Rising Tides Sink All Boats

By David M. Fields

So, what is the Fed’s deal? Has Jerome Powell fallen prey to inflationary paranoia and hysteria for all the wrong reasons? Or is a “strong’ dollar a manifestation of a particular response to a policy choice that is more calculated and direct? By facilitating aggressive monetary austerity, the Federal Reserve is ensuring the US dollar is a safety asset to insulate the global rentier from cost-push-markup inflationary unpredictability.

The US dollar is surging to new heights. For instance, the US Dollar Index, which values the greenback against a basket of currencies, has advanced considerably. One of the burning questions is whether this will last? For now, I think, yes, it will, simply because there is no alternative for global trade invoicing and financial accounting. Aggressive monetary austerity policy from the Federal Reserve, a project aimed at using unemployment to tame cost-push-markup inflation, is pushing rival currencies lower, particularly in emerging market economies that suffer from balance of payments constraints, as investors from around the globe rush to purchase US Treasuries for security in the face of world-systemic economic uncertainty.

This scenario is vastly different than the monetary policy from only a year ago or so. Then, to cope with the Covid-19 pandemic, central banks around the world cut interest rates sharply — to near 0 — and governments deployed aggressive fiscal support of their economies. As a result, Federal Reserve actions were important in stabilizing world financial markets, specifically with respect to Fed swap lines and the establishment of the Foreign and International Monetary Authorities (FIMA) Repo Facility, which ensured a “buyer of last resort” for foreign central banks desiring to sell U.S. dollar reserves. Capital flowed throughout the world and the dollar fell sharply. In a sense, this was to be expected, and was seen as temporary. Eventually, the dollar was bound to bounce back up. And now it is. And the post-pandemic world paved the way.

Indeed, as the world economy reopened from pandemic lockdowns, supply chain bottlenecks arosecoupled with pandemic profiteering, generating worldwide upsurges in inflation. The response from the Fed, as mentioned, has been to raise the federal funds rate, which has translated into a sharp dollar appreciation as a result of global capital inflows, as the US dollar is a reserve asset to cope with worldwide economic uncertainty.

Yet, is this influential role of the dollar in the world economy an indication of the United States’ core commitment to internal price stability and external cooperation for the deliverance of efficient world capital markets and global trade links? Or acute deposition of the monetary power of the United States? In my view, the answer is the latter.

Here’s why.

The Fed is the world economy’s central bank, which acts as the safety valve for mass amounts of international liquidity. The role of the US dollar in international markets, and the advantages that come with it, are the spoils of its monetary hegemony. The provision of this asset allows the United States to become the source of global demand, and to insulate itself from fluctuations and contradictions of perilous cumulative disequilibria that may arise in the world economy, like the adverse price effects of supply chain bottlenecks and financial contagion that stem from foreign currency devaluations. The US dollar is the numeraire currency in international markets, which is not emblematic of credible macroeconomic performance that fosters confidence, but an arbiter of authority that regulates and dictates the flows of international financial commitments for global economic activity.

Given the current state of world economic dynamics, along with the foreseeable future, there does not seem to be a direct challenge to the dollar’s preeminence, in the same vein as the Euro was not a likely contender given its fallout from the Great Recession. There is not any indication of the greenback’s fall from grace as the dominant international currency. This does not preclude, nevertheless, eventual dollar dethroning, just confirms that the process is (very) long-term.

Despite hysterical contestations of inflationary fragility, the US dollar insulates the United States from global fluctuations and contradictions that may arise. This provides the country the effective means by which the world economy can be stabilized with global demand expansion, without spurring assumed demand-pull inflationary spirals. So, what is the Fed’s deal? Has Jerome Powell fallen prey to inflationary paranoia and hysteria for all the wrong reasons? Or is a “strong’ dollar a manifestation of a particular response to a policy choice that is more calculated and direct? By facilitating aggressive monetary austerity, the Federal Reserve is ensuring the US dollar is a safety asset to insulate the global rentier from cost-push-markup inflationary unpredictability. As such, expectations of future dollar depreciation arising from a return to loose monetary policy is, unfortunately, unlikely.

I hope I am wrong.

***Republished from the Monetary Policy Institute Blog***

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.

Monetary Austerity as Social Conflict

By David M. Fields

Monetary austerity, like fiscal austerity, is a top-down offensive. A monetary assault on working people is being waged in the name of fighting inflation. In similar fashion to the demagoguery that surrounds government expenditure cuts that lead to significant losses in social provisioning, a political climate of inflation hysteria has engulfed the US Federal Reserve, engendering a reactionary policy stance of protecting the wealthy at the social cost of maintaining a precarious working class.

The Fed has concluded that inflation is now its biggest challenge, but admits having no control over the actual factors underlying the current inflationary surge. Nonetheless, it defends raising interest rates as necessary “preemptive strike” to excessive price distortion, whereby severe “market imperfections” in the long run could undermine the dual mandate of price stability and maximum sustainable employment. In central bank jargon, such so-called forward-looking acumen conveys the message that anchoring inflationary expectations is the primary means to ensure market confidence or “credibility” for effective macroeconomic balancing.

The notion of an independent and knowledgeable technocratic Fed constitutes naïve faith. Monetary policy choices support some interests over–even against–others. So, contrary to what we are told, contractionary monetary policy is NOT a conventional tool to soothe market confidence in light of unpredictable inflationary expectations; it is an embodiment of social conflict, a coordinated attack on the working class to protect and maintain profit extraction. Raising interest rates, thus, is not “sound” policy in the truest sense of the term; it reduces consumer spending and economic activity at the behest of the rentier to insulate this social group from any possible unsavory transgression that may arise from economic uncertainty.

I am sure this seems like heresy to many, but let me try to convince you. The economy, as determined by the need to expand output depends on banking; the capacity for firms to purchase necessary amounts of labor and material inputs necessary for satisfying expectations of profit and for workers to receive wages is assigned by the availability of credit. Without banking, economic growth comes to a halt, since business investment expenditures stem from the need to borrow in excess of any pre-existing amount of financial resources. Credit provides deferred payment, which allows firms to manage sales, and, thus, facilitate long-run operational expansion. If there is a restriction on credit, as a matter of course, any attempts for increased production are futile.

Credit allows firms to pay out money for materials and wages to keep production and distribution going in advance of receiving profits from expected sales of goods. The implication is that firms will have to deduct interest payments from profits, which will be relegated to the banking sector. The cost of available credit from the banking sector is set by the rate of interest, which is determined by the Fed; this, by definition, determines the parameters of firm profit. A high rate of interest, for instance, would induce firms to forgo productive investment because access to credit is expensive. This would encourage firms to suppress wages, e.g. layoffs, which triggers recessionary pressures resulting from decreased production — this raises the level of unemployment, which is antithetical to working-class interests.

The decision by the Federal Reserve to raise interest rates by the largest percentage point since 1994 is, therefore, quite treacherous for working people. US Economic growth is well below full employment. The economy confronts headwinds from developments that constitute cost-push-markup inflationary processes, so we are not seeing the manifestations of so-called demand-pull inflation, that is, too much money chasing too goods, or too much wage growth, resulting from an overheating economy or overspending for which monetary austerity is requisite. There is an economically destructive rationale at play, wherein interest rates are hiked to the point that they depress wages to compensate for causes outside of the direct reach of the Federal Reserve, to put a stop to workers from taking advantage of unique historically-specific social circumstances to effectively bargain for receiving their fair share.

***This post is heavily drawn from my entry on ‘Credit Money” in the soon to be published Encyclopedia of Post-Keynesian Economics, edited by Loui-Phillipe Rochon and Sergio Rossi, see here.***

***Republished from the Monetary Policy Institute Blog***

On the political force of MMT

From a non-sovereign perspective

By Andris Šuvajevs
A couple of days ago, the British economics commentator, Grace Blakeley, called people who advocate Modern Monetary Theory “naïve.” This was following a public radio appearance earlier that same day, in which she described tax breaks for the wealthy as taking money directly from those who claim public benefits. An MMT perspective objects to this line of argumentation since the actual or technical monetary process does not at all operate the way Blakeley describes it. Since what MMT calls a monetary sovereign, such as the UK, can issue currency without borrowing (or taxing the rich more), MMT proposes a policy that simply says ‘let’s provide more income to the poor’. The outcome is the same as in Blakeley’s approach, but the journey is different – MMT proposes to get rid of the conditionality that inheres in a policy position which rests on ‘let’s tax the rich in order to fund the poor.’ Importantly, MMT advocates tend to be wholeheartedly in favor of taxing immoral and abnormal levels of wealth – they just treat it as a separate policy issue.

It strikes me as surprising that people on the left become so heated and genuinely insulting toward each other in discussions regarding fiscal policy. There is often bad faith on both sides. Blakeley calling MMTers naïve is patronizing and quite simply arrogant, discarding the scholarship of many truly admirable thinkers. However, I often find that some MMTers are equally hostile when trying to make the point that taxes do not fund the government. Blakeley is obviously making a rhetorical rather than an academic point. She might (perhaps) agree with the technical analysis of the British monetary system that MMT provides, but her interest lies in formulating effective political arguments that resonate in British society. Thus, much of the online bickering between the British (Corbynist) Left and the global MMT crowd is often pointless as both sides speak on different conceptual levels.

Nevertheless, there is a conceptual disagreement between people who generally believe that public spending is in some way dependent on private savings and people who see it exactly the other way around. This disagreement concerns the issue of power. There is a reason why Blakeley disparages MMTers as naïve – her perspective is that MMT has no idea how the political world operates and that MMT is nothing more than a technical description of the monetary system. It is precisely on this point, however, that Blakeley—and the part of the British Left that she represents—demonstrates their worst short-sightedness and bad faith.

Namely, it cannot imagine a world where the metaphysics of trade-offs is not the basic principle of politics. I am all in favor of making effective political arguments that are not necessarily based on MMT, but arguments such as the one Blakeley is making are indicative of a fundamental world-view based on scarcity and zero-sum relations that unwittingly reinforce the very logics it supposedly tries to overcome.

In a way, MMT has a more advanced theory of power than contemporary British Marxists in breaking with the normative vision of societies that are discursively structured in classes and other forms of hierarchy. The British Left immediately (and in bad faith) accuses MMT of denying that classes or hierarchies exist. MMT, on the other hand, sees such blanket disavowals of monetary authority as entrenching structures of inequality. The worldview of the British Left is structured as a struggle. The MMT worldview tries to re-define the meaning of the struggle itself.

I suspect that one reason the British Left is explicitly antagonizing in its rhetoric has to do with it being continuously sidelined from power for the last, I don’t even know how many decades. The British ruling classes have been so overwhelming in their political victories that the British Left probably thinks it cannot afford to spend time on redesigning its conceptual toolkit. Admittedly, it is not easy to make public policy based on rather abstract ideas of power such as the one MMT professes.  However, it has been my own professional experience that political arguments based on MMT can be incredibly empowering. I live in Latvia and this is a country that has adopted the euro and thus has no “monetary sovereignty” as it is commonly defined. Latvia has no formal influence over the interest rate, bond-buying programs and whatever else the ECB is doing. It is a country for whom “MMT does not apply” as critics often suggest. In reality, MMT is the only way forward if Latvia is to achieve any meaningful socio-economic development.

Let me give you some examples of the political utility of MMT. To begin with, the neoliberal doctrine of the financially impotent state whose capability is dependent on the entrepreneurship of the private sector has been a central feature of the post-soviet macroeconomic consensus. It is useful to remember that MMT itself emerges in conditions where political arguments on both sides of the debate assume that the state is a secondary institution in the force-field of capitalism and the fundamental scarcity of money is a fact of life. It is precisely this assumption which enables financialization and privatization of social life and public goods – MMT emerges to challenge that, providing nuanced analyses of the monetary system which then form the basis for the political arguments against the privatization of the state. It is quite remarkable that the British Left fails to acknowledge this making one wonder who actually is naïve here.

In Latvia, as in other Eastern European, post-socialist countries this consensus has imposed heavy social costs. Since the restoration of independence in 1991, the country has lost nearly a quarter of its population and the decreasing population rate is projected to continue well into the next decades. The only public policy response has been nationalist-conservative exhortations about women needing to give more births and moral panics regarding same-sex partnerships. The lack of public policy is rooted in fear that surrounds any economic projects undertaken or supported by the state. The yearly reduction of debt-to-GDP ratio is de facto state policy even in conditions where Latvia enjoys a relatively small debt-to-GDP ratio. Even if Latvia can ‘afford’ to spend more, it will not do so if it increases debt by a few percentage points in the subsequent fiscal year. Meaningful public investment in social infrastructure that includes the wages, salaries or stipends of teachers, students, social workers, etc. is effectively unthinkable. The median wage in society at large after tax is 749 EUR. Latvia’s integration into the global market immediately turned it into a peripheral country that supplies low-to-medium value goods and services, and regularly posts a trade deficit. The austerity of the last decade has decimated its long-term prospects as the absence of social and industrial policy has meant the gradual evaporation of doctors and teachers alongside a discombobulated private sector that is left to its own devices without support or strategic guidance.

It is within this sorry mix of affairs that MMT provides a powerful political alternative. MMT helps articulate the view that public debt is a form of investment and thus does not have to be feared at all. MMTers often criticize the Eurozone for its harsh and nonsensical fiscal framework which countries like Latvia currently fully embrace. Yet, almost paradoxically, Latvia could enjoy more freedom of action if there was the political will to use the financial security afforded by the eurozone to small open economies. Latvia could invest in its social infrastructure without having to rely on its export earnings and without having to impose a heavier tax on its (very small) well-earning segment of the population. Latvia could create financial institutions like a state development bank with the mandate to provide credit to specific industries that carry out the objectives of the green transition if there was a will to do that.

Without an understanding of MMT, these policies are politically impossible. If public investment (in which I include salaries, stipends, and pensions) is made conditional upon tax hikes on the well-off, you may as well just fold and retire. Furthermore, MMT helps to advance the public discussion by suggesting a focus on available resources rather than ‘available money’ – if the gap between necessary and available teachers is recognised as a problem, policy has to be focused on bridging this gap rather than reducing public debt despite everything else collapsing.

At this point, the conventional arguments pop up – ‘Well, what about the interest rate?’, ‘What happens when the debt grows and the servicing costs increase? Won’t we have to sell our national assets to pay it off?’ These are legitimate concerns in a country whose politicians willingly sold its soul to the IMF in 2008. It is precisely because Latvia does not politicize its own monetary agency and reliance on financial markets that these arguments carry the weight that they do. Nevertheless, without MMT one cannot properly address them. It is MMT that points out that the interest rate set by the central banks (the ECB in this case) is a policy, not a market rate. It is this fact which lets one argue that increased debt will not be a burden on future generations because the interest rate set by the financial markets depends on the ECB – and if ECB increases rates in a recessionary environment, well that’s just stupid policy, isn’t it? Whereas if rates increase in a pro growth environment – well, then there’s no problems servicing the debt, is there? Even in the Eurozone there’s room for political decisions and pressures around the ‘super-independent’ ECB as the debates surrounding current inflation demonstrate.

So it can be seen why MMT is politically helpful in such an economic environment. If one can demonstrate to the public that spending can be carried out without extra taxation, and it will likely increase the overall productive capacity of society, they can begin to imagine a new economic model that is otherwise inaccessible. MMT provides the theoretical tools to infuse the public sector with a positive meaning emphasizing the ways it complements rather than contradicts the private sector.

However, an Eastern European setting comes with its own challenges. The society simply does not believe that public debt can be harnessed for good and it sees public money as dangerous and not particularly democratic. The experience of the 1990s and the corruption and theft of state resources has made many of us intuitively suspicious of large (or any) state projects. If direct public spending is proposed, the first thought for many will be that some well-connected individuals are about to be generously enriched.

This is probably where many on the mainstream British Left will triumphantly exclaim “I told you so,” reminding us that it is insufficient to simply ‘learn economics.’ In that sense they are right, and MMTers certainly should be cautious about appearing too arrogant themselves by reducing politics to their academic truths. Public debt and spending is inevitably going to be realized through and alongside the existing structures and hierarchies of society even as it, hopefully, tries to change them. Repeating the mantra that ‘the state cannot go bankrupt,’ even practically in the eurozone, will not get you very far. People have legitimate historical concerns and thus there is still work to do in developing MMT’s insights into an effective political rhetoric.

To briefly conclude, my hope in writing this is centered on the possibility that there will be less quarreling among people who are in broad agreement about their political goals. If more MMTers and non-MMT Marxists inject some good faith in their positions and arguments, that’s a chance for both to practice what they preach. Just because struggle is constitutive of politics does not mean that everything has to be seen as a refraction of one struggle. And just because one is technically correct about something does not mean they are correct in their political rhetoric, dependent as it is on their respective societies. 

The Visual Cliff: Eleanor Gibson & the Origins of Affordance

By Erica Robles Anderson & Scott Ferguson

Originally presented at Hidden Histories: Gender in Design, Design History Society Seminar, April 14, 2022.

Part I: TED Talks and Teapots

In a 2003 TED Talk titled “Three Ways Design Makes You Happy,” Donald Norman announced that “The new me is beauty.” Norman – a professor, design firm principal, and the first Vice President of User Experience at Apple – ranks among the most influential figures in the field of user experience design. Yet above all, he is associated with the concept of “affordance,” an invented term now widely employed to refer to the forms and features of any useful thing.

Norman brokered the term from psychology to design in his 1988 book The Psychology of Everyday Things. Citing J.J. Gibson’s 1979 book The Ecological Theory of Perception as his source, he offered this definition: “The affordances of the environment are what it offers the animal, what it provides or furnishes.” In the 1980s and 1990s, the medium of computing was taking form as a mass “personal” technology. Norman was part of a movement to constrain the material and semantic scope of personal computing through psychological principles of use.

The book cover of "The Psychology of Everyday Things" depicts a tea pot with a handle that is directly underneath the spout.
Donald Norman popularized the term “affordance” in his 1988 book The Psychology of Everyday Things, later re-titled The Design of Everyday Things. Norman’s original title self-consciously references the quotidian neuroses Sigmund Freund famously analyzed in The Psychopathology of Everyday Life. Norman’s book nods even more directly to Freud in the opening chapter “The Psychopathology of Everyday Things” linking daily experiences of frustration to the need for a new psychology of materials. Unlike the psychoanalyst who might help explore repressed desires and unconscious motivations, the designers’ task is to ease frustrations by generating immediate understanding.

A decade later, at the turn of a new millennium, in the aftershock of the Tech Bubble burst, Norman was now thinking about what feelings afford. He dramatized his thought process on stage:

“I really have the feeling that pleasant things work better, and that never made any sense to me until I finally figured out — look … I’m going to put a plank on the ground. So, imagine I have a plank about two feet wide and thirty feet long and I’m going to walk on it, and you see I can walk on it without looking, I can go back and forth and I can jump up and down. No problem. Now I’m going to put the plank three hundred feet in the air — and I’m not going to go near it, thank you. Intense fear paralyzes you. It actually affects the way the brain works.

That’s what fear and anxiety does; it causes you to be — what’s called depth-first processing — to focus, not be distracted. And I couldn’t force myself across that. Now some people can — circus workers, steelworkers. But it really changes the way you think.”

Donald Norman on-stage delivering a talk.
Donald Norman, “Three Ways Design Makes You Happy,” TED, 2003.

The pleasure of well-designed things has something to do with anxiety. In 2003, unease would have been a salient emotion. The United States was waging a so-called “War on Terror” and the national economy was just pulling out of a recession. A plank across an abyss affording safe passage to the skillful and the daring could be an allegory for neoliberal precarity. But Norman’s demonstration also surfaced a different moment and a history underlying affordance that seems, at first glance, to have very little to do with computing or design: Dr. Eleanor Gibson’s visual cliff

To the best of our knowledge, there are no citations of Eleanor Gibson’s work in design literature. We correct that omission. Eleanor played a foundational role in developing a paradigm that came to shape how we perceive aesthetic, technological, and political-economic possibilities.

We are currently writing a media history of affordance–the first sustained cultural analysis of the concept. We account for the term’s diffusion through networks of social scientists, designers, and technologists during a period marked by discourses about market growth and government constraint. We fundamentally reject zero-sum metaphysics. Our engagement with this history is an effort to revisit late-twentieth-century aesthetics in order to enlarge their critical possibilities toward more capacious ends.

Our analysis of Eleanor Gibson rejects additive models of gender history, with their fatal deferrals to “someday”, or “also”,  or “her or they too.” These logics reproduce inclusion as perpetual supplementarity and thus configure the project of history as an asymptotic climb toward completeness. Gibson’s visual cliff was always already a story of affordance. Our task is to critically interpret its world-shifting Gestalt.

The cover of Eleanor Gibson's memoir depicts the horizon. An overlay of lines converge toward a vanishing point.
Eleanor Gibson, Perceiving the Affordances: A Portrait of Two Psychologists (Routledge, 2002).

Part II: Baby on the Brink

In April 1960 Eleanor Gibson and Richard Walk astonished Scientific American readers with photographs featuring a baby boy crawling atop a sheet of glass laid across a checkerboard platform. On one side there appeared to be a drop-off of a few inches. The other seemed to give way to a small chasm several feet below. Although perfectly safe, the juxtaposition of opacity and transparency created the impression of a precipice, as vividly portrayed in filmed recordings of the experiments. The visual cliff staged the problem of affordance, although it was not yet named as such. Images of mothers beckoning infants to traverse the makeshift gorge entered popular culture through New York Times and Life features. They have been canonized in psychology textbooks for more than half a century. We are bringing babies back in order to think about what affordance affords.

The Cover of Scientific American shows a kitten staring over a precipice.
The “Visual Cliff” was the cover image for the April 1960 issue of Scientific American. Babies of all kinds – human, kitten, goat, rat, lamb, puppy – were placed on the apparatus.
Four images of babies on a visual cliff are depicted. In some, the mother can be seen encouraging the child.
Eleanor Gibson & Richard Walk, “The Visual Cliff,” Scientific American, April 1960.

Eleanor and J.J. met at women-only Smith College during the Great Depression. She was a student, he was an Assistant Professor. She completed her undergraduate and master’s degrees in psychology, before finishing a Ph.D. at Yale in 1938. The Gibsons spent decades at Cornell University where J.J. was a professor, but nepotism rules prohibited Eleanor from eligibility as a faculty hire. She worked as a contingent scholar, with no lab of her own nor license to apply for grants as a Principal Investigator. When J.J. retired, Eleanor became the first developmental psychologist in the Department of Psychology as well as Cornell University’s first female endowed chair. She was inducted into the American Academy of Arts and Sciences in 1977 and she received a National Medal of Science in 1992, which is the highest scientific honor in the United States. 

If mid-century psychologists were preoccupied with social attachments, stimulus responses, and mental associations, the Gibsons, together, developed a paradigm they called perceptual ecology and the visual cliff was a crucial experimental foundation. By isolating the child from its mother, they established an ontogenetic basis for “independent locomotion” and “discrimination of depth” untethered from the psychosexual dramas and ambivalent interiorities that riddled midcentury white middle-class prosperity. As unnerving as they are exciting, photographs of babies on the brink raise the question: What does the infant see? In the experiment, almost every toddler refused to venture over the cliff. For Gibson and Walk, this not only proved the babies’ perceptual fitness, but also established that mobile depth perception is a direct ecological “endowment,” not a matter of habits, associations, or institutions. 

Newspaper clipping depicting Dr. Eleanor Gibson, President George H.W. Bush, and Dr. Allan Bromley at the White House.
“Eleanor Gibson receives the U.S. National Medal of Science in 1992,” by Roger Segelken in Cornell Chronicle.
Scientific diagrams explain the visual depth cues in the apparatus designed as a "visual cliff."
First- and third-person views of the visual cliff featured in Eleanor Gibson & Richard Walk, “The Visual Cliff,” Scientific American, April 1960.

PART III: ALL ABOUT THE GIVENS

Cybernetics has long been narrated as the paradigm that shaped human-computer interactions. Perceptual ecology reveals another path, equally foundational but ontologically distinct. Perceptual ecology is not concerned with signals, feedback loops, or uncertainty. It theorizes a sensory-rich, ever-changing world inhabited by animate perceivers. The terrain is a substance. The ground is a surface primordially differentiated from the sky at the horizon. The atmosphere is an immersive, boundless medium. Animate perceivers do not receive bits of information through discrete channels. Instead, they register the constant flux of light on surface as an “ambient optical array.” Persistent sensory information is called “invariance” and it corresponds to the “solid angles” in a shifting world.

A line drawing of a landing field is shown. Arrows indicate multiple perspectival directions of view, which vanish at the horizon and at the point of aim.
Diagram demonstrating the underlying invariant structure of the optic array from James J. Gibson, The Ecological Approach to Visual Perception (Psychology Press, 1979).

Perceptual ecology, like other paradigms that shaped human-computer interaction, addressed the predicament of the soldier moving through the world in machines. During World War II, Eleanor took leave from teaching and research to raise children and J.J. led a U.S. Army Air Forces Aviation Psychology Program called the Psychological Test Film Unit. The Unit jettisoned the instrumentation of cockpits and radar screens to make motion pictures. The animated mobile point-of-view shots we associate with first-person shooter games and virtual reality experiences were developed to train pilots and to build a psychological theory of being-in-the-world that is perceptual and ecological at once. In 1947, J.J. wrote that “All spaces in which we can live include at least one surface, the ground or terrain. If there were no surface, there would be no visual world, strictly speaking.”

A gunner door on an aircraft is open and a plane flying nearby, likely a target, can be seen.
Point of view shot from Position Firing, an animated U.S. Air Force training film directed by an un-credited John Hubley and featuring waist gunner “Trigger Joe” voiced by Mel Blanc. The film was developed to teach gunners the basics of how to hit attacking fighters from bombers like the B-17 & B-24. Position Firing is one of many test and training films discussed in James J. Gibson’s previously classified text, Motion Picture Testing and Research, Report No. 7 (1947), written under the auspices of the U.S. Army’s Psychological Test Film Unit after the Second World War.
A room is drawn as if receding from inside the head of the observer. The nose appears close up, the feet appear further back, then the boundaries of the room, then the view out the window, all the way to the horizon.
The cockpit perspective comes home. The first-person view of the wartime pilot is transmuted into a mid-century view from a living room lounge chair. CIT The Ecological Approach to Visual Perception.
Two renderings of a house are juxtaposed. In the first every edge of the shapes composing the structure can be seen. In the second, only the edges that would be visible to an observer are in view.

Perspective views of solid objects modeled by Lawrence G. Roberts. Throughout the 1960s, Roberts drew extensively from J.J. Gibson’s Perception of the Visual World (1950) to formulate a highly influential theory of computer vision focused on surfaces, edges, and lines. The pictures above were featured in Ivan E. Sutherland, “Computer Inputs and Outputs,” Scientific American 215, no. 3 (September 1966). For a media archaeology of this image in computer graphics see Jacob Gaboury, Image Objects: An Archaeology of Computer Graphics. (MIT Press, 2021).
A hand reaches out, as if attached to the player, to punch an avatar on screen.
First-person combat view from Superhot VR, a virtual reality game designed for Oculus’s Quest & Quest 2 headsets.

The visual cliff brought surfaces and animate perceivers into the lab in order to prove that discrimination is a psychological, rather than merely a physiological, problem. Babies of all kinds – human, kitten, goat, rat, lamb, puppy – were placed on the apparatus to the same effect. Surfaces are meaningful in terms of an organisms’ proprioceptive sensory capacities within an ecological niche. Their perceptual thresholds act as optical footholds or levers for immediate responsive action: edge detection. Affordance names the frame-of-reference as organism-environment relationality. 

Donald Norman’s version of “affordance” channeled perceptual ecology into design. Norman explains, “Affordances provide strong clues to the operations of things. Plates are for pushing. Knobs are for turning…when affordances are taken advantage of, the user knows what to do just by looking: no picture, label, or instruction is required” (Norman, 1988, 9). “Good design,” he argued, “leads to immediate understanding” (Norman, 1988, 23). 

Good, here, means ease, not True or Beautiful. Norman’s “natural design” breaks with Beaux-Arts, Bauhaus, and Arts and Crafts traditions. The aesthetic of “immediate understanding” took hold through the language of “user experience.” In the moment when graphical conventions were being developed, affordances constrained interface functions and forms. Affordance diffused through training programs, professional organizations, and publications. It circulated through engineering, social science, business and marketing, the arts, and the humanities. In the process, terrestrial surfaces became digital media ecologies and affordance became a term for technology, writ large.

A hand pushes upward on a seat adjustment lever attached to the side of a car door.
“Seat Adjustment Control from a Mercedes-Benz Automobile” An example of “good design” as constraint mapping, from Donald Norman’s The Design of Everyday Things (Doubleday, 1989)
A small desktop computer with a portrait of a child's face on-screen is placed on a floating white background.
Macintosh Color Classic, an all-in-one Macintosh with color display targeted at educational institutions was released the year Donald Norman joined Apple as Vice President of User Experience.

At first glance, affordance seems to be a popularized social science term. It is capaciously relational, perhaps almost to the point of banality. Upon critical reflection, however, one begins to perceive how affordance-thinking contracts the view. When ‘what you see is what you get’, social difference, intermediaries, and ethical disturbances disappear from the schema of the given.

If these politics often evade notice, perhaps it has something to do with how elegantly affordance nominalizes the verb to afford. By focusing on “the complementarity of the animal and the environment” it omits political economy, by design. To afford is to provision, to bear the expense of accomplishing something. The Gibsonian neologism replaces the political-economic provocation ‘What is to be done?,” with the perceptual ecological question, ‘What is immediately given?’

Direct experience is a rather narrow and ambivalent mode of ease. It relies upon mediations and hidden labors that must go unseen. A gender history that adds specific figures to the canon can never go far enough. There is trouble with a model that takes what is seen as the limit of what can be given. If we are to reckon with affordance we need to promote the concept to the status of a metaphysical reckoning with being-in-the-world. Like I-Thou relations, a phenomenology for Dasein, a biosemiotic Umwelt, Kantianism, or Cartesianism, there is a big move underway on the visual cliff. But there is also a sensational melodrama of eyeballs on the brink, which Norman’s turn to emotional design brings to the surface.

By queering and expanding the term we could embrace perceptual ecology as political economy as design. We can openly declare that society is not condemned to forever teeter on the cliff, whether narrative, fiscal, or metaphysical. There are many worlds that we can, in fact, afford.

About the Authors

Erica Robles Anderson is a professor of media, culture, and communication at New York University. She is a cultural historian of network society interested in architecture, technology, and religion, as forms of collective life. She is a founding member of the OIKOS working group on kinship and economy, and the Editor of Public Culture.

Scott Ferguson is a professor of film and media in the Department of Humanities and Cultural Studies at the University of South Florida, editor for the Money on the Left Editorial Collective, and research scholar at the Global Institute for Sustainable Prosperity. His research focuses on money, media and aesthetics in Western modernity.

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

On ‘Thin Air’: Money, Metaphoricity & Metatheatre (Essay)

By Rob Hawkes

Last year, I gave a talk on literature, money, and trust in George Gissing’s New Grub Street (1891) which the MotL Editorial Collective kindly shared as a podcast. Gissing’s novel tells the story of a group of writers struggling to survive in the harsh literary marketplace of the 1880s, one in which artistic merit seems to count for very little and authors who wish to achieve success must regard literature as a trade. The two characters who most clearly embody the plight of the artist who cannot ‘supply the market’, Edwin Reardon and Harold Biffen, both die in poverty by the end of the book and, significantly, both recite the same lines from Shakespeare’s The Tempest as they approach death: ‘We are such stuff / As dreams are made on, and our little life / Is rounded with a sleep.’ This is not simply a coincidence; Biffen is present at the moment of Readon’s death and he later recalls his friend’s last words as he reaches the end of his own life. However, I find the appearance of these lines in this text especially intriguing because they point towards a set of pressing issues in our present-day debates surrounding money.

This is the longer speech from The Tempest that the lines recited by Reardon and Biffen are taken from:

Our revels now are ended. These our actors,

As I foretold you, were all spirits and

Are melted into air, into thin air:

And, like the baseless fabric of this vision,

The cloud-capp’d towers, the gorgeous palaces,

The solemn temples, the great globe itself,

Ye all which it inherit, shall dissolve

And, like this insubstantial pageant faded,

Leave not a rack behind. We are such stuff

As dreams are made on, and our little life

Is rounded with a sleep.

At this point in the play, the sorcerer Prospero has called a halt to a ‘masque’ which he has conjured to celebrate his daughter Miranda’s engagement to Ferdinand, the Prince of Naples. As Prospero explains to Ferdinand during the performance, its cast are: ‘Spirits, which by mine art / I have from their confines call’d to enact / My present fancies’. One of many instances of a play-within-a-play in Elizabethan drama, this scene in The Tempest exemplifies the thoroughgoing ‘metatheatricality’ of Shakespeare’s works. That is to say that Shakespeare’s plays frequently contain moments of self-reflexive awareness of their own theatricality and, by extension – as in the famous ‘All the world’s a stage’ speech from As You Like It – of the theatricality of life beyond the theatre. Furthermore, as William Sherman notes in the Literary Encyclopedia, ‘Our revels now are ended’ is a speech: ‘which many critics have been tempted to read as Shakespeare’s own farewell to the stage’ occurring as it does in one of the ‘late plays’. As it happens, this speech is also the Oxford English Dictionary’s earliest citation for the ‘transferred and figurative’ use of the word ‘thin’, to mean: ‘Wanting body or substance; unsubstantial; intangible. Also in to vanish (melt, etc.) into thin air: to disappear completely from sight or existence (formerly only of spirits). More rarely to come (etc.) out of thin air.’ As Money on the Left readers and listeners will know, ‘thin air’ is a much-repeated phrase in conversations surrounding money, and especially in discussions of Modern Monetary Theory (MMT). In Declarations of Dependence, for example, Scott Ferguson celebrates the ‘resolutely public capacity to generate money out of thin air‘ that MMT makes manifest.

The Covid-19 pandemic has brought the topic of money creation to widespread public attention – perhaps as never before – as a result of the vast increases in government spending that were necessary to protect lives and livelihoods around the world and, within this broad discussion, the notion of ‘thin air’ has continued to feature prominently. In April 2020, for instance, still in the early months of the pandemic, an article in the New York Timessought to explain ‘How the Government Pulls Coronavirus Relief Money Out of Thin Air’ as follows:

“The United States has responded to the economic havoc wrought by the coronavirus with the biggest relief package in its history: $2 trillion. It essentially replaces a few months of American economic activity with a flood of government money […]. And where is all that cash coming from? Mostly out of thin air.”

The language used here is fascinating in a number of ways. First, the idea that the US government ‘pulls’ money ‘out of thin air’ connotes the pulling of rabbits from hats, while the ‘flood’ of government money evoked next supports the image of money as a liquid that flows (or sometimes sloshes) around the economy. However, this notion of liquid money sits awkwardly alongside the idea of money being ‘pulled’ from somewhere (or perhaps nowhere) – might money in a liquid form be imagined more plausibly as needing to be scooped or pumped than pulled? Having evoked the idea of a flood of money, however, the article goes on to refer to ‘cash’, suggesting that the $2 trillion ‘package’ of coronavirus relief took the rather more solid form of coins and banknotes (which might be better imagined as a stack or a pile than a flood). Finally, it is intriguing to note that the covid relief money is described as coming ‘mostly’ from thin air – which presumably means that some of it was already lying around somewhere – although the exact proportions remain mysterious. This analysis of the article’s phrasing may seem facetious, but (perhaps unsurprisingly as I am a literature scholar) it is my contention here that words matter. Furthermore, I assert that the difficulty that can frequently be observed in any attempt to put money into words – as in the above example and, more broadly, in the mixed metaphors and confused figurations that abound in public discourse surrounding money – is extraordinarily telling.

In a 2020 interview with the Financial Times, Stephanie Kelton asserts that: ‘we don’t have a debt problem, we don’t have a deficit problem […] We have a language problem.’ Kelton, furthermore, is not the only MMT economist to underline the importance of language and especially of metaphor in the way that money is imagined and discussed. In ‘Framing Modern Monetary Theory’ (2017), Louisa Connors and Bill Mitchell ‘provide a conceptual basis for understanding how the language we use constrains our thinking’ and ‘examine some of the key metaphors used to reinforce the flawed message of orthodox economics’. These approaches tend to present the ‘language problem’ identified by Kelton as something to be overcome in the pursuit of more effective ways of explaining how modern economies work. By contrast, I want to suggest that money is hard – perhaps even impossible – to put into words for a reason and that this is an aspect of money that warrants further exploration and understanding rather than circumnavigation or avoidance. Indeed, it may be that money is necessarily ungraspable, both literally and figuratively.

It is particularly interesting to note that, unlike the image of the ‘magic money tree’, which has repeatedly been evoked in recent years to ridicule those who support increases in public spending, the idea of money coming ‘out of thin air’ has been used both to champion and to poke fun at the MMT approach, despite its equally magical connotations. In a recent review of The Deficit Myth for Forbes, for example, Nathan Lewis caricatures Kelton’s argument as follows: ‘as long as there are unused productive resources in the economy (basically, unemployment), the government can print money out of thin air, spend it, and everything is okey-dokey.’ Lewis’s accusation in this piece is one of naivety, as the phrasing ‘everything is okey-dokey’ underlines. Nevertheless, his characterisation of Kelton’s argument – that ‘the government can print money out of thin air’ – is both intriguing and baffling. If the process of creating of money ‘out of thin air’ involves printing, then it is very hard to imagine how this works. Does air get fed into one end of the printer, where blank paper would usually go? I suppose this at least explains why the air has to be thin (gathered at high altitude, perhaps?) – thick air would no doubt clog up the printer. On the other side of the argument, in another piece written in the early stages of the pandemic response, Thomas Fazi deploys the idea of ‘thin air’ in support of MMT:

“The coronavirus crisis has now revealed the austerity logic to be an utter sham: as advocates of modern monetary theory (MMT) have been saying for years, states that issue their own currency and issue debt in their own currency […] can never ‘run out of money’, nor can they become insolvent because, unlike households or firms, they can literally create money out of thin air.”

In the light of the origin (or, in other words, the coining) of the phrase ‘thin air’ in The Tempest, Fazi’s assertion that governments literally create money out of thin air is a curious one. As the OED highlights, the phrase relies on the figurative use of the word ‘thin’ and much of its impact, I would suggest, derives from its metaphoricity. As the image (or non-image) of thin air going through a printer more readily than thick air was intended to emphasise, the word ‘thin’ in the phrase ‘thin air’ is not a reference to its thickness as such. In the OED’s terms, it means ‘unsubstantial’ or ‘intangible’ and thus the idea of something substantial appearing out of unsubstantial air suggests the involvement of a sorcerer such as Prospero.

Given that, as Kelton observes in The Deficit Myth, ‘money is no object’, I would argue that it makes little sense to describe money as being ‘printed’, ‘literally created’, or even ‘pulled’ out of thin air, because all of these formulations represent the production of money as a physical process. Nevertheless, I remain convinced that the link between Shakespeare/Prospero and ‘thin air’, via Gissing, remains significant. After all, while the spirits that perform Prospero’s ‘masque’ both come from and vanish into ‘thin air’, there is no need to imagine that they achieve substantiality in the interim. As I noted above, the ‘Our revels now are ended’ speech has often been regarded as a moment of metatheatrical commentary. Interpreted in this way, plays and, by extension, other works of literature also come out of thin air (and it is remarkable how little time most of us spend worrying that we are going to run out of plays, novels, or poems). As the literary theorist and scholar Derek Attridge puts it: ‘A literary work is not an object or a thesis; literature happens’. This is one of the reasons, as Attridge also explains, ‘that all attempts since the Renaissance to determine the difference between “literary” and “non-literary” language have failed’ and yet, as he goes on to assert, ‘this is a necessary failure, one by which literature as a cultural practice has been continuously constituted.’ In my wider research, I pursue connections between literature, money, and trust and argue that rethinking this trio of terms and the dynamic relationships between them can shed important new light on each concept. I do so not to suggest that literature and money are the same, but to affirm that literature and money can be thought of as sharing the generative potential to emerge from thin air, a potential that frequently defies articulation. Perhaps, then, the difficulty of putting money into words discussed above is also necessary, because money is no object; money happens.

Response to People’s Policy Project on Alaska’s Oil Fund (Parody)

[This is a Guest Post from the Neoclassical Marxism Think Tank]

I apologize for the lateness of this post. I would have finished it sooner, but since taking my kids out of school to learn directly from market experiences, I’ve had to figure out ways to get them to leave me alone. This is a response to the People’s Policy Project on Alaska’s bold cuts to their public university system.

There was a time, probably hundreds of years ago, when public education was important. Before income became automated with the invention of passive income, humans had to be augmented with different kinds of knowledge in order to earn money and become truly free. Today, the average worker is far less productive than the average index fund in real terms. And by real terms, I mean dollars. In our technologically advanced society, the income of an “educated citizen” is equal to the income of an adult who receives the same amount in the form of an oil dividend.

From a material point of view, “public schools” are little more than unemployment insurance with a homework requirement.

So it’s a breath of fresh air to see that the brave government of Alaska, following Marx, cut the state’s public university budget by 40% to pay for their oil-powered Sovereign Wealth Fund. Alaskans have been liberated from workfare at a rate of $3,000/year. But the real benefits can’t be so easily measured. Beyond just $3,000/year, Alaska’s former students have gained something truly invaluable. Approximately $2,400 per year of extra consumption, by my intern’s calculations.

But as usual, some Leftists care more about gate-keeping their cushy think tank positions and virtue-signalling to tenured professors than actually winning. In a disgusting attempt to prop up the Workfare Industrial Complex, some “comrades” at the People’s Policy Project are saying that Alaska can close the university-sized hole in its budget with a move as simple as eliminating the $1.2 billion in deductible tax credits that will be lost to oil companies this year.

This is of course a ridiculous lie. Every oil fund thinker I know says dividend amounts will go down if they don’t get their tax credits. The idea that we can separate public spending from oil revenue when they’re sourced from the same place is a dangerous political fantasy.

And the truth is, Matt Bruenig knows better. I expect he’ll tell me as much when we meet this September to record podcasts in my wife’s spare room while our kids homeschool themselves. Matt knows that the yield for public education is low compared to other investment strategies the state could pursue with those tax revenues. He knows he is misleading citizen-shareholders across Alaska, but he doesn’t care. It’s worth it for him to keep Neoclassical Marxism from eating into his market share.

This is a plea for solidarity from leftists who share my dream of turning all public services into passive income streams. These flirtations with workfare are pure opportunism, and the average think tank reader is disgusted by them. Instead, we should be speaking the language of universalism. It doesn’t matter if a child is smart or dumb, productive or an objective waste of space. They shouldn’t be forced into a “school” to “learn things”. They should be at home, shopping online. Universalism means recognizing that all social problems can be solved with cash.

That’s what separates Socialists from other think tanks.

Don’t Look Up MMT (Essay)

By Michael Brennan

Adam McKay and David Sirota’s new film Don’t Look Up is an exercise in what Mark Fisher has called “capitalist realism,” literalizing the provocation that “it is easier to imagine the end of the world than the end of capitalism.” In the film, McKay and Sirota imagine the discovery of an approaching large comet that will destroy all life on Earth in six months and the futile attempts to convince the public to act to avert extinction. Leonardo DiCaprio describes the film as “an analogy of modern day culture and our inability to hear and listen to scientific truth,” particularly regarding climate change and COVID. Here, the media are positioned as the primary obstacle to an effective public response, the title Don’t Look Up referring to the tendency cultivated by neoliberal media to deny scientific truth (e.g. climate or COVID deniers). The film’s call to action is for the audience to reject this death drive by “just looking up:” to face the scientific truth of our crises directly in order to take action. 

The trouble with the film’s central critique is that it reinforces a problematic liberal theory of media as a private “marketplace of ideas” led by influencers. This prevents viewers from critically analyzing media as contestable public infrastructure. Sirota, an investigative journalist who worked as Senator Bernie Sanders’ 2020 presidential campaign speechwriter and surrogate, considers the film a “success” for dominating Twitter and Netflix trends and spreading awareness about the need for public action on climate change. But this alleged success is in tension with the liberal “Just Look Up” approach that the film shows to be ineffective. Proponents are assumed to be using media to drive people toward “climate action” whereas critics are reduced to symptoms of the media problem diagnosed in the film. This logic ends in a doom spiral. Having ourselves “looked up” at truth by watching the film, we are driven toward despair at our own lack of agency in the face of neoliberal media. We are led to accept capitalist realism’s fatalistic view of the impending end of the world. Media is wholly captured and alternatives are unimaginable.

This essay explores a way out of this trap by flipping McKay and Sirota’s critique on its head. The film’s disavowal of mediation, I suggest, is the imaginative barrier to saving the world from capitalism.

Doomsday Media

Don’t Look Up’s initial pacing is frenetic. Astronomy grad student Kate Dibiasky and her professor Dr. Randall Mindy discover the comet and straightaway send the data upstream to U.S. President Janie Orlean. This setup induces an immediate suspicion of media in the audience since the bureaucracy is reflexively against scientific facts that would disrupt neoliberalism’s automatic churning. The plot unfolds from this negative institutional premise, flattening media to the propaganda model proposed in Edward Herman and Noam Chomsky’s Manufacturing Consent (1988). On this model, the dominant mass media system consists of financialized corporate conglomerates driven by advertising revenue and stock value appreciation. With austere budgets and management, journalists and analysts are structurally reliant on elite access and get institutional flak if they dissent. Similarly in the film, President Orlean and her Chief of Staff son Jason Orlean cover up the comet ahead of the midterms until they realize they can boost their polling by projecting nationalist strength. The talking heads of the primetime cable news show “The Daily Rip” disregard the doomsday message, preferring pop stars Riley Bina and DJ Chello’s relationship drama for its trending value in the information economy. When the corporate media does eventually become concerned with the comet, it is as an accessory in a profitable culture war between the “Just Look Up” liberals and “Don’t Look Up” comet deniers. 

Bash Cellular founder/CEO Peter Isherwell, an Elon Musk/Jeffrey Epstein-derived billionaire and President-whisperer, is the political system’s puppet master and the film’s personification of Capital. He is introduced at a Silicon Valley presentation of his new Artificial Intelligence (AI), BashLiif. This AI is designed to be “fully integrated into your every feeling and desire without needing to say one single word” in order to generate exact micro-targeted content. As part of the film’s anxious world-building, Isherwell is immediately associated with our own impending “metaverse,” the web3/cryptocurrency promise to “disintermediate” the Internet as a totally immersive digital space. His emphasis on direct feelings and the technology literally “touching” the user (personified in his implied pedophilia) is symptomatic of what Scott Ferguson identifies as an unconscious tendency of neoliberal aesthetics: to make the world “real” to the audience by compulsively reinforcing sensory immersion. While McKay and Sirota rightly draw out this frightening tendency, their approach—for the audience to “look up” at scientific truth to take action on climate change—still plays into such fantasies of immediacy and immersion. Overcoming this reduction of truth to sensuous immediacy requires deeper reflection about our philosophical priors than the film allows. In particular, we need to attend to the liberal understandings of media and politics that underlie the film.

Doomsday First, Media Second

Liberal political philosophy relies on the idea of a “state of nature,” where humans first encounter the world and each other at a sensuous and immediate level, before agreeing to enter into relations of social interdependence. Absolute freedom is inherent to this private human condition, with public governance emerging as a secondary phenomenon. This is analogous to the “barter myth” underpinning the liberal theory of money, where the direct exchange of commodities precedes money as a second-order medium. For a liberal theory of media, speech is also considered first as a pre-political practice of private individuals, before it is regulated by law as individuals become citizens. Media is thus naturalized as a “marketplace of ideas”—a private sphere of free individuals communicating with government intervention occurring after the fact. In the liberal frame, the individual or collective subject knows empirical truth through the immediacy of the senses; any social meaning or interpretation is considered superfluous “spin” to base reality. 

Each of these liberal premises rest on the same ahistorical flaw: sequencing individuals to be metaphysically prior to the public. Contrary to the liberal story, it is in truth impossible to give a full account of who we are and what we do without reference to the symbolic media that organize our circumstances in the first place. As Maxximilian Seijo argues, Christine Desan’s constitutional theory of money provides the basis for an alternative theory of media. Desan describes money as a “governance project” and a “mode for mobilizing resources,” an inescapable problem of social accounting that persists throughout history (for better and worse). Just as with money, communications are an inescapable governance project that shapes and names all that is caught in it. Understanding the nature of mediation—as the boundless site of public coordination—is key to opening the imaginative space for capacious public action. 

With this frame in mind, Don’t Look Up’s reductive decision framework comes into critical focus. Because media is presented as totally enclosed by capital, the theory of change is narrowed to a binary choice: to lean in or drop out. Dr. Mindy leans in to play the role of sexy scientist spokesman for the White House, a figure reminiscent of Carl Sagan teaching about the cosmos or Dr. Fauci soothing the public by personifying the aesthetics of a confident bureaucratic state. Despite disagreeing with the profit-seeking turn of the mission, his justification for taking up this role is to secure his inclusion in the decision-making room with the President. Dibiasky, meanwhile, at first leans in as the public critic. She gives voice to the film audience’s own frustration with the media, reinforcing our view of her as a protagonist. Once Isherwell’s plot to mine the comet is revealed, however, Dibiasky drops out and is disciplined by the police-state for stirring up dissent. When Dibiasky tells the crowd at the bar that “they are going to let it hit the planet to make a bunch of rich people even more disgustingly rich”—one of the film’s few moments that gestures towards sites of politics beyond the main characters—we cut to a spontaneous mob destroying private property. Emblematizing the film’s broader rejection of media, McKay and Sirota depict the trope of riots as violent outbursts by masses of individuals, located outside of a coherent theory of change, rather than as mediated collective tactics. Later, when Dr. Mindy tries to lobby Isherwell on the flaws of his plan to mine the comet for its resources, Isherwell shuts him down, articulating his view of himself as not a businessman but a God overseeing the techno-evolution of humankind. With no alternative, Dr. Mindy melts down on TV and drops out, leaving no one and nowhere left to make change.

Money as Media

Two seemingly incidental instances in which the film overtly thematizes money lay bare the impasses of its approach to media. The first comes at the beginning as Dibiasky and Dr. Mindy wait outside the Oval Office with Dr. Teddy Oglethorpe and General Themes to brief President Orlean about the comet. Themes asks the other three for cash to pay for the White House-provisioned snacks, only for them to discover later that the snacks were free. Dibiasky is continually perplexed by this absurd petty theft, eventually concluding the military official did it because “he gets off on the power.” At one level, this instance laments the supposedly selfish part of our nature that wants power for its own sake. Yet this scene also registers an intuitive disbelief that money could be reduced to such a petty end in-itself when sitting in the heart of American power, implying a yearning for a more convincing account.

The second instance occurs at the White House Cabinet meeting after the first attempt to nuke the comet is mysteriously aborted. Isherwell presents Bash Cellular’s internal research that the comet “contains almost $140 trillion worth of assets,” including a supposed $32 trillion of critical rare-Earth materials for Bash’s technologies. (This critique ironically ends up undermining itself by naturalizing an accelerationist resource war with China as an inherent impulse of personified capital.) Isherwell and President Orlean’s new proposal is to break the comet into small enough pieces to not be an existential threat but to allow it to still impact the Earth so the materials can be recovered for profit. According to Isherwell, this money will supposedly be used to end “poverty as we know it, social injustice, loss of biodiversity.” The plan gets its popular support for the supposed “job creation” it will provide in the perennially scarce US economy. Yet the public-private partnership ultimately ends in apocalyptic failure, with Bash’s explosive robots malfunctioning mid-mission, not sufficiently breaking apart the comet, and the world ending. “What do these trillions of dollars even matter if we are all going to die from the impact of this comet?” asks a flustered Dr. Mindy.

The protagonists’ perplexity at the micro and macro greed of Themes and Isherwell, respectively, indicates that Just Look Up desires an alternative to a cataclysmic profit motive that the film itself cannot envision. This is precisely what a Modern Monetary Theory (MMT) reading of the film provides. The film’s claim that the comet’s resources are worth $140 trillion implies economic value is intrinsic to an inert external source, which logically trickles down into the justification of “job creation.” But this is absurd on its face since money is not the second-order medium for a commodity’s inherent value. It is a public utility that names what is valuable in the first place.

President Orlean has the legal authority to direct the Treasury to create $140 trillion at any moment. Simply marking up the government’s bank account at the Federal Reserve, the disbursement would only go into the economy to finance spending that has been authorized by Congress. (Indeed, this is the point of recurring proposals to mint $1 trillion coins). The true political question is: What ought to be named as valuable in a public budget, which public money then accounts for and coordinates? Such operations are proven tacitly earlier in the film, when President Orlean mobilizes the seemingly unlimited capacity of the military to nuke the comet. Thus the film actually resolves the money question from the outset, despite stumbling back upon it for the tragic remainder of the film. In this way, Don’t Look Up proceeds like its protagonist Dr. Mindy, knowing intuitively to contest Isherwell’s claim that the comet is worth $140 trillion but lacking the language to destabilize the liberal premise of private money. 

Looking Up’s Contradiction

Strangely, the strategy that follows from the film’s contradictory liberal theory of media is explicitly shown to be ineffective late in the film. The comet approaches and becomes directly visible, rendering the threat no longer “abstract,” but rather an empirical fact. This leads to the viral “Just Look Up” trend, a last ditch effort to overcome comet denialism and mobilize the public to act. People had been initially reliant on media to communicate to them the relevant scientific information. The comet becoming visible, however, occasions an event of “disintermediation,” where people can instead rely on their senses to directly know reality. At President Orlean’s “Don’t Look Up” rally, this seemingly proves successful when the MAGA crowd turns on Orleans after looking up to see they were tricked.

In the end, however, temporary success gives way to disaster. True disintermediation is not possible. When one uses their senses to interpret the external world’s representations, including when viewing a comet with the naked eye, those inputs are still mediated as knowledge via language, culture, ecology, etc. They do not constitute a higher form of “direct” relationship to reality. This is the liberal theory’s contradiction. We see this again in “Just Look Up’s” plea for other countries to defy the US and launch their own comet interception mission. Such appeals still depend on the attention economy trending power of Riley Bina’s immersive pop music experience at “The For Real Last Concert To Save The World.” She calls on the audience to “listen to the goddamn qualified scientists” but offers no further strategy other than to continue passively participating in media. 

McKay and Sirota seem to acknowledge the Just Look Up strategy’s contradiction, since it ultimately ends in apocalypse. But the film intentionally makes the very same move, encouraging the audience to have a direct relationship with the scientific facts of climate change while itself still participating in media. Sirota consistently highlights the “success” of the film based on its trending power, while simultaneously calling outshitlibs” for lacking a coherent theory of change. Just as Dr. Mindy failed to destabilize Isherwell’s premise of private money, McKay and Sirota do not destabilize a liberal theory of media. Instead, they reinforce the assumed binary option to either lean in or drop out of the corrupt marketplace of ideas. This implicates everyone in the sin of participating in media, including the filmmakers as well as their critics. But whereas they participate knowingly and for the right cause, critics are interfering with the activist message to “look up” at the truth and take action, which functions as an effective bludgeon against supposedly “superfluous” and “distracting” posting detached from the “real world.” Thus Riley Bina’s concert functions as a synecdoche for the film as a whole: an absurd and ineffective spectacle that treats the audience as passive consumers of external media.

Affirming Public Media

What would a genuinely public media strategy look like? Media, properly understood, plays constitutive roles in organizing popular support for public action. The film gestures toward this with Dr. Mindy’s role as public intellectual. He is practicing a Carl Sagan-esque mode of media participation (implied directly in the first scene with his bobblehead on Dibiasky’s desk). He promotes a hotline (set up as a public-private partnership between FEMA and Bash Cellular) for people experiencing anxiety to discuss the comet with scientists “for peace of mind.” Yet the depth of Sagan’s style of popular engagement with schools, member organizations, research and academic institutions, etc., is not explored here. While promising, such solutions are insufficient for the task of shaping the world.

To begin to answer this question, a public media strategy can borrow frames from previous public actions. This is the basic approach of the Green New Deal (GND), which uses the familiar New Deal framing to open imaginative space for a similar policy regime today. The demand for a Third Reconstruction from Rev. William Barber II and the Poor People’s Campaign (itself drawing on the familiar narrative of Dr. King’s later organizing) returns to the public task of the incomplete Black Reconstruction following the Civil War to create new space to imagine its completion. 

But to be a fully public media strategy, we must go a step further by holistically designing the media of the programs themselves. Seijo gestures in this direction by drawing from the experience of the 1930s Civilian Conservation Corps (CCC). Here, Seijo critically assesses how the New Deal’s economic programs are shaped by and possess their own media texture:

“From its inception, the CCC was more than simply an employment or conservation programme. Rather, like much of the New Deal, the CCC was both a political and a communications project. From the political creation of the money needed to fund the programme, to the strategic placement of the laborers’ camps, to its architects’ rhetorical emphasis on the ‘wilderness’ or ‘frontier’ over the perceived artificiality of urban environments, to the robust media apparatus that bolstered the popularity of the programme – the CCC reveals the propagandistic nature of public policy development in the New Deal. It is for this reason that its intertextual web of informational activism was of such profound importance to its achievements.”

On Seijo’s analysis, the CCC was a holistic media project, an explicitly normative attempt to shape the material and aesthetic world, the success of which lives on today. GND advocates are currently pursuing a modern CCC as part of Congress’ pending Build Back Better Act, demonstrating the staying power of designing public jobs programs as media. Seijo goes on to outline the media lessons from the past for a GND today:

“With such a history in mind, the GND could foster broader support among the public at large, through both the material and aesthetic experience of its effects. For example, the GND must consider its public relations effort not simply as a campaign that aims to influence individuals in a so-called marketplace of ideas. Rather, the GND needs to incorporate its public media governance within the material manifestations of such projects – in signs, artwork, screen media content, localized and scaled public addresses, etc.” 

In contrast to Seijo, McKay and Sirota deny this imaginative space by relegating media to so-called “culture wars” and reducing said culture wars to superfluous media distractions. They fail to represent actually-existing contested public media spaces—workplaces, neighborhoods, universities, community meetings, protests, mutual aid, etc.—thus obscuring those strategic media terrains. What is more, crises such as climate change, the pandemic, nuclear war have more uneven time horizons than the binary “doomsdate” of the comet, allowing a pluralism of media strategies to develop and flourish. It is, of course, urgent that we act quickly since we also don’t have long.

There are ample opportunities for shaping public media in the response to the type of disasters allegorized by Don’t Look Up comet. These do not necessarily need to be government-run programs to be “public media” in the broader sense intended. But they should be nested within political struggles for re-orienting public money for public purposes, including full employment. For media to address such crises, however, we must first open up our ability to imagine new possibilities.

Automating Eden (Essay)

by Geoff Coventry

[Note for readers: This article contains spoilers]

Shawn Levy’s Free Guy is the latest cinematic attempt to manage social problems through self-conscious artificial intelligence (AI). In doing so, it tumbles right back into fanciful utopian imagery while wishing away the complexities of human care. As this virtual redemption story reaches its climax, the AI-created world resembles a moneyless and bodiless bliss where only the nice get to stay, and no one needs to be responsible for social provisioning. In the parallel reality of planet earth, humanity cheers the downfall of a greedy capitalist while simultaneously looking to a new generation of Silicon Valley heroes and the market-economy to produce a better future within the exact same institutional structures that gave rise to the story’s existential crisis. Rather than imagining the boundless ways AI could support human and planetary care while challenging the zero-sum economics that fuel greed and violence, Free Guy tries to charm its way to hope within the logics and institutions of zero-sum austerity.

Free Guy casts the endearing Ryan Reynolds as a non-player character (NPC) in a video game whose two genius creators (Jodie Comer as Millie and Joe Keery as Keys) originally set out to design a virtual world called Life Itself, where characters would “naturally evolve” in a “real life” environment. The title Life Itself grants an immanence to the game platform that obscures the wider mediation of the virtual world by a whole team of employed staff within a corporation, positing their creation of virtual “life” as a self-standing, self-contained environment, where good things can blossom if only left to itself.

Tragically for the duo, their core artificial intelligence source code was stolen by Antwan (New Zealand actor Taika Waititi), the CEO of game developer Soonami, who uses it to power a violent massively multiplayer online game in the genre of Grand Theft Auto. Soonami portends an unstoppable wave of capitalistic destruction. In doing so, the filmmakers ignore the legal and public mediation that created and continues to support the system being critiqued, refusing any alternative that could restructure markets and the public sphere into a mutually regenerating force. Although deterministically coded as a zero-sum game, the “platform itself” is actually subject to powerful non zero-sum influences, both positive and negative: Millie entering the game to find the lost code and helping Guy “come alive”; Keys coding game enhancements; Antwan rebooting the game and destroying its servers. In reality, both the virtual and non-virtual worlds are locked in a co-dependency and co-determination that is never fully acknowledged, let alone explored for its possibilities. 

As the young AI creators battle to prove the theft of their source code, NPC Guy begins to “come alive,” gaining self-awareness and deviating from his routine as the friendliest bank teller you’ll never meet. Initially programmed to be the handsome nice guy in town who can’t find true love, Guy begins to look for more meaning in life and to participate in the game as the good hero who stops violent criminals and saves his NPC friends. Discovering that their code may have just created the world’s first real artificial intelligence, Millie and Keys must now save Guy and the other NPCs from destruction at the hands of a ruthless capitalist who would rather see everything destroyed than face financial loss and diminution of his ego. Hollywood remains entrenched in the formula of larger-than-life heroic individuals responding to, but never truly reforming, societal and existential threats, providing the conditions for rinse-and-repeat series. This may make entertaining and profitable cinema, but when seeking to take flight as an aspirational future for human potential, it can’t break free from the gravitational pull of its predetermined economic and relational limits.

As the movie reaches its climax, Guy, with the help of Millie and Keys, reaches the original Edenic island world of Life Itself, a garden-city paradise explicitly defined by the absence of banks, jobs and guns, where he is eventually reunited with all his friends. In this new world, and now evolved from their programmed roleplay of menial work and innocent victims of violence, the NPCs are free to “do whatever they want”. No “bad” characters enter this world from outside. Only the nice remain; however, neither do they need to do any work of caring for the world they inhabit or the people they share it with. Life Itself closely resembles a common Christian conception of “heaven” more than anything that might shed light on the real world inhabited by humans: its selectively-limited inhabitants magically “perfected” while the masses of less-than-perfect humanity are kept away. This perfected AI platform codes its idealized life  much like racialized urban planners coded white suburbs: by defining-away most of humanity and ignoring environmental interdependencies.

And herein lies the problem. The hope for a better world as modeled by an innocent artificial intelligence leading us back to Eden fails before it starts. Such a binary worldview filled with coded outcomes has no bearing on reality and ergo provides no guidance for humanity’s struggles and no inspiration for its potential.

Similar to how nostalgia is a killer of truth, niceness is a killer of care. Niceness is an individualistic construct that renders unnecessary the challenging choices needed to reorganize society in ways that provide mutual care. Niceness inverts care’s others-focused accounting structure into transactions of feel-good self interest; each smile, wave or act of kindness recorded to the social credit of the “good” person. Nowhere is this more encapsulated than during a Christmas holiday, where, for a few days, those with means placate the subconscious trauma of participation in a zero-sum game by mutual gift giving and token charity, only to return Monday morning to the brutalization demanded by winning the game. Care in the real world rejects scarcity and exclusion, wrapping all into interdependent, unending, difficult, and imperfect relationships of service. The logic of care is universally inclusive since all are simultaneously providers and recipients. No one is altogether nice or irredeemably bad. Relational, not transactional, care’s accounting seeks to explore the unknown and unmet needs within and beyond every community. The society-wide capacity to care remains unbounded by exclusionary categorizations of people (or other life forms), refusing to accept arbitrary limits of affordability and existing resource availability. When seen in this light, Hollywood’s Guy is the dreamy nice dude who saves the day only because this AI Guy is really not at all like a human nor lives in a human-like world.

Free Guy wants us to believe the world can be changed by nice artificial intelligence produced by nice human intelligence, even as it wishes away the need for any deliberate collective work to bring about structural changes to social, political and economic systems. Niceness is self-centered, privileged, and ultimately protected by violence in order to pretend the “nice” can avoid problematic intrusions into their perception of bliss. Violence in the service of niceness is still violence against other people. Meet the new boss, same as the old boss. 

In contrast, care is a conscious social engagement that seeks out and serves the needs and wants of all within an inclusive community, while recognizing and rewarding the provisioning of care in dignifying ways. Care doesn’t preclude unpleasantries, injustices, and human vices, but dives into the complex and unending work of listening, problem-wrestling, healing and building. Such an inclusive logic of care sees the 22 year old gamer Keith, still living with his mother and venting his anger over frustrated desires, societal rejection, and economic exclusion, as a person deserving of meaningful social and economic participation in the community. The exclusionary logic of Hollywood can only mock the gamer, defining him as a villain to be vanquished from the promised land along with all the other “bad guys”, and relegating him to perpetual torment at home. 

Free Guy seeks to contrast greed and care, yet retains a field of limited agency within a dualistic and simplistic vision of humanity and socio-economic possibilities. The fallen-world dystopia of greedy capitalism foments wanton violence on the city streets where innocent victims are killed and workers are trapped in soul-destroying jobs. Redemption of the virgin innocence of this lost paradise comes when the nice people resist their oppressors. This comes in the form of an organized and unanimous strike from their jobs that lasts just long enough to buy time for the caring geniuses, Millie and Keys, to heroically expose the capitalist greed, remove their control, and finally prevent any more “bad guys” from entering paradise. The NPCs’ only agency is to stick it to the boss and walk off the job, and the only qualification to participate in this society is to be one of the “nice people”. The co-dependence of these interconnected worlds is largely ignored, along with the real work being performed by an army of hidden figures who literally build their houses and streets and keep their lights on.

What is so obviously missing from the bliss-filled ending is that the world Guy and his NPCs inhabit was entirely constructed by the code of the earnest protagonists, whose new creation for innocent NPCs remains dependent upon real people who need to work, eat, live, earn wages, and own companies. In Guy’s new Eden, there is no concept of the need to develop and share their world’s resources in ways that will create a cohesive social order to care for the city and land they inhabit. Nor is there any recognition of their existential predicament: how to maintain the energy, money and labor needed to keep their world online. Their entire existence relies on the continued aspiration and organizational skills of its young “gods” from another dimension and remains as precarious as a power outage or corporate bankruptcy, and yet we are expected to view this heavenly virtual locale and the lack of banks and jobs as a picture of human freedom.

Fast forwarding to the future, we see that Millie and Keys have stepped right back into the same Silicon Valley startup world they were just fighting, running a company, relying on banks, investors, and keeping a hopeful watchful eye on their customer and revenue growth in order to keep the dream alive. The NPC Eden now exists, not as an independent and self-sufficient alien planet, but as a Twitch channel dependent upon entertaining its viewers. The only apparent change from the old regime is in the values of the company leadership. Along with the heavenly bliss of nice AI, Silicon Valley wants to sell us on an evangelical worldview for humankind’s master coders. Government regulators and legislators should leave the smart techies alone to invent the future in their image, just so long as they try to have nice people in charge. Of course, Google’s “Don’t be evil” code of conduct falls far short of preventing ongoing systemic concerns. It is telling that the film has no vision for changes to the status quo. There is no hint of public funds being available to help protect and fund this new AI “life form,” no changes to corporate ownership structure or employment relations, and no public engagement in how best to care for either newborn AI or real world human life to ensure extinction is no longer an imminent risk. 

The neoliberal blockbuster has yet to imagine its way out of the corner of zero sum economics and the resulting combination of violent and exclusionary solutions to the imagined inevitability of greed and exploitation. Dualistic metaphysics still dominate: good and evil; Eden and Dystopia; heaven and hell; Life Itself and Soonami.

Major Hollywood studios and Silicon Valley often struggle in portraying human-like artificial intelligence in part because of their flat and cartoonish portrayals of humankind, societal structures, and economic possibilities. Heroic battles and utopian endings do nothing to suggest a path forward for a sustainable world and care-filled creative societal order. In a real way we humans are the AI we wish to create. If we still haven’t found the imagination to care for humankind (all humankind) and the complex life systems we exist within, we should be skeptical of those claiming to have imagined human-like AI and a path to a heavenly future. Until we develop the right framework for human flourishing, our dreams of an Edenic AI future will only serve to immerse our imaginations in an entertainment-induced trance that prevents us from fully seeing and caring for all.