There is a growing awareness in the field of alternative economics that our society's current system of money creation has detrimental economic, environmental and social consequences. Many authors have now analysed this system and its effects and concluded that an alternative must be found if humanity is to solve its most pressing problems. In this posting I would like to look at the effect of this system on the character structure of the individual citizen and explore whether it may be a contributing cause of the so-called "self-contraction" (or tendency toward "self-grasping") described in the spiritual literature. I will then suggest how an alternative system advocated by some monetary-reformists may successfully address the problem.
Although interesting in itself, I will not attempt an in-depth analysis of the effect of the banking system on society as a whole as this has been done by others , but will instead confine my efforts to the question above.
2. How Money Creation Works
In order to explain how our system of money creation currently operates, and to draw out some of the negative effects it has, I will refer to Charles Eisenstein's book Sacred Economics . In this book Eisenstein outlines a complete critique of the modern economic world and offers a series of prescriptions for changing it for the better. While more hard-headed integral readers may find some of these prescriptions unrealistic, I believe most will find Eisenstein's analysis of the problem to be very good. In line with his vision of a "gift economy", Eisenstein has made Sacred Economics available for download free of charge from a dedicated website .
To explain how the banking system works I will borrow a fairly long parable from Eisenstein, which he in turn part-borrows from economic visionary Bernard Lietaer. This parable, called The Eleventh Round, gives a stripped-down description of the workings of the money system and illustrates the basic mathematical problem inherent within it. It goes as follows:
"Once upon a time, in a small village in the Outback, people used barter for all their transactions. On every market day, people walked around with chickens, eggs, hams, and breads, and engaged in prolonged negotiations among themselves to exchange what they needed. At key periods of the year, like harvests or whenever someone's barn needed big repairs after a storm, people recalled the tradition of helping each other out that they had brought from the old country. They knew that if they had a problem someday, others would aid them in return.
One market day, a stranger with shiny black shoes and an elegant white hat came by and observed the whole process with a sardonic smile. When he saw one farmer running around to corral the six chickens he wanted to exchange for a big ham, he could not refrain from laughing. "Poor people," he said, "so primitive." The farmer's wife overheard him and challenged the stranger, "Do you think you can do a better job handling chickens?" "Chickens, no," responded the stranger, "But there is a much better way to eliminate all that hassle." "Oh yes, how so?" asked the woman. "See that tree there?" the stranger replied. "Well, I will go wait there for one of you to bring me one large cowhide. Then have every family visit me. I'll explain the better way."
And so it happened. He took the cowhide, and cut perfect leather rounds in it, and put an elaborate and graceful little stamp on each round. Then he gave to each family 10 rounds, and explained that each represented the value of one chicken. "Now you can trade and bargain with the rounds instead of the unwieldy chickens," he explained.
It made sense. Everybody was impressed with the man with the shiny shoes and inspiring hat.
"Oh, by the way," he added after every family had received their 10 rounds, "in a year's time, I will come back and sit under that same tree. I want you to each bring me back 11 rounds. That 11th round is a token of appreciation for the technological improvement I just made possible in your lives." "But where will the 11th round come from?" asked the farmer with the six chickens. "You'll see," said the man with a reassuring smile.
Assuming that the population and its annual production remain exactly the same during that next year, what do you think had to happen? Remember, that 11th round was never created. Therefore, bottom line, one of each 11 families will have to lose all its rounds, even if everybody managed their affairs well, in order to provide the 11th round to 10 others.
So when a storm threatened the crop of one of the families, people became less generous with their time to help bring it in before disaster struck. While it was much more convenient to exchange the rounds instead of the chickens on market days, the new game also had the unintended side effect of actively discouraging the spontaneous cooperation that was traditional in the village. Instead, the new money game was generating a systemic undertow of competition among all the participants."
This parable begins to show how competition, insecurity, and greed are woven into our economy because of interest. They can never be eliminated as long as the necessities of life are denominated in interest-money. But let us continue the story now to show how interest also creates an endless pressure for perpetual economic growth.
There are three primary ways Lietaer's story could end: default, growth in the money supply, or redistribution of wealth. One of each eleven families could go bankrupt and surrender their farms to the man in the hat (the banker), or he could procure another cowhide and make more currency, or the villagers could tar-and-feather the banker and refuse to repay the rounds. The same choices face any economy based on usury.
So imagine now that the villagers gather round the man in the hat and say, "Sir, could you please give us some additional rounds so that none of us need go bankrupt?"
The man says, "I will, but only to those who can assure me they will pay me back. Since each round is worth one chicken, I'll lend new rounds to people who have more chickens than the number of rounds they already owe me. That way, if they don't pay back the rounds, I can seize their chickens instead. Oh, and because I'm such a nice guy, I'll even create new rounds for people who don't have additional chickens right now, if they can persuade me that they will breed more chickens in the future. So show me your business plan! Show me that you are trustworthy (one villager can create 'credit reports' to help you do that). I'll lend at 10 percent--if you are a clever breeder, you can increase your flock by 20 percent per year, pay me back, and get rich yourself, too."
The villagers ask, "That sounds OK, but since you are creating the new rounds at 10 percent interest also, there still won't be enough to pay you back in the end."
"That won't be a problem," says the man. "You see, when that time arrives, I will have created even more rounds, and when those come due, I'll create yet more. I will always be willing to lend new rounds into existence. Of course, you'll have to produce more chickens, but as long as you keep increasing chicken production, there will never be a problem."
A child comes up to him and says, "Excuse me, sir, my family is sick, and we don't have enough rounds to buy food. Can you issue some new rounds to me?"
"I'm sorry," says the man, "but I cannot do that. You see, I only create rounds for those who are going to pay me back. Now, if your family has some chickens to pledge as collateral, or if you can prove you are able to work a little harder to breed more chickens, then I will be happy to give you the rounds."
With a few unfortunate exceptions, the system worked fine for a while. The villagers grew their flocks fast enough to obtain the additional rounds they needed to pay back the man in the hat. Some, for whatever reason--ill fortune or ineptitude--did indeed go bankrupt, and their more fortunate, more efficient neighbors took over their farms and hired them as labor. Overall, though, the flocks grew at 10 percent a year along with the money supply. The village and its flocks had grown so large that the man in the hat was joined by many others like him, all busily cutting out new rounds and issuing them to anyone with a good plan to breed more chickens.
From time to time, problems arose. For one, it became apparent that no one really needed all those chickens. "We're getting sick of eggs," the children complained. "Every room in the house has a feather bed now," complained the housewives. In order to keep consumption of chicken products growing, the villagers invented all kinds of devices. It became fashionable to buy a new feather mattress every month, and bigger houses to keep them in, and to have yards and yards full of chickens. Disputes arose with other villages that were settled with huge egg-throwing battles. "We must create demand for more chickens!" shouted the mayor, who was the brother-in-law of the man in the hat. "That way we will all continue to grow rich."
One day, a village old-timer noticed another problem. Whereas the fields around the village had once been green and fertile, now they were brown and foul. All the vegetation had been stripped away to plant grain to feed the chickens. The ponds and streams, once full of fish, were now cesspools of stinking manure. She said, "This has to stop! If we keep expanding our flocks, we will soon drown in chicken shit!"
The man in the hat pulled her aside and, in reassuring tones, told her, "Don't worry, there is another village down the road with plenty of fertile fields. The men of our village are planning to farm out chicken production to them. And if they don't agree ... well, we outnumber them. Anyway, you can't be serious about ending growth. Why, how would your neighbors pay off their debts? How would I be able to create new rounds? Even I would go bankrupt."
And so, one by one, all the villages turned to stinking cesspools surrounding enormous flocks of chickens that no one really needed, and the villages fought each other for the few remaining green spaces that could support a few more years of growth. Yet despite their best efforts to maintain growth, its pace began to slow. As growth slowed, debt began to rise in proportion to income, until many people spent all their available rounds just paying off the man in the hat. Many went bankrupt and had to work at subsistence wages for employers who themselves could barely meet their obligations to the man in the hat. There were fewer and fewer people who could afford to buy chicken products, making it even harder to maintain demand and growth. Amid an environment-wrecking superabundance of chickens, more and more people had barely enough on which to live, leading to the paradox of scarcity amidst abundance.
And that is where things stand today.
I [Eisenstein] hope it is clear how this story maps onto the real economy. Because of interest, at any given time the amount of money owed is greater than the amount of money already existing. To make new money to keep the whole system going, we have to breed more chickens--in other words, we have to create more "goods and services." The principal way of doing so is to begin selling something that was once free. It is to convert forests into timber, music into product, ideas into intellectual property, social reciprocity into paid services.
Abetted by technology, the commodification of formerly nonmonetary goods and services has accelerated over the last few centuries, to the point today where very little is left outside the money realm. The vast commons, whether of land or of culture, has been cordoned off and sold--all to keep pace with the exponential growth of money. This is the deep reason why we convert forests to timber, songs to intellectual property, and so on. It is why two-thirds of all American meals are now prepared outside the home. It is why herbal folk remedies have given way to pharmaceutical medicines, why child care has become a paid service, why drinking water has been the number-one growth category in beverage sales.
The imperative of perpetual growth implicit in interest-based money is what drives the relentless conversion of life, world, and spirit into money. Completing the vicious circle, the more of life we convert into money, the more we need money to live. Usury, not money, is the proverbial root of all evil.
3. The Effects of Usury
This simplified story contains within it an explanation of the entire problem with our system of money creation.
For the purposes of this current essay I would like to point out several pernicious effects of usury as noted by Eisenstein and then relate them to the character structure of the average citizen.
- The first effect is that when a society's system of credit creation is based upon interest, this leads inevitably to the centralisation of capital. This is because the usury-based banking system demands that $11 be repaid for every $10 that is created and lent , thus sucking money out of circulation. This has the effect of pulling all the wealth of the world into the financial system, an effect that is only counteracted by having a) growth of the money supply, to ensure more currency is continually created and circulated, and b) heavy taxation in order to ensure capital is redistributed somewhat more equitably.
- A second consequence of usury pointed out by Eisenstein is that it causes the production of goods and services beyond the level required by basic human demand. In the parable this is represented by the glut of chicken-related products experienced by the villagers. Eisenstein summarises these first two effects as "scarcity amidst abundance".
- The third consequence is that usury creates collective greed, competition and insecurity. This is due to there never being enough currency in existence for everyone to pay off their debts, leading to a "musical chairs" situation whereby, in the absence of further money-creation, people are reduced to fighting one another for the tokens required to keep ahead of the debt collector.
- The final effect I would like to draw attention to is the incessant conversion of the natural world into money. This is obviously pathological in and of itself as continued unchecked it would lead to the destruction of the planet, but I will argue it also has a damaging effect on the character of the average citizen.
In the next part I will suggest that each of these harmful social effects of usury has a correlate in the character structure of the individual living within the usury-based economy. To do that it is necessary to very briefly summarise the work indicating that the structure of a society, and particularly its economic base, is mirrored in the internal psychological structure of the individual.
4. The Relationship Between the Individual and the Collective
This relationship between the structure of a society and the character structure of the individual living within it has been studied in some depth in the philosophical and psychoanalytic traditions. Many thinkers who have addressed this issue have come to the conclusion that such a connection exists and that the structure of society has an important influence on the inner life of the average citizen. While a full treatment of this subject falls beyond the scope of this article, I would like to mention a few thinkers who have addressed this topic in order to show that it is a widely held view.
One of the most well-known advocates of the position that the structure of society affects the structure of the individual was, of course, Marx. Marx held the view that the economic base is paramount in determining the nature of the consciousness of the average citizen and that capitalist modes of production have an inherently alienating affect upon it. While I do not know enough about Marx to take a position on his philosophy as a whole, I will, in this posting, be following the view that the material base has an important effect on the consciousness of the individual.
From a psychoanalytic perspective, an analogous discussion was initiated by Freud, particularly with his book Civilization and Its Discontents . It was then continued by those who came after him, for example by the then Marxist Wilhelm Reich in The Mass Psychology of Fascism  and Erich Fromm in The Fear of Freedom . All held the view that there is a direct causal correspondence between the structure of society and the character structure of the average citizen. This relationship is imposed in childhood, so the argument goes, via the emotional and cognitive  environment of the individual's family, which is itself determined by the wider social milieu in which both exist. Barring therapy, the individual thus patterned (or, in pathological cases, armoured) then continues in this mode for the remainder of her life.
Andy Smith in his book Worlds within Worlds , which, to my mind, is the best holarchical model that we currently possess, also claims that there is a direct relationship between the individual's inner world and the structure of the society in which she lives. In Andy's model society is a higher-order holon that subsumes the individual, and the inner experience of the lower is formed by it looking up at the structure of the holon in which it is embedded. Smith's work is based on a scientific rather than psychoanalytic model, and so he does not directly discuss the issue of character structure, yet he arrives at a conclusion compatible with that of the analysts.
The holarchical schema that readers of this essay will likely be most familiar with is the quadrant model of Ken Wilber, introduced in versions of his model subsequent to Wilber-IV . In this model, while there is no direct causal relationship between the collective and the individual, there is still a high degree of correlation between them, with the two (right-hand) collective quadrants and the two (left-hand) individual quadrants all influencing each other via multiple feedback loops.
In the mandalic model that I am developing , the relationship between the individual and the collective is basically the same as in Smith's one-scale model, but with a more psychoanalytic emphasis. In my view the collective exerts a causal influence on the individual and to a large degree determines her character structure. In terms of the self-contraction, we could say that the individual is a lesser mandala within the greater social mandala, and that a contraction in the higher will cause a contraction in the lower, via all of the interpersonal processes outlined by the analysts.
At one time there was much debate on Integral World as to whether society is a higher-order holon than the individual, a la Smith, or whether Wilber's symmetric view is the correct one. The outcome of this debate will no doubt be interpreted differently by different readers. My take on it is that Smith is right and that the problems he has pointed out with the opposing "symmetric" position are indeed fatal. I am obviously therefore adopting a one-scale view in this posting, but the argument I am putting forward applies, albeit in a slightly modified form, regardless of which model we choose to adopt.
What we can at this point say is that the most fundamental aspect of a society is its economy as this forms the so-called material base upon which the superstructure of culture is built. In an earlier version of his model, outlined in Up From Eden , Ken Wilber puts forward a theory of levels of exchange, in which the structure of the individual is determined by the flow of tokens in and out of his being at various levels of reality. In this view, the flow of higher-level, cultural tokens is greatly influenced by the structure of the flow of lower-level, material tokens such as money, and a distortion or imbalance in the lower predisposes the higher to reproduce that imbalance on its own level. While in Wilber's view higher levels can overcome the imbalances of the lower (by mechanisms not fully explained), the entire structure of the individual and his culture is still determined to a very large degree by the structure of the flow of tokens through the material base.
By combining Wilber's thinking on this fundamental nature of the material base with a view that sees the collective as exerting a causal influence on the individual, we arrive at the conclusion that the economy of a society has a profoundly important effect on the character structure of the individual living with it. In this view the economic base determines to a large extent the character of the average citizen, and pathologies and imbalances within the flow of money will cause pathologies within the personality structure of the individual.
5. The Effect of Usury on the Individual
As the system of currency creation and exchange is the most fundamental aspect of the economy and therefore the material base, we should look to see what the pernicious effects already noted of this being based upon usury will be on the character structure of the individual.
I would suggest the following correlations:
- The centralisation of capital within the economy correlates with the centralisation of psychic resources within the individual ego. In other words, the contraction of the monetary sphere that centralisation represents causes a self-contraction within the average citizen. This self-contraction is the root cause of all the personal maladies that afflict us in our daily lives.
- The "slackness" within the economy represented by "gluts" of goods and services correlates with a "slackness" within the individual character structure. This would manifest as a certain impulsiveness and lack of self-discipline within the individual, utilized eagerly by a consumerist society to keep us purchasing unnecessary products, but also with other obvious negative social consequences.
- The collective greed, competition and insecurity created by usury correlates with the same qualities being generated in the minds of individuals within the population. Reminiscent of the three Buddhist poisons of greed, hatred and delusion, these "poisons of usury" come to dominate the mental make up of large numbers of people within society and are the hallmarks of egoic consciousness.
- And finally, the incessant conversion of the natural world into money correlates with an objectification of the body and the mental self in the consciousness of the individual, just as usury forces us to objectify the world collectively. The individual thus afflicted tends to turn self, body and other into extensions of the ego.
If these correlations are correct, and I don't think it could be disputed that we see these phenomena in the modern world, then clearly usury has an extremely damaging effect on the character structure of the average citizen. Combined with the social effects noted by Eisenstein and others, it certainly looks to be the source of many of the world's problems and one of the most important topics that integral thinkers should be addressing at this point in time.
6. An Alternative System
Clearly then, when designing a system to replace usury, we would need to consider the effect of this new system on the character structure of the individual in order to ensure that it is truly healthy. We would be looking for a system that will cause individuals to be as uncontracted as possible, and to exhibit a personality that is an integration of freedom and self-discipline.
Eisenstein's preferred system is one of negative interest. Basically the opposite of usury, this is a system in which interest rates are below zero and is thus one in which stored capital loses value over time (also called demurrage). For example at an interest rate of minus 10%, $100 stored in the bank would have decreased to $90 at the end of the first year. Conditioned as we are to believe that storing money should accrue money, such a system initially seems disconcerting and possibly even unfair. However, when the implications are worked through, it actually makes a great deal of sense. Not only does it encourage the circulation of capital, but it brings the underlying nature of money into line with other stores of value such as perishable goods or precious metals, that either degrade over time or require payments for storage and protection, and thus into line with nature. I will not attempt to outline Eisenstein's entire analysis of negative interest, as it falls beyond the scope of this article, but instead refer the interested reader to Sacred Economics.
However, one property of a system of negative interest that is relevant to this essay is that it is inherently decentralising. In a system where capital loses value over time, rather than accumulating savings most individuals would be encouraged either to donate their money, or to invest or lend it in order to prevent their store of it from degrading too quickly. This has the effect of augmenting the flow of money and pushing capital out from the centre to the periphery in a centripetal motion, rather than sucking it inwards as happens under usury.
In terms of the negative effects of usury already noted, I would suggest that a system of negative interest would remedy them in the following manner:
- Because of the relationship between the collective and the individual, we would expect this decentralisation to have a decontracting effect on the character of the average citizen, with psychic resources no longer being centralised in the ego. This decentralised, spacious self is equivalent to the centaur in transpersonal theory. In line with my mandala model, such a decontraction would be expected to affect all aspects of the individual, that is her body, energy, emotions and thinking  and to lead to the integration of all of these in a more harmonious sense of self.
- Another property of a negative interest system according to Eisenstein is that it is more efficient than a usury-based system and would not lead to gluts of goods and services. This greater self-discipline in the collective would translate to a greater self-discipline in the individual and thus to the natural, organic integration of freedom and discipline that I have argued is the hallmark of the uncontracted self.
- And from the fact that forcing individuals to interact in a cooperative manner with their communities will have the effect of overcoming selfishness and encouraging a greater sense of community, we can see that a negative interest system would erode the self/other distinction and the three "poisons of usury" (greed, competition and insecurity ) leading to greater social openness and emotional balance in the population. This is another piece of evidence in favour of the argument that it would overcome egoic consciousness in the individual.
- Finally, we would expect that in a system of negative interest, or degrowth economy, because the relentless drive to convert nature into money no longer exists collectively, for there to be an eventual end to the objectification of mind, body, other and nature in the average citizen.
If this mini-analysis is correct then clearly the integral community should be advocating reform of the banking system as a matter of some priority. Whether negative-interest turns out to be the desired alternative or not is a question that I suggest should be the subject of further debate. While it looks promising at a first reading, it may have unexpected consequences when put into widespread practice that Eisenstein and its other advocates have not foreseen. Reform must therefore be carried out in a controlled way, and the process managed meticulously to ensure that it is having beneficial effects.
Of course, advocating banking reform would bring the integral community into conflict with the existing structures of global financial, which will not give up their power easily, but I argue it should do so anyway as a matter of principle, as it certainly appears as though monetary reform is essential to bring about the integral society that all in the movement want.
7. The Bigger Picture
In the overall model of reality that I am presenting, the individual citizen is a smaller mandala existing inside the greater mandala of society, which itself exists inside the still greater mandala of a world-system (in this case, samsara). Therefore just as society exerts a degree of influence over the structure of the individual, samsara exerts a degree of influence over the structure of any society existing within it, as well as directly over the individual. Samsara is basically a world-system that has become contracted and thus it entraps within itself worlds and beings that have become contracted themselves, and then works to hold that contraction in place.
Ultimately, therefore, the self-contraction of the individual is caused by her living within samsara itself and will not disappear until she transcends this system. However, from my overall model, it follows that the mechanism that holds the individual within samsara as a whole is dual in nature. Firstly, we have the more overt self-contraction caused by living within a usurious economic system, which, being one holarchic level above the individual, affects mainly the gross levels of the mind . But secondly, we have the contraction caused by living within samsara as a whole, which, being two holarchic levels above the individual, affects him on the more subtle level of consciousness . Therefore both mind and consciousness become contracted in a mutually reinforcing manner.
Being a system of consciousness the contraction samsara causes in the individual is on a level more refined than gross-mentality alone, and we thus require a transpersonal strategy in order to completely undo it - a mental technique on its own will not do the whole job. However, a significant part of the battle can still be won through a transition from a usury-based monetary system towards something less constricting.
And by analogy with the individual, a contracted society exists within samsara only by virtue of that society being contracted. Should it decontract, therefore, an entire world can be liberated from this system, just as can a being. In Buddhist theory, such worlds are said to be Pure Lands, worlds that exist outside the cycle of birth and death, and it is perhaps towards becoming such a world that our own is headed.
 c.f. Lietaer, B. (2001)
 Eisenstein, C. (2011)
 In order to find this site, please enter the terms "Sacred Economics Eisenstein" into a search engine.
 In reality it is often a lot more than $11.
 Freud, S. (1991)
 Reich, W. (1970)
 Fromm, E. (2001)
 In line with my mandala model, I would add the physical and energetic spheres to this statement.
 Smith, A. (2000)
 Wilber, K. (2000)
 O'Connor, J. (2015; 2017a; 2017b)
 Wilber, K. (1996)
 These are the four cardinal points of the individual mandala in my model.
 At first glance it may appear that negative-interest would lead to greater insecurity as people would not have a nest-egg of cash to rely on in hard times. However this is not in fact the case as their "nest-egg of cash" still exists but is distributed amongst the community, to be drawn on as needed in proportion to their previous generosity. Hence, security is increased as they are no longer relying on the success of one person (themselves) but instead the success of all individuals in the network.
 This is consistent with the principles of the one-scale model.
 This way of viewing the relationship between samsara as a whole, and the consciousness of the individual, is unique to my version of the one-scale model.
Eisenstein, C. (2011). Sacred Economics: Money, Gift, and Society in the Age of Transition. Self Published in E-Book Form.
Freud, S. (1991). Civilization and Its Discontents. Penguin Books Ltd.
Fromm, E. (2001). The Fear of Freedom. Routledge.
Lietaer, B. (2001). The Future of Money. Penguin Random House.
O'Connor, J. (2015). A Mandalic Approach to Development, Part 1: The Structure of the Psyche. Available on http://www.integralworld.net.
O'Connor, J. (2017a). A Mandalic Approach to Development, Part 2: Releasing Contraction. Available on http://www.integralworld.net.
O'Connor, J. (2017b). A Mandalic Approach to Development, Part 3: The Collective Mandala. Available on http://www.integralworld.net.
Reich, W. (1970). The Mass Psychology of Fascism. Souvenir Press (E&A) Ltd.
Smith, A. (2000). Worlds Within Worlds: The Holarchy of Life. Self Published in E-Book Form.
Wilber, K. (1996). Up From Eden. The Theosophical Publishing House.
Wilber, K. (2000). Sex, Ecology, Spirituality. Shambhala Publications Inc.