Margrit Kennedy, who died two years ago today, was one of the greatest advocates of an interest and inflation free money system. She was among the first to predict that we “cannot have infinite growth on a finite planet”. Of course this is true. Logically, there are two ways out. We can try to stop the vicious cycle of compound interest. Or we can move capitalist growth to the virtual world. Everyone who understands the system knows that the interest-based economy is a self-propelling mechanism that requires exponential growth of the money in circulation. Each year’s interest can only be paid back by borrowing more from the future. This means that the numbers we save on our computer servers keep going up. But why is that a problem?
For two reasons. First, it creates a bias towards the owners of capital. The highest 10% wealth bracket generates net earnings as the financial returns on their capital far exceed the interest they pay as part of their consumer spending. When this continues longer wealth is shifted upward the social pyramid. Thomas Piketty has described this effect and we all accept this “trickle up” mechanism. Those who still need to be convinced can watch the BBC series “the super-rich and us”.
Second, the way the production system is built appears to leave producers no other choice than re-invest their earnings in more physical production. It has always been cheaper and more secure to expand in the direction of more material dependency because locked-in consumers are loyal consumers.
What if we could make these requirements of capital hold in the virtual world? I can’t find much on virtual capitalism on the Internet, but none other than Yannis Varoufakis states that economics research is much easier in virtual worlds. It will save him and his colleagues a lot of headaches. He doesn’t mention however, the obvious effect of such virtualisation: exponential growth of virtual production is possible for a virtually unlimited amount of time. The virtual realm allows an indefinite increase of revenue without an increase of resource use. Simple logic dictates that the only way to “save” capitalism is to move the usury part to a virtual economy.
Under virtual capitalism, all basic human needs are taken care of by subsidized corporations. People earn a basic income, they eat healthy, have a place they can call home, and have access to cyberspace. These activities make only marginal profit. The reason the corporations produce the wholesome food, the green energy and the ecological clothing lines is that they want to build their brand. Because their brand is invaluable in the virtual world.
Firms decide to invest in virtual goods. Say, BMW pays designers to create stunning virtual sport cars or Ray Ban produces virtual sunglasses behind which people “never hide”. McDonald’s replaces the plastic Happymeal toys with a virtual equivalent. Bono tours virtual cities around the world. The possibilities are endless. The cost of virtual goods is the effort of developers and designers as the physical cost of production goes to zero.
Second Life and similar virtual reality games have been a hype a few years ago, but their growth has stalled. As of 2013, an estimated 600,000 people use Second Life regularly.
The market share of virtual products never reached the threshold where they’d become more interesting investments than physical products.
Neoliberalist fundamentalists should jump to the chance because the only way to continue unfettered capitalism is to move it to a virtual realm. The value of money is nothing but a collective illusion, and so should the products that it buys.
So why not?
Why is this not happening? One possible explanation is that the virtual world is too insecure because it doesn’t know physical dependencies such as our dependency on fossil fuels in the real economy. No dependencies means future prices become unpredictable. Natural resources are “free” wealth for the companies that exploit them. In the virtual world, the only resource in town is the creativity of designers, hence its economy will be radically equitable. Perhaps this is what scares the early 21th-century elite.
Or is it just out of habit that companies don’t adapt?
Imagine for a moment what a world of virtual capitalism is like. The fight for the real world is over. Boring, fully automated systems take care of all our body’s needs. Meanwhile in the virtual realm of our entertainment, capitalism is unleashed. Banks build the towers of the City, without skies, without limits.
Banksy sprays infinite walls with brilliant slogans without ever opening a spray can.