion is a tiny number for an aid package appropriate for the need. And anyway, what is of crucial importance is the swift return of the central bank’s ability to manage its banking system, exchange rate and afghani liquidity. That’s the plumbing, folks. Imagine ripping the plumbing out of a thirsty person’s house, then handing them a length of the resultant copper scrap and saying, “Drink up! There’s some water left in this pipe. And you’re welcome ;)” That’s what this is like. Or if you prefer less hyperbole, here again is Dr. Mehrabi:

Belsky: […] The World Bank, as you know, is now planning to restore about $230 million in aid. But even this small amount, they’re saying, has to go through UNICEF and the World Health Organization instead of going through the Afghan banking system. What is your view of this?
Dr. Mehrabi: I don’t know where UNICEF is going to use it, for what purposes. I said that before. Or WHO, and even the World Food Program. If they are for the purpose of purchasing grains and other basic necessities, that is good. But humanitarian aid is not a solution to rekindling the activities of the economy. Humanitarian aid, as I have said all along, while it is necessary, it’s a stop gap measure, it’s not a complete measure to get the economy overall to move to a point where they could get an increase in aggregate demand, which is very essential if the economy is going to function and generate enough revenue for daily economic activity.

Horror #2: Robbing Afghans to compensate 9/11 Survivor Claimants with suits outstanding

I’m not a legal expert and will not opine on the standing or other circumstances of the 9/11 Survivors lawsuits. And this one might make a lot people very angry with me. But, I will say that it’s grotesque political theater to seize reserves of a central bank in one country to use as a basis for paying people in another country under the pretense of compensating them for damages caused by individuals from a third country. Even if you could establish a direct connection to some Afghans for that crime, it would not follow that you should punish an entire society of people who have no causal relationship to the event as a mechanism for making financial restitution to a restricted class of beneficiaries in another society. I leave the legality of the whole proposition to the lawyers, which seems to this lay person rather dubious.

And you don’t need to pilfer the central bank reserves of Afghanistan to make 9/11 Survivors whole! A fact that brings me to the last horror I’d like address.

Horror #3: We see once again the deleterious effects of treating money as a quantum of value that needs to be shuffled around

I know what you’re thinking. And you’re right. I did put MMT into this reaction piece. Here’s why: this Executive Order, top to bottom and side to side, represents the sound money scarcity logics that prevail consensus policy views. It’s right there in the notion that you can seize some treasure to move from the plumbing of the Afghanistan banking system to the “humanitarian aid” sector of the Afghanistan economy. Elsewhere, you have the notion that you can seize some of the treasure and push it across the playing board to third parties who are hoping for payments to originate from the legal – economic apparatus of the US system. And yet you still see it in the foolish notion that you can do any part of this in such a way that sanitizes the operations from hitting Taliban balance sheets. Only a sound finance mind can dream up such a fantasy.

It’s the opposite case that draws this last horror out. The idea that economic endeavors may proceed on their own terms (by envisioning the outcome you want and then legislating for the funds to finance it), in non zero sum fashion, illustrates the needless cruelty, waste and punitive character of this Executive Order. It is volitional to destroy the Afghan financial system. It is volitional to starve Afghans so that you may clear a path for resolution for the 9/11 Survivors. It is grotesque and horrific and will be Biden’s legacy.

Read more from Mitch Green’s Substack