Economic Direct Democracy

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* Book: Economic Direct Democracy: A Framework to End Poverty and Maximize Well-Being. By John C. Boik

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"the book describes a new, local economic framework that could help cities and regions increase wages, reduce income inequality, reduce unemployment, improve well-being, and raise funds for infrastructure repair, climate change, and other important issues. Nonprofits and schools also benefit from the new source of funding."


"Economic Direct Democracy is a book-length proposal for transforming local economies into sustainable, democratic systems. John Boik describes a novel local economic framework that represents a synthesis of approaches already in use in some cities around the world. The framework builds on ideas from buy-local, invest-local, local-currency, local-food, local-sharing, open-source, open-government, open-data, participatory democracy, and related community development, knowledge transfer, and decision-making initiatives.

The framework is implemented by a Local Economic Direct Democracy Association (LEDDA), which is a membership-based, community-benefit corporation. The LEDDA framework functions as an overlay to an existing city or regional economy. It offers all members roughly equal and direct opportunity to influence their local economy.

The framework is intended to empower communities to strengthen local economies and take meaningful action on infrastructure repair, debt, income inequality, health care, climate change, environmental degradation, and other issues of importance. Results from a computer simulation model, discussed in the book, describe how the system leads to higher incomes, reduced income inequality, reduced unemployment, and funding for schools, nonprofits, and businesses.



Each generation has its visionaries. No real progress is possible without some individuals seeing beyond the day-to-day complacency of conventional wisdom to help us imagine a better world. In ages past, the insights of visionaries might have taken decades or centuries to influence change. But in the modern, wired, technological era, change can come blindingly fast, even if it starts slowly and in small groups. More than ever before, innovative ideas can be impossible to arrest.

John Boik has a few to share. He is among a new cohort of original thinkers who dare to push boundaries and challenge accepted truths. A biologist trained to think in terms of systems, he sees our economic woes from the fresh perspective of a scholar and outsider. These days, the discipline of economics is marred by conflicts of interests and a disheartening level of complacency, so it is not surprising that the most promising innovations may come from non-economists. We must encourage out-of-the-box thinking among ourselves, our students, and civil society.

As an academic unburdened by “economics as usual,” John is a passionate advocate for social change. I read his 2012 book, Creating Sustainable Societies, and am excited to see this expanded version, which, like the first, is published under a Creative Commons license---a fitting approach for sharing ideas about how cooperation can change the world.

Economic Direct Democracy is a radical manifesto for change that is, above all, sensible. It merges theoretical reflections, systems thinking, and the results from computer modeling to generate a scientifically sound, captivating narrative. John's views complement those of several political and ecological economists, including myself, who have discussed at length the inadequacy of the current development model to deliver equity, social justice, and sustainability.

Hard as it may be for some to accept, our economic institutions are largely outdated. Neoclassical views of economic growth---and the use of GDP as the guide for policy---are ripe for replacement. They have been proved unsatisfactory, and new approaches are available to supplant them. Yet neoclassical views continue to influence our decisions, permeating university textbooks, politics, investment strategies, and corporate boardrooms.

Neoclassical views may be consistent within their own frameworks, but they lead down the wrong path. They fail to take into account that humans are inherently social, motivated by empathy as well as self-interest, and that an economy is a human-designed system of governance. More so than political institutions, the economic “rules of the game” define how we act in day-to-day life, what we can attain, and the type of society in which we live. Although we are taught to believe that economies are neutral or indifferent, just “attached” to a society, the reality is that they are systems of interrelations and institutions that spring from a society, for good or ill.

Indeed, the best way to think of an economy is as a web of rules that describe and define human interactions. And money---the quintessential element of economic interaction---is nothing other than a governance tool. Rather than viewing the functions of money as a measure of value or medium of exchange (as is taught in university courses), we are better off thinking of money primarily as a mechanism to register preferences---in John's words, as a “voting tool.”

When viewed as such, money becomes a powerful adjunct to conventional tools of politics. This is not money undermining politics, but rather money creating new opportunities for the “common” person to express social power, including expression of empathy, support, environmental concern, and preference to cooperate. If we want real change---if we want a world that is actually fair, functional, healthy, and sustainable---we may very well start by rethinking money itself.

By reducing inequalities and empowering all people to play a more meaningful role in economic decision-making, we will be able to alter the trajectory of self-destruction induced by our current development models. If our economic “rules of the game” remain shaped by the ultra-wealthy and ultra-powerful, there is little hope that political institutions will break free of their influence sufficiently to bring about needed radical transformation.

For some years now, many of us have been critiquing the current economic model for its flaws and the deep injustices it perpetuates. Economic Direct Democracy will help us move from “critique” to “action.” Through a series of compelling arguments, analyses, and proposals, John makes a crucial contribution to the global debate occurring among civil society, academics, governments, and progressive thinkers about innovative approaches to new, more sustainable social systems.

Unlike conventional approaches that view challenges as discrete problems to be addressed by partial reforms and technological interventions, the arguments in this book make clear that the challenges we face are profoundly interrelated. Success depends on adopting a holistic, systems viewpoint, and reorganizing societies so that our methods and policies align with our values.

By taking the wide view and connecting the dots, we can reframe our seemingly intractable societal problems into ones that readily express solutions---we can imagine new ways forward.

The insights and approaches advanced in this book have far-reaching implications. Even though its analysis is restricted to the United States, its findings may very well apply elsewhere in the world. In fact, the transformative potential of local currencies and economic democracy is even greater in societies that still retain important features of solidaristic economic development, social cohesion, and a strong sense of community responsibility---something that many “developed” societies seem to have lost.

Most important, Economic Direct Democracy delivers a powerful message: change is not only possible, it is within reach. Politicians and technology gurus will not fix the world for us. But we can, through a steady process of regaining control over our economies.

By asserting the importance of democratic control over economic decisions, we may very well trigger the most powerful revolution of all times: a calm, bloodless revolution led by millions of women and men of common sense who are dedicated to building a more equitable, safer, fairer, and happier world.

Lorenzo Fioramonti Professor of Political Economy Director, Centre for the Study of Governance Innovation University of Pretoria, South Africa Author, Gross Domestic Problem: The Politics Behind the World’s Most Powerful Number


Chapter 1: Getting There From Here

 1.1 A Confluence of Crises
   Six Challenges
   Local Problems
 1.2 Purpose
 1.3 Strategy
 1.4 Cooperation

Chapter 2: The LEDDA Framework and Notions of Justice

 2.1 Elements of the LEDDA Framework
 2.2 Notions of Justice
   Adam Smith
   John Rawls
   Amartya Sen
   Rawls, Sen, Arrow, and the LEDDA Framework

Chapter 3: Economic Direct Democracy

 3.1 What Is Democracy?
 3.2 Decision-Making Processes
   Purchasing Decisions
   Bakery Example
   The Crowd-Based Financial System
   Bakery Example, Continued

Chapter 4: LEDDA Impact

 4.1 Integrated Approach
 4.2 LEDDA Microsimulation Model

Chapter 5: Income Equality

 5.1 Income and Wealth Distributions
 5.2 Issues of Income Equality
 5.3 Engagements

Chapter 6: Token Exchange System

 6.1 Overview of Local Currencies
   Local and Regional Complementary Currencies
   Global Complementary Currencies
 6.2 Flows in the Token Exchange System
   The Token Monetary System
   For-Profit and Nonprofit Organizations
   Collaborative Governance System
   Crowd-Based Financial System
   Loan Certificate Trading System
 6.3 Legal Aspects of Local Currencies

Chapter 7: Principled Business Model

 7.1 Public Corporations
 7.2 Socially Responsible Corporate Forms
   Social Business
   Nonprofits in the United States
 7.3 Principled Business
 7.4 Certifying a Principled Business
 7.5 Diversity of Principled Businesses
 7.6 Intellectual Property

Chapter 8: National Monetary and Financial Systems

 8.1 Eight Differences
 8.2 Debt-Free Money Creation
   The Fed, Banks, and Dollar Creation
   The LEDDA Approach to Token Creation
   Dollar Debt
 8.3 Focus on Economic Development
 8.4 Inflation-Free Money
 8.5 Income Inequality
 8.6 Environmental Stewardship
 8.7 High Transparency
 8.8 Alternative Conceptual Models

Chapter 9: Collaborative Governance System

 9.1 Three Branches of Collaborative Governance
 9.2 Administrative Branch
 9.3 Legislative Branch
   Evolutionary Computation
   Details of the Legislative Process
 9.4 Judicial Branch

Chapter 10: Starting and Operating a LEDDA

 10.1 LEDDA Startup
 10.2 Businesses Diversity and Distributive Enterprises
 10.3 Targeting Economic Sectors
 10.4 Climate Change and the Environment
 10.5 Interrelated Problems
 10.6 Next Steps