Paula of Mythodrome has examined the "Solari" concept of money management in a post full of interesting ideas and insights. Before getting to Paula's text, however, some comments from me (U.B.).
M
oney does not really exists. Borrowing a metaphor developed by A. Mitchell-Inness, think of a concept such as a "kilogram," a unit of measurement of weight. You can say that a certain object weighs one kg, but you can't have a "kilogram" in your hands any more than Bodhidharma's disciple could show his soul to his master to have it pacified. The same is true for money, which is a unit of measurement for the concept of "credit" and, as such, has no embodiment, alone, in the real world.
Yet, we tend to think that dollars or euros can be somehow owned, hoarded and conserved. It is as if we were seeing ourselves as small Fafnir dragons sitting on our gold hoards, waiting to battle the next Sigfried arriving. That's an illusion creating us endless troubles: money cannot generate anything more than what society can generate. If the society collapses, money collapses with it. The reverse is also true. What we are seeing nowadays is the interactive reinforcing of two elements: the financial crisis and the resource/climate crisis.
Much work is being made about new forms of money and new ways to manage money. We have local money, ethical finance, alternative currencies, and more. Whether these ideas will work is all to be seen, but they may give us at least a fighting chance to soften the effects of the next financial collapse. In the following, Paula of Mythodrome examines in detail the "Solari" idea developed by Catherine Austin Fitts.
Introducing The Venerable Ms. Fitts
One of the people whose post-9/11 work I most admire is
Catherine Austin Fitts. Vocationally she’s an investment banker which, in a lot of peoples’ minds, should automatically make her positively e
vyle; however, her approach to money and finance is very different from the
vampire squid with which we all contend.
I got to meet her at the 2006 Local Solutions conference, and at one
point while chatting informally about various ways local communities
could finance their own needs without the help of the vampire squid, she
exclaimed with a big smile, “I love money!”
Up until that point I would have been horrified at such a blatant
declaration of greed. I mean, if nothing else it’s just in really poor
taste. But for whatever reason it clicked in my head differently at that
moment and I saw that there was not anything like standard bankster
greed in her statement. For Fitts, money was not something to hoard out
of fear. For her, money was a creative medium. Not a destructive or
extractive one. It was a tool to be used for creating beauty and social
justice, for healing the Earth, for bringing corruption to heel, for
building a door out of our crumbling economic edifice and into the real
world of fresh air and living souls. She spoke with the vocabulary of
banksters but the words had a different meaning. Fitts was an artist and
her medium was money: infinitely useful, infinitely malleable, limited
only by our own failure of imagination.
Like all wage-slave types, money for me had always been bondage. And
indeed that is how our monetary system is set up, a system of slavery
whereby only a few ever gain freedom and everyone else is doomed to
flush their lives down the time-card toilet with only two weeks per year
to enjoy life, plus another 10 years at the end before death. But after
my brief conversation with Fitts I began looking at money and finance
differently. Money is indeed useful and malleable; it can be made to
behave on any scale, and no special lobbying or social movements or
legislation is required. It is the master’s tool that can dismantle the
master’s house.
One of the most important things I gleaned from Fitts’ work, though I
don’t believe she ever addressed this directly, is that the illusory
nature of money is both its great weakness — of which most of us are
aware at this point, I’m sure —
and its great strength. It is a
shape-shifter that can be formed into anything, and can appear or
disappear in an instant. It has no shape of its own and it has no
allegiances. Indeed, money is so slippery that
even under a monetary regime designed for slavery and death it can be turned into life in the hands of an adept practitioner.
Money As Magick
I choose the phrase “adept practitioner” quite deliberately. Money
doesn’t really exist — even if it is in the form of gold or other
concrete object, its value as money exists only in one’s mind. Money is,
ultimately,
intention. Harnessing and directing the power of intention is the definition of
magick.
While Fitts herself probably wouldn’t like that analogy, I’m going to
use it here because I suspect anyone reading this will have dabbled
more in magick than in finance.
Like any magick, the key to using money is in learning how to direct
intent. In magick, this is done by first identifying your intent; next,
gather various objects and/or substances that correspond to your intent;
and finally, assemble these into a ritual that sharply focuses your
intent and gets it out of your head and into the universe. The ritual
process creates a
morphic resonance within your morphic field
that brings about synchronicities in line with your intent. There are
two basic types of intent: sending stuff away from you (yang), and
pulling stuff toward you (yin).
The monetary system functions like a morphic field; what you do with
your money is akin to a ritual, and the consequences of your financial
decisions are like synchronicities within the morphic field. Money obeys
the basic intent types: you can send it away from you (yang), or pull
it towards you (yin).
For the sake of comparison, let’s say there’s something in your life
you want to send away from you… a nosy neighbor perhaps. So what you
want to do is a mild banishing spell (you don’t want to kill anybody).
For your ritual you collect a black candle and some sage oil, both of
which correspond to banishing intent. For the ritual itself you rub the
sage oil downward on the candle to symbolize “away from me,” light it,
and while it’s burning visualize your neighbor ignoring you. When the
candle burns out you collect up the wax scraps, wrap them in a blue
cloth to symbolize “peace,” and place these in your freezer to symbolize
“chill out.”
Now let’s say you have some money stream coming in that you want to
banish. Because money is intent already out in the universe, you do not
have to go to the trouble of putting it there; you can work with it
directly. Your banishing ritual will involve shutting down whatever is
the source of that money. On the flip side, if you want to pull money
toward you, your ritual will involve opening up a channel through which
it can flow.
In magick, it is crucially important to be very clear about your
intent, because if you identify it wrong you’re going to get results you
don’t want. In the nosy neighbor example, what you want to banish is
not the neighbor but her unwarranted attention; if you get it wrong, you
may end up banishing her from her house through fire or foreclosure or
whatever. The same is true with money, and I think this is where people
start getting tripped up — certainly this is something I have trouble
with. Since money is
already intention out in the universe
& within your morphic field, its results are immediate — resonance
need not be established, it is established already. And that means there
is no behind-the-scenes, mysterious, invisible process working to
manifest your intention; this part you have to do yourself. You may
never know what circumstances motivate your nosy neighbor to leave you
alone, but if you want to open a channel through which money can flow to
you, you have to map out that process from beginning to end and spend
the money accordingly on each individual step in order to make that step
manifest.
Now all of that might seem like a silly detour, but I’m laying all
this out to try to get Fitts’ solari idea into a context that might be
more easily understandable than finance-speak.
Money As Magick Applied
Right now our monetary system is set up so that money flows from the
less-wealthy masses into the coffers of corporations and billionaires.
It does this through various codifications of the principle
like attracts like. The
most obvious example of this is usury, otherwise known as interest. If
you have money, usury causes it to attract more money. If you do not
have money, usury depletes whatever money does happen to come your way.
Another example would be that of the P/E ratio, or price-to-earnings
ratio. On the stock market, the price of a company’s stock is determined
(in part) by dividing the company’s earnings by the total number of its
existing shares — and then multiplying —
multiplying! — that
number again and again. That multiple is the ratio. The multiple is
determined by stock traders in the process of buying and selling the
company’s stock: if they think the company is awesome they will drive up
the price of the stock, and therefore its multiple, by trying to outbid
each other to buy those shares. Higher earnings makes people want to
buy, thereby increasing the multiple and the value of the company; lower
earnings makes people want to sell, thereby driving down the multiple
and the value of the company. Like attracts like.
The most pernicious example would be simply this: the rich get richer, the poor get poorer. Like attracts like.
Fitts’ genius is in her ability to align positive intention with
money’s properties of immediacy and like-attracts-like. Like any adept
practitioner, she isn’t constrained by notions of fixed space, fixed
time, fixed matter; or as in the case with money, notions of fixed value
or fixed availability. Her basic idea, as I understand it, boils down
to this: money’s like-attracts-like positive feedback loop can be
attached to anything, so let’s attach it to the good and the just. Once
that attachment is made the upward spiral will take care of itself.
And this is the point where she lost everyone. Because figuring out
how to do that attaching requires entrepreneurship — dirty, filthy
capitalism. Overcoming the capitalism heebie-jeebies and actually
learning to become an adept money practitioner is too much for most
self-respecting people of moral principles, but it’s across that chasm
that the fun really begins.
For example: in any given community, there are going to be a bunch of
people earning .5% on their CD savings accounts, and a bunch of other
people paying 20.5% on their credit cards. The bank has the
like-attracts-like thing set up in its own favor, ripping off its
customers at a 20% spread. Getting the feedback loop working in the
peoples’ favor is, in this instance, really obvious: the people with
savings lend their money to the people with credit card debt at 10%
interest. Bang zoom, problem solved. The savers are earning back an
un-fucking-believable rate on their investment, the debtors are paying
off their debts at half the standard usury rate and twice as fast as
before, and everybody’s extricated from the bank’s feedback loop.
The peoples’ feedback loop fires up when their neighbors find out
what’s going on and want to get in on the action. Now more people are
extricated from the bank, more savers are earning higher interest and
more debtors are getting out of debt faster. Then maybe someone else
duplicates the idea somewhere else; then it happens again somewhere
else, then somewhere else still. The bank’s feedback loop is shriveling
and the peoples’ feedback loop is blossoming. Like attracts like.
Here’s a somewhat bigger example. Say there are a half-dozen
independent businesses on Main Street that are struggling in the bad
economy. Normally these businesses would go to the bank and establish
lines of credit at 15% interest in order to pad the slow times so that
they can meet their monthly bills, payrolls and such. Those businesses
don’t have the ability to issue stock to raise money like big
publicly-traded companies do. What they could do, though, is band
together to form a special kind of umbrella business called a Limited
Liability Company (LLC) and sell “memberships” — which, for all intents
and purposes, function just like stock shares with dividends and the
like, but can’t be traded. Now suddenly everyone who’s bought
memberships in the LLC has a vested interest in making sure those Main
Street businesses do well. The LLC members shop at the stores and
encourage others to do the same, because they’ll get bigger dividends,
and now suddenly Main Street is prospering again like it hasn’t in
years. Then soon enough other businesses want in on the LLC because
that’s a fucking awesome setup. Then eventually someone duplicates the
idea on some other Main Street; then another and another; and thus the
Main Street feedback loop fires up too.
(Aside: the LLC is a really interesting kind of business
organization. It’s like a hybrid public-private company with all the
advantages of both and none of the disadvantages of either. It can be
organized just about however you want. See
Chris Cook’s article on the UK’s version of the LLC,
called an LLP, and some ingenius ways it has been used for sustainable
development. Chris Cook was main architect of the Iranian oil bourse and
another of my filthy-capitalist collapse heroes.)
Solari
But Fitts’ crowning achievement, in my opinion, was her blueprint for the
solari, a for-profit community financial corporation.
In order to really get how a solari would work, it’s important to
understand one thing: information is worth money, and information about
money is worth
more than money. When Facebook went public, it was valued at something like
$100 billion
— and that is definitely not because of the money it makes on
advertising. It’s because Facebook owns what is arguably the largest
database on individual people in the world. That kind of detailed
knowledge is phenomenally powerful.
A solari works on the same principle, only its database is filled not
with ducky-face photos and cyberbullying, but with detailed information
about money flows within its given community. The information is
collected from public records, voluntary surveys, various public
entities’ budgets and the like. Crucially, it would also include all the
black- and gray-market information it could track down. Like Facebook,
the solari’s database would grow over time, revealing an ever more
detailed picture of the community’s wealth.
Based on this information the solari then identifies areas in the
community where cash flow can be optimized in the community’s favor. So
for example, say the city hires a big national firm to handle garbage
collection; meanwhile, a bunch of people in need of jobs are sitting
around fretting about how they’re going to pay rent. The solari would
negotiate with the city for its community to opt out of the garbage
collection contract, and would rechannel those funds toward hiring some
of the unemployed locals instead. So now, the community has saved money
and decreased its unemployment rate and, potentially, provided some
health insurance for people who otherwise wouldn’t have any. The solari
has optimized the community’s cash flow and everybody wins.
And of course, these types of actions go into the database,
increasing the database’s value. It is not in the solari’s interest to
do things that hurt the community, because a database full of financial
failure is worth just about jack shit. The solari’s database is valuable
only to the extent that it is successful at contributing to improving
the community — in whatever way, shape or form that may take. Thus
the solari profits not by extracting wealth from its community, but rather by increasing wealth in the community. This is precisely the opposite of how the economy currently functions.
Once per quarter, the solari publishes a report on the financial
health of the community and the projects it is working on. Feedback from
people on the ground would be crucial — these folks are the solari’s
eyes and ears on the street, and if they are not benefitting, the value
of the database is compromised.
The solari raises money for its various projects by selling stock
against the value of its database, just like Facebook does. There are
two stock tiers: tier A stocks can only be sold to people who live in
the community, are very limited in number, they confer voting rights,
but do not pay dividends. There is no direct financial gain with
A-stocks; any gain to A-stock holders is indirect, by improving the
community. Tier B stocks can be purchased by anyone, do pay dividends,
but do not confer voting rights. Financial gain is direct in the form of
the dividend checks, but because they confer no voting rights, there
isn’t any way for B-stock holders to manipulate the solari’s projects
for their own advantage over the community.
With this tiered stock system, the solari is able to pull in money
from potentially all over the globe to build up the community, while the
community itself spends that money wherever it determines some
improvement project will benefit the community as a whole. The money can
be used for quite literally anything: to bolster failing schools, to
clean up an abandoned lot and plant a public orchard, to invest in
cottage industry and mom-and-pop businesses, maybe build a local
solar-powered electrical grid, set up a low-cost health care clinic, fix
up or tear down blighted properties. Anything that improves the
community also increases the value of the database, making further
B-stock sales more attractive, and bringing in more money.
Because the solari is a standard, run-of-the-mill financial
corporation, there’s no reason its stocks can’t trade on a secondary
market. In this scenario, the whole community is able to benefit from
the P/E ratio madness described above. So, say the earnings of the
community as a whole is $10 million, and the secondary market determines
the stock to be worth 10 times earnings. Now suddenly the solari — and
by extension, the community — is worth $100 million. $100 million! Just
like that! A valuation like that makes
all kinds of outside investment in the community very attractive indeed, thereby bringing in even
more outside money.
In this way, the solari completely reverses the financial drain in a
community. Instead of money flowing out of the community and into the
coffers of supranational corporations, money flows in, causing more
money to flow in, and then more and more. The like-attracts-like
positive feedback loop is attached to the community as a whole and
everybody benefits.
Solari And Preparations
It is plainly obvious to me that in terms of collapse preparations, a
solari is almost infinitely more useful than a Transition initiative.
Anything at all that can be done at the community level to slow the
descent — that is, to extricate the community from the sinking
globalization ship — will contribute to the feedback loop. How about a
neighborhood-based solar-electric grid that is not tied to the main
grid? How about buying a half-circle of vacant property around the
perimeter of the community to establish a public permaculture space? How
about a distributed gray- and black-water bioprocessing system that is
not tied to the public sewage system? How about a jubilee in which the
solari flat-out pays off the consumer debt of its community members?
Even more important is the ability to adapt, and quickly, to whatever
black swan event might strike. The solari makes enormous sums of money
available at any given time, providing the opportunity for immediate
adaptation when required.
None of these things are even remotely possible under the Transition
banner. They’re just too expensive, and even if the money were
available, would require so much “consensus” on every little detail that
nothing would ever get done.
You know, it makes me angry and very sad to survey the level of
opportunity lost since Fitts first began circulating her solari ideas.
That was long before the economic crash and so much could have been done
to cushion the blow. All that was lost, was lost because people did not
want to relinquish their notion that money is evil and bad, and they
didn’t want to corrupt themselves by even learning about it, much less
putting it to use. Solari is the ultimate relocalization; when
relocalization got usurped by Transition is right about the time Fitts
withdrew behind her paywall. I wonder now if she didn’t simply see the
writing on the wall. Transition is just not flexible enough in its
ideology to accommodate something so blatantly capitalist as a community
financial corporation; there really isn’t any room there to discuss
such things, let alone take action on them. The anti-capitalist bent of
those with the collapse megaphones has succeeded in cutting off
preparations’ nose to spite its face.
Conclusion
Solari represents not just a buffer against collapse, but a complete
reconfiguration of how money works. It cannot stop climate change or
peak oil; however, what it can do is fund a real and meaningful
transition — small “t” — to a way of life that is adapted to the new
realities and can thrive more-or-less happily within these. Should the
idea catch on at a large scale — unlikely, but not out of the realm of
possibility — it could form the basis of a fully adapted, and adaptable,
economy. Resilience would become a moot point, because it would simply
be built right in.
Maybe it’s not too late for Fitts’ solari ideas to take root. Maybe enough people understand now that “collapse” means
financial collapse first and foremost. But given what I have seen, I’m not holding my breath. Old habits of mind are too hard to break.