Season 8. Episode 4: Economics W/ Ethan, Julio & Alana

Transcript

Welcome to the Green Pill podcast. This season of Greenpill is all about Ethereum localism. Your hosts are Alex, Max, and Josh of the Ethereal Forest, which is a placebased DAO, which brings localism to the blockchain and the blockchain to localists. Ethereal forests are the creator of a conference which explores how to do that. Gel, the general forum for Ethereum localism, which gives its name to the meme Ethereum Localism. They're also the organizers of the local Dow summer and the producers of the Ethereum localism book. They're exploring the big themes of Ethereum localism, how localist coordination works from neighborhoods to bio regions, why it matters, which frameworks localists are using, and how blockchains can horizontally scale their

impact. This season, you'll hear about strategies for bringing local change makers and global developers into deeper collaboration. Why that matters for the future of a free and open internet and how it impacts the shape and function of future network states. We're talking about whether or not blockchain create recreates the extractive and asymmetric systems we know and what must be true to usher in a revolution of global sovereignty and decentralization. To navigate this novel space and complexity of the intersection between technology and localism, you'll hear a different style of podcasts. Your host will be weaving into conversation interviews with experts and practitioners while supplying context into its relation with Ethereum localism by making localism accessible to technologists and

technology accessible to localists. This season serves as a primer you can share with your family and friends to help explain the revolutionary potential you see in blockchain technology and the ways it can impact daily lives in local communities. The next voices you will hear are your hosts, Alex, Max, and Josh. Enjoy this season. Money is uh this realm of social agreement. And oftent times people see money as um well similar to the laws of physics or something like that. Like it's uh these are the rules and we're going to follow them. And I would say

both in the local and alternative economy spaces that I've interfaced with uh in my work with local food systems and in my work in the blockchain community, there's been a much more playful and creative attitude towards money that money is a human construction and let's make it serve the purposes we'd like to and if it if it's not working how we want it to, we should redesign it. This is the fourth episode in a series covering the general forum on Ethereum localism, where we explore the ins and outs of localism, how it's practiced, why it matters, and the role that technology can play in creating a more local and grounded future. We're your hosts. I'm Alex. I'm Max. And I'm Josh. And we'll discuss why we believe

the future of a free and open internet depends on a localist first approach. The network state must be built bottom up if we don't want web 3 to end up like the walled gardens of the internet as we know it. Last episode we discussed tools of the local commons. We talked with Magenta Sabre and Ben West about the practical strategies they've used as localists and how decentralized technologies have amplified their efforts. what technology is actually inspiring to us and easy to us that serves the the actual need that people have which is to be connected with other people and there's interesting stuff there and it's not for not like to the extent that like there's economics involved the mechanism design is really really important but I think there's really a limit on governance design and

I'm not sure we're going to like figure out anything new with respect to like governance design that people haven't thought of or experimented with over the last few thousand years. It's really about about the culture and how we take care of each other. And there's a lot we could still build in terms of coordination tools and and economic mechanisms and and all this kind of stuff. That's not Magenta and Ben. Those are today's guests. If you missed last episode, go back and have a listen. But before I introduce today's guests, I got to say as we move into more dense advanced Ethereum localism topics, we'll shift into more of a discussion format with some of our brilliant guests helping us think through the deep layers of systems change. Today's focus is on alternative economics. How we understand and interact with the flow of resources

around us. We're not just talking about money here. We're talking about the relationships, agreements, and cycles that hold our communities together. Economics and finance can seem intimidating, but at their root, they're just ways of mapping how we meet our needs, share surplus, and build capacity together. Think of economics in its original meaning. from the Greek words oos and nomos meaning household and management. At its core, it's simply about how we choose to take care of our shared home. Before we jump in today, a couple of frames for this conversation.

First, economic systems rooted in flows, trust, and relationships, often inspired by indigenous and ancient practices, aren't new inventions. These approaches that have sustained communities for thousands of years are still alive today and maybe even poised for a renaissance. Second, economics is not static. It's always been evolving and technology has always shaped that evolution. We design our economies so if we don't like how they're working for us, we can and should make new ones. And with that out of the way, I'll introduce the guests.

So today we're joining in discussion with Ethan Buckman and Julio Lonardes who are both builders and researchers dedicated to this topic. Then we'll get some insight and a grounded perspective from Alana Kanei. We're kicking off today with Ethan Buckman who works in software research education and the garden. He's the CEO at Informal Systems, a worker cooperative developing Cosmos and other distributed systems. is the co-founder of Cosmos and is currently incubating Cycles Protocol, which you'll hear more about shortly.

Ethan will take us on a journey from the physics of living systems all the way into why modern economics gets it wrong and how new tools can help model economies more like living networks than stagnant machines. So, let's jump in. Take it away, Alec. So, that actually leads us to the way that we've been opening a lot of these conversations, which is to check in where you find yourself in the world, how that informs your work, um, or if it was informed by your work in some cases. So, would love to start there and find out where this call finds you. Yeah, I woke up and found myself mysteriously in the city of Toronto. I happen to have been here almost every day of my life, so I guess that explains why. But yeah, this is where I grew up and my family's here and

stuff and so so I I like this town. I'm, you know, hoping to be part of the uh Toronto resurgence as we reclaim our our greatness and uh you know, a lot of California's excellence comes from the like little horseshoe valley around Toronto, Waterlue interns and all that, our number one export. So trying to trying to repatriate the Canadians, bring them home and uh reestablish the proper tech scene here. But yeah, I need to I guess I need to leave my house a bit more frequently to do that sort of stuff. And so I want to back up and talk to where you found your career kind of origins and how you got into developing technology in general, what you see in terms of the problems that you were

looking to solve. I was a young optimistic university student at the University of G. It's about an hour outside Toronto close to water. We share a library system. So, you know, could have been almost a waterlue intern, but uh went a different way. I love G cuz it was a very grounded and biologically oriented town. There's the a vet school there and a lot of like agricultural schools and that's where I discovered like permaculture and fell in love with all that stuff. I felt like I was on a track to be a uh a professor of biology or physics. I was I was quite fascinated by problems in bioysics, problems in in the origin of life. You know, how is it that in a universe that is allegedly always running down according to the second law of thermodynamics, you know,

the coffee in my cup never gets hotter uh unless I pour more of it. How is it that in in such a universe like that, we have these organisms that run themselves up and, you know, create beauty and emergent phenomena and all this incredible stuff. And so I was really trying to understand that where it all where it all came from and and but as I started learning about you know permaculture and and sustainable agriculture and these kinds of practices started to think a little bit more about the larger systems around me and um and started to think about the economy and it was I started to I became friends at that time with Vlad Zamir you know early Ethereum researcher. We kind of discovered the space together in in in G. and uh he turned me on to you know the finance and economics and uh you

know abolish the Fed and all this kind of uh Austrian rhetoric or whatever which was very uh enamoring for let's say a young 20-year-old who had never really thought too deeply about you know finance and economics before. So um that sort of started to get me thinking about about these broader issues and the institutional structure of society and and the problems there and it and I you know starting to see all that made me a bit more disenchanted with the academy and and the university and the sort of like you know paper pushing and and all that stuff you know publisher parish and just like the way it's funded and all these kinds of issues led me to to um to start to think more broadly about like how I could have an impact on society and you know and and from my background in biohysics thinking about these

problems terms of sustainability. What does it mean to build a sustainable society and and and you have a sustainable civilization and all that and I I started to feel like okay just being stuck in the academy. I wasn't going to be able to work on those things in the way I wanted to. And it was around these this kind of time that I that we discovered Bitcoin and then you know early Ethereum was kind of happening in Toronto. We'd drive into the the Bitcoin meetups and you know I was writing like what was it called? LL contracts lowlevel lang I think they called it is that right? ll. Yeah. Before Solidity was a thing, there was like a very early Ethereum programming language when we were writing like, you know, little banks in and stuff and uh and just became like completely enamored with the possibility of building um you

know, fully permissionless decentralized systems and and I saw that as like okay, this is the basis on which, you know, we're going to be able to coordinate globally to solve difficult problems, which is the kind of stuff everyone's been saying, you know, for over 10 years now. I don't know how well we've actually done that. Uh so far, I mean, the president's launching memecoins and stuff. I don't know if that's helping anyone coordinate any better, but uh some things are happening positively. You know, the privacy the privacy roll out, I think, is is probably the most maybe one of the most important things that that we've achieved as um as an industry so far, like that, you know, private transactions and you know, um censorship resistant global private transactions are actually real. So I

started to see crypto as more of like securing a fundamental human right to transact um and sort of an extension of fundamental human rights to speech and so on and and so I think that's really like what attracted many of us here but you know I still see something beyond that which is this capacity to coordinate to upgrade and improve you know finance and economics and how how money is distributed and and and things like this and I think we still have a long way to go there and a lot of the space seems to have kind of veered away from that. I mean, they still pay lip service to it, but in in the stuff that's being built, it seems kind of um, you know, kind of afar. And so, I've been trying to focus my own efforts back towards that. I do want to circle to

something that felt very intuitive and you're telling, and I think it's come up in a few conversations we've had around these topics of localism and technology that serves localism rather than flipping that hierarchy. So it just sounded very intuitive to go from biopysics and studies of sort of like organic matter into economic studies. I'm curious if you if you can dig into maybe what that what that feels like or if you have any working theories as to like you know economy mapped on to natural functions versus economy as sort of an abstract creation separate from distinct from what would otherwise be our organic ways of working. Yeah. Well, I mean for my studies, what I was studying was uh you know when I was

studying biohysics, these are problems of non-equilibrium statistical mechanics, right? So you have complex systems made up of many parts where at best you can you can apply certain statistical properties, but you're aware that these systems are not in equilibrium. They're driven far from equilibrium by, you know, consistent or persistent energy inputs. Uh and they have to do they have to make something of that energy input, right? They don't just like sit there and let it, you know, they're not just like tanning in the sun, so to speak. They're uh they're harnessing it for for for something interesting. And so, you know, I spent a lot of time thinking about that and the relationship between information and energy and um and and what that could what that meant for defining sustainability in terms of how organisms or systems harness the incoming energy,

how they represented internally, what it means for them to be able to adapt to the world and adapt to that energy and predict it even. And you know there's a there's a lot of um kind of deep connections between between energy and and information theory. Um but you know as I started to learn a little bit about economics it struck me that the economists for whatever reason had just like assumed all that away and and they treat the system as if it's like one grand equilibrium and they can just like set everything equal and and assume that you know everything balances out or whatever. And and that was just so like shocking and obscene, you know, that it was like it's just so obvious that the economy is a non-equilibrium system. I mean, equilibrium means death. Like if if we were at equilibrium, we'd be dead.

I mean, you know, so that's basically the base assumption of the economist is that there's no economy that it is dead because uh it's an equilibrium system and that you know and everything. So I find that kind of kind of shocking and you know the interesting thing is well there's such a thing as stationerity, right? You might have a non-equilibrium system, but it might have a stationary state. And so you, you know, someone might mistake that for equilibrium. I mean, in high school, we learn about homeostasis, right? You learn how your body regulates itself, right? Our bodies are very far from equilibrium. Very far from equilibrium. We're driven by all kinds of energy inputs. And if we stop eating and and breathing and so on, very quickly, we'll die and we'll find out what what equilibrium is like. But it it's very fascinating to study the

problem of stationary non-equilibrium systems. some non-equilibrium systems that maintain themselves in some regularity, right? And and so I just became completely fascinated with that. And there were early attempts in the 70s maybe um to to try to study non-equilibrium systems by linearizing around equilibrium to say, okay, we know these aren't equilibrium systems, but um we can kind of use we can use equilibrium mechanics to kind of give us an idea and maybe everything is always trending towards equilibrium no matter where it is. And so, you know, maybe we can use that that kind of mathematics.

And and that led to some progress, but was just fundamentally limited because the systems we're interested in are so far from equilibrium that using any kind of like equilibrium model just really really doesn't help. And that's where the the sort of non-equilibrium statistical mechanics gets gets so interesting. And there was there were a bunch of breakthroughs actually in the late '9s um that I don't I I still don't think have been like fully internalized, but I haven't really been keeping up with kind of the physics literature and the biohysics literature in the last I don't know 10 years or so. But but but anyway, so that you know that stuff got me thinking about the economy as also a far from equilibrium system and one where we want there to be some notion of sustainability which means a stationary non-equilibrium state and that means something about how the economy

represents the world around it right there's some relationship between the information you have about the world and and your ability to survive in the world um and the energy that you know you depend on for survival right I mean it's all kind of like intuitive obvious things you know any anyone's uh anyone's grandma is going to is going to understand that. But, you know, try to try to get equations out of it is a little bit more um a little bit more complicated. But all that led me to asking questions about okay well how does society represent information about the world? How does society represent the energy that drives it out of equilibrium and all signs kind of started to point to money and the monetary system uh because that's where we you know almost literally represent value in a sense where we account for

things you know. So there's this accounting that's happening and and the economists are just oblivious to all of this. It's it's kind of incredible how they got away for a hundred years being these like you know prophets and disciples at the echelons of you know our institutions and they have they have no working model of of anything. They still assume the economy is dead by you know by definition because it's all equilibrium models and uh they have you know disdain for accounting. they don't think about accounting at all and and they can hardly explain money and then you know these monetary crises hit like the the 2008 and and so on and and none of them see it coming and so clearly something was very kind of broken in all of that and um you know I thought these studies in statistical mechanics and especially non-equilibrium statistical

mechanics might might help and might give some indication of of a way forward and at least intuitively or you know heristically it has for me I don't know concretely that you know I've materialized a grand theory of money yet but uh I do I am starting to progress in that direction coming from um from other other schools of thought uh that are sort of you know converging with the these kinds of like biohysical non-equilibrium views on uh starting to take that stuff seriously. So um that's that's all very exciting. We'd love to just sort of get an overview and ground the listening base in your work with cycles because it seems like maybe that was part of this thought pattern that you just described for us.

So yeah, cycle. So you know a lot of this thinking about money and the problem of the problem of money as a representational medium um but also money as a flow. Uh and that's the other thing that you know when we study biology and and bioysics what you what you come to realize is that everything is always flowing. Um it's there's no nothing is ever static. Things are things are constantly moving. Again it's kind of a truism but but those flows matter because because dissipation happens as you flow. But the other thing that's interesting about the flows in in biology is that they're cyclic, right? Sustainable systems are one that's ones that cycle energy. And if the energy isn't cycling, then the system isn't sustaining. And that's um that's kind of clear clear everywhere. Clear to ecologists and and and so on. And uh and

so that was always, you know, that thinking about cyclic energy flows has kind of been part of my, you know, theoretical understanding of the world for for a long time, even before I kind of got into money. Actually, there there's an incredible book which I'll just I'll just plug always. Uh, it's called The Rainbow in the Worm: The Physics of Organisms. Uh, written by a biochemist. They may want to hoe. A lot of people think she's a quack, but uh, I think she's wonderful. She's written a wonderful book. There's probably things in there that are wrong. I'm I'm certain there are things in there that are wrong. I don't think she quite nailed it with respect to entropy and stuff, but there's some amazing stuff in there just about how incredible organisms are and and physically what, you know, there must be stranger things happening than

than we can currently account for. But she talks about you know cyclic flows of energy and um you know the organism as this quintessential sustainable system and and stuff like that. And so, you know, all that got me thinking about, okay, what would it mean for money to be more, you know, what would it mean to study money like this to to think about flows of money and and how money flows in cycles and um and again, you know, the economists and and any economic kind of treatment, you know, I shouldn't say any, but most economic treatments of money, they kind of abstract all that away. They just think about quantities of money, right? How much is there and what is the, you know, the average price level, you know, price indices and measuring inflation and and all this nonsense. and they kind of assume the

flow is, you know, the velocity is a constant and they just like assume it away as like just some uh, you know, accounting identity or or or something like that. When in fact, it's actually arguably the most important thing that's happening here is that the money is flowing. The stuff is moving, right? I mean, what is money if it if it doesn't move? If you just uh if you just hodddle it, it's not money, right? Which is where all the you know, the crypto folks kind of go wrong here, right? Like I like to say, none of your coins are money and you all have brain damage. But um so so anyway, so so that got me thinking about um what it might mean to have money that that that flows more cycllically and and thinking a lot more about um kind of local institutional

structures and getting into, you know, Elellanar Astramm and Jane Jacobs and, you know, these kinds of and thinking about local monies and I was really, you know, fascinated but also frustrated with the problem of local monies, community currencies, mutual credits because they seemed so promising and yet they kept they seem to keep failing. You know, people would get excited, they boot up a community currency and it wouldn't really go anywhere um or you know it'd be so limited in scale and and there have been a few that have been quite successful and often it just takes like you know very passionate couple of people to to keep them alive and and going and if those people move on then you know the currency kind of falters.

There have been a few mutual credit systems that were very successful that are, you know, fascinating. The the Veer Bank in Switzerland, which has been running since, you know, the 1930s and Sardex in in Italy, which has been running since like 2009 or so. Um, and then there's um the Sarafu systems in in in Kenya and and elsewhere in Africa. So, and those are, I think, a little bit more more recent and um not quite as widespread or wellnown. So, you know, trying to study this stuff, but but still felt like there was something missing in in making this stuff scale. And I I couldn't quite I hadn't quite put the pieces together. I was thinking about bonding curves. I thought that was like an interesting new uh you know technology that might bridge the gap somehow or you know um square the monetary trillemma as I was as I was

saying for some time. Uh but then then I found this paper called um uh obl uh liquidity saving through obligation clearing. I think it came out in 2021 or so and Dill Green wrote a blog post about this called someone just turned the lights on. And I think that was like the the experience for many people in the kind of community currency movement when when this paper came out. Um and this paper described this idea of credit clearing of basically identifying debts in the economy that already exist in cycles where if the money were to flow it would be it would have to flow in a cycle, right? I owe you and you owe someone else and and and so on and it comes back to me. and the realization

that those cycles are everywhere already and uh and we can find them and in fact we can clear them without using any money at all. Right? And that sort of points to this possibility of a kind of like infinite velocity of money so to speak, right? Um, and what that paper also showed was that when you combine that sort of thing with a mutual credit system with the ability for a community to issue its own money, you can save businesses, you know, huge amounts of of cash flow stress and and, you know, working capital costs and things like that, which is, you know, a major source, not a number one source of of um of businesses being pushed out of business, even if they're, you know, solvent, healthy businesses. And so, you know, liquidity kills you quick, as as people like to say, you can be insolvent

for a long time, but liquidity kills you quick. And uh you know solveny is kind of this it's almost like a a fiction. Who really knows what what assets are worth until you try to sell them, right? So until you actually have to pay your debt, you don't know. Um and then uh and so it's really liquidity is kind of all that matters. So so anyway, you know, I was uh I was fascinated by by this paper because it felt like it kind of brought together a clear way of thinking about this sort of like base layer that needed to be in place. this, you know, discovering the network of debts that exist, the graph of of debts that exist all around us, looking for the cycles within them, clearing those first, and then being able to build other kinds of local currencies and stuff on top in a

way that's empowered by the underlying um that underlying network structure. And so, you know, it felt to me like this was the way forward to make community currencies and other kinds of local currencies and local sources of credit and all this kind of stuff possible. And so I ended up getting in touch with um with the authors who coincidentally were trying to get in touch with me because they wanted to build this stuff using Cosmos because they saw Cosmos as sort of the you know the ideal um you know platform and technology stack through its values sovereignty interoperability stuff I've been talking about for a long time. Uh you know Cosmos is kind of fundamentally a philosophy of monetary you know monetary philosophy in in a way and um and I think there's a lot you know Cosmos is the start of something. It certainly doesn't have all the answers

of around what money should be and and and so you know cycles is the project that's evolved out of this confluence of like what Cosmos started and this connection to you know my thinking about local currencies and this credit clearing stuff that I think is now the next step in addressing these key challenges in the institutional structure of money and really focusing on the necessary cyclic flow of money. Right? money is fundamentally um a graph problem and and we need a graph theory of money and and the monetary system and and we don't really have one and and so we've been kind of trying to develop one with cycles and if you read the white paper there's a lot of you know kind of graph theory in there and a way of thinking about debts and money and the structure of finance in terms of uh a

graph of um of commitments about debt and debts in the past debts in the future we can represent kind of uh everything like that so that's where that's where cycles starts from and and then sets itself you know an ambitious goal of clearing the most debt for the most people with the least money. Yeah. So that's uh that's the starting point for cycles and I'm happy to get into it, you know, much more detail, but I should uh breathe for a second. You've talked about how broken are the ways in which economists are measuring our economy and monetary system. Meanwhile, others are arguing that our economic system itself is broken. Which one is it? Is it the measurement process broken, the system itself, or a combination of both? Yeah, it's a good question. I think it's both.

Um, for sure. Uh, and it, you know, it's there's a long history of of problems. There's I don't think there could ever you could ever point to a time and say, "Oh, the monetary system like worked then." You know, the the gold bugs and the libertarians love to say the period from 1870 to 1907 was a perfect period of monetary bliss where, you know, everything worked and there was no uh no problems. And I mean that's it's nonsense, but um but anyway, so it's it's both theorizing about about money, but and that feeds back into the institutional structure of it as well, right? Um and there's a lot of points to pick off in the, you know, multi,000-year history of these

institutions where you can say, "Oh, something went even more wrong here." Uh but there's no point where you can just be like, "That's the point where things went wrong." Because then if you're like, "Okay, well, what happened before that?" you find more problems before that and then you're back at, you know, the Neolithic revolution in the invention of agriculture. Like if you want to know where things went wrong, it's when we started producing surpluses and then having to manage the surpluses. And once you need to manage a surplus, then you're outside of, you know, you've sort of extricated yourself away from just like the pure natural environment whose cycles you're already a part of. And then you have to create all these new cycles. You get all this distribution problems. And um you can't really uh it's just like, you know, an 8,000-year consequence of um discovering

a agriculture or whatever. So, but if you start to get into measurements, I mean, there's there's there's many there's many things we could point to that are just like obviously hilariously stupid and wrong. Um one is just the way they try to measure money itself. I mean, they just have no idea what the stuff is, right? So, they they keep changing the definitions of like M M1 and M2 and all this stuff. for a while like in the 80 you know after the whole like inflation of the of the of the 70s and everyone was like okay the Keynesians were wrong this experiment has failed now we have massive inflation now we're going to swing to the other side and let the like you know right-wing monitor step in who are like all that matters is the amount of money in the system okay maybe there's some

truth to that if you want to like you want to start there but then presumably you need to be able to measure the stuff but then they found out that they couldn't even measure the stuff like all their measurements couldn't correlate to anything that was actually happening And so then they just kind of gave up in the '9s and they're like, well, it's not about how much money is in the system. It's about people's expectations about how much money is going to be in the system. And so they invented this whole like, you know, expectations theory of uh, you know, of monetary policy. And then, you know, and the Fed basically leaned into its role as like an oracle that, you know, it's it's mere utterances, you know, affect the markets in all these, you know, transcendental ways. And so um so that the the problems

of the measuring and of the like institutional structure are related and I think have become even more related. But so much of the money in the system is just uh is is is not measurable by central actors, right? And and part of the problem is when you have a highly decentralized and to to some extent private system. I mean if you talk about the structure of the global monetary system, you have this like highly decentralized private, you know, uh monetary system. I mean, you know, a crypto person hearing that like oh decentralized private system like sounds great. I mean that's that's what we've got. So what what what are the problems then right? Uh well, obviously there there's tons of problems, but you know, if if you want to predicate the thing on being able to measure it and and do monetary policy or, you know,

institutional change based on based on your measurements, but you can't actually measure things accurately, then you're going to have um you're going to have huge problems. So, I mean, that that's one thing is just like measuring the quantity of money in the system and and try to do things based on that is is doomed because you can't actually get a real a real measure of this stuff. Um, and even if you could, it would still be well, a it would be, you know, it's a surveillance nightmare, but even if you could, it probably still wouldn't hold all the answers for you because what what matters isn't the stock of money. What matters is how it flows, right? If everyone just sat on their money and did nothing with it, then the amount of money in the system doesn't tell you anything, right? Um, so obviously what

matters is is the flow of money. I tried to write a blog post about this about the velocity of money and how it's the least understood and most important element of you know the the equation of exchange MV equals you know PQ or however you want to frame it but it's not it's not a single thing and trying to like aggregate and just think about things in the aggregate is another big source of the problem right and and so people often come back to GDP right so GDP is another one of these like measurement you know challenges we have where it's like oh we need a measure of like the growth and health of the economy and and so they come up with this GDP thing but the GDP P again is like an accounting fiction and it changes over time. they decide to count

things towards or against the GDP and and that and that changes and like you know at one point they changed it so that like they kept having to deal with these problem problems of like how to account for finance and and the money the banks are making because initially it was it was like obvious to the accountants who were defining this stuff that like okay you know the money the banks are making is like not productive like what the banks are doing is not like a productive component of of society. it's not part of the gross national product. It's if anything it might be taking away from it. It's some like rentseeking extractive thing, right? And so, but then by like the 70s or something, they were like, well, they're making so much money. There's so much profit that it must be productive.

So, therefore, we have to find a way to incorporate that profit as part of the product. And now it's, you know, a critical component of of the GDP of of countless nations. So, again, it's, you know, um, so what does that mean for for measurement and what should we measure and how should we measure it? I I I don't know that I have the answers to that. I'm not sure there's ever a singular thing. I mean, deciding what to measure is a is itself a somewhat subjective, you know, what matters, right? Who's to say what matters? Um, as much as possible, I try to ground the problem in in the biohysics. I can say the biohysics matter, right? I can you know the if nothing else the like physical reality the physical material reality that keeps us alive the energy from the sun matters you know can we

quantify how much energy comes in from the sun yeah probably I think we can do a pretty good a pretty good job of that can we quantify how that energy you know is is transformed into ecosystems and into you know ultimately into the monetary system well that's a lot more complicated but I think that's the direction we have to go so I think you know the problem of the 21st century is primarily a monetary problem is how do we, you know, define and redefine money and and and start trying to measure, you know, I don't want to say the right things because like what is I don't know that there's truly a right answer, but um something that is somehow more uh more accurate, let's say, um for lack of lack of a better term. Um but but you know, I part of the problem I have is I

don't have all the answers. I'm not sure all the answers are there. I'm still trying to figure out what the right questions to ask are. still learning quite a bit about all this stuff and how much is is is is fundamentally wrong. But what I do know is that these are problems of of flows and of accounting and if we're not talking about flows and if we're not talking about like accounting for material things then we're not talking about something meaningful with respect to economics. Right? So um now that's been my position for a long time and I'm not sure it's advanced that much. I've just learned a lot more about history that kind of further entrenches that position. So, you know, um, make what you will of that with respect to me as a researcher or something, but yeah, there's a long journey ahead here. All right. Wow.

Before we move on, let's just take a minute to breathe and, uh, pull some of those threads together from Ethan's breakdown. Max, what are your takeaways from that? Yeah. So, it's wild how poorly measured economic systems are, or you could say how poorly mapped our resource environment is. And and I could go on and about this forever, but suffice to say, as Ethan lays it out, it makes sense why so many economic models lack predictive capabilities. Second, I love the framing that we're actually mapping an emergent natural system. That is what markets are. And and to do that, we need to recognize it behaves like other natural systems. That what matters are the flows, that they move. They aren't in equilibrium, but are dynamic.

Third, uh it seems promising to use a system like credit clearing which recognizes the that value of flow or the velocity of currency as opposed to liquidity. The whole debt clearing thing is pretty amazing, particularly when you consider the the relationship between community currencies and mutual credit systems being so synergistic. The fact that each expands the impact of the other is a very promising innovation for alternative economic systems. Yeah, it's super cool. But once you wrap your head around it, you can see it as a way to minimize the need for money itself. Kind of like a supercharged networkwide version of Splitwise, but for a whole amalgamation of communities and small businesses. So, we heard some new terms here. Uh Josh, you want to give the listeners who may be new to these topics

some additional context? Sure. Here's a quick term breakdown for folks that might not be familiar. So, Cosmos is the blockchain tech that Ethan founded and is building his current project cycles on. It's just another blockchain. And most blockchain architectures make trade-offs between different benefits and drawbacks. And Cosmos and Ethereum pretty much do the same stuff, but we're not going to get into the details of that right now. Yeah. All you really need to know is that they're both perfectly adequate substrates for Cosmolo regenerative tools and coordination. Yep. And so, Cycles is a project developed by the co-op that Ethan's the CEO of. It implements credit clearing mechanisms. The project aims to create infrastructure for mutual credit systems that can operate at scale with enhanced transparency and security.

Mutual credit is a system that enables non-monetary exchange of goods and services. It's a currency created through an agreement between participants to extend credit to each other. Unlike conventional money, mutual credit is not issued by a central authority, but instead represents promises between individuals in a community or network. Like when you remember you owe your friend a favor or who has the next round of drinks at the bar. Yeah. And credit clearing is like when you and each of your friends pay for a round of drinks and no one at the end needs to pay each other because the costs cancel out. It's effectively creating a system where I use can be exchanged and offset. Another piece Ethan touched on is blockchain as a substrate. It's not the goal. It's just the foundation we can build new

financial coordination tools with. And if or when we get better tools, we should shift to those ones. We should use the best tools for the job. Uh like tools in right relation or this term known as appropriate technology. Yeah. And blockchain is like good soil for growing new kinds of economies. And maybe the most important note, we design the systems that we have today. And that means we can redesign them. Our current economic structures weren't handed down by kings or emperors. They were choices. And we can make new ones. Right? You can just do things. Exactly. So before we jump into our next guest, just to avoid confusion, you heard Ethan talking about cycles and coming up with Julio, you'll hear him talking about circles. These

are different projects. Ethan's current project cycles is the credit clearing protocol. And Julio was involved in a UBI or universal basic income pilot project called circles a few years ago. Yeah. While the deeply similar linguistic mimemetics here, cyclical like uh donut economies or water cycles or regenerative systems, closed loops, there's a philosophical through line here, right? I'm glad you see it too. Okay, so with that, let's dive into our next conversation. Our second guest, Julio Linarez, introduces himself beautifully. So, I'll just say he's thought deeply about anti-colonial financial systems, debt, dignity, and why real economic liberation starts with remembering old ways of coordinating

life together. Julio challenges both the crypto and mainstream economic systems for their role in creating inequitable power structures in our society as well as offering real world pathways to a democratic and ecological just transition. So, here's Alex again with scoop. Cool. Cool. Cool. All right. So, just to take it from the top with the founding question, I guess um we've been asking everyone where are you rooted? Where are you located right now as you take this interview? And how does the place that you live or the places that you spend time inform your work? Yeah.

So, my name is Julio. I am an economic anthropologist from a place that is called Guatemala. Uh I live in Berlin for the last I want to say maybe six years almost seven years and I do lots of things from here that have to do with alternatives to the monetary system and also to technology. So for example, I started a place with many of my comrades called offline, which is a space for uh different communities to self-organize events and also to work on peer-to-peer technologies. I'm also involved in various groups that deal with

anti-colonial actions, anticolonial politics, contributing to many movements I think today. So in Europe for example the degrowth movement uh movements for debt cancellation and I am also serving as public outreach for the basic income earth network where I do a lots of advocacy work on the topic of universal basic income. So I I have a lot of hats I would say. I also for many years did a pilot of an experimental currency called circles UBI which was a sort of an attempt to self-organize a basic income without uh waiting for a government to to do it here in Berlin.

So how did you find yourself in Berlin? It sounds like that's kind of the nexus of a lot of these groups. How how does being in that city sort of inform these different identities for you? So I got to Berlin because of uh the circles project. I was interested in the question of how to make basic income a reality and how to do it in a way where we could actually challenge the monetary structures that underpin the world today which are rooted in state and and and the banking system. So yeah, at the time when I sort of was moving to Berlin, I wanted to move to Berlin, I was doing um a master's degree at the anthropology department at the London School of Economics where I was studying with my

late friend and professor David Graber on the topic of money and on the anthropology of value particularly. Very cool. Can you say a little bit more about that work with David Greyber and how his research interest sort of informed your own? Yeah. So I stumbled upon David's work. I was living in Asia at the time. I lived in Taiwan for six years and I was doing uh research uh in Bangladesh. Uh particularly studying how people that live in so-called poverty, I should say capitalist poverty. People are not poor, they have been impoverished by capitalism. Uh how they live their lives when it comes to money.

So I was doing a an analysis of a methodology called financial diaries whereby people in rural areas in Bangladesh would write down in a diary all their money flows both inflows and outflows and then I would recollect those those diaries and then analyze them as a whole. I think we did it for like 50 people at the time to sort of understand the social lives of people. No, the the social life of money in a way. Sort of through reading critiques of micro finance at the time and and debt, I got to the work of uh Carpolani who is like a late economic anthropologist from the 30s and 40s and 50s and then eventually to David's work.

So I applied I think for a scholarship at the time it was 2016 maybe 16 to go study at the LSC and I thankfully got it. Uh I wanted to basically look more at the topic of money and value and how could we go beyond you know these current structures of debt and micro finance which over the years been proven not to really work because what they actually do is that they end up putting people in a cycle of debt where h you know you pay a debt to you get out of another debt and then you're constantly just sort of living on borrowed time. I stumbled upon the idea of basic income as a way to decommodify human labor time and actually change the logic by which we relate to money. I was interested in

these questions and at the time I read the the book on debt that that David had put out. I reached out to him and then when I was in London we started working on on these topics. At the time I got approached by the circles team, a lot of the people within Atheidium, what I would call theium left was kind of like the group of people formed there to try to make this this project a reality. How could we create a system where people themselves could issue their own money and then go about claiming stuff of value, things of value with it? Now the pilot is finished. We had a lot of interesting insights and experiences and about both the potentialities but also the limitations of what such a system can do under current capitalist uh

imperialist condition. So to give you an example, we worked uh a lot with farmers and farmers often struggle with uh having high costs of of production for their food especially in Europe. These farmers when they would sell their vegetables at a local shop here in Berlin, they would often have to sell them at a higher price often 50 cents in the euro more expensive than the say tomatoes that come from andalucia in Spain. Even though we were trying to get farmers to collaborate and decrease their cost of production and and like be able to provide cheap food to people, you know, with their basic income, you have the sort of very structural issue uh in the centers uh of like imperialist

centers of the world. So, um a basic income pilot that we were trying to do in Berlin uh that was sort of based on this idea of localism and autonomy was not really enough because uh we're dealing with a global system. It's kind of like this sort of chicken and neck problem of yeah we want to have local solutions to global problems but if we don't change the global uh structures we won't be able to change these conditions. So in Germany to give you a context uh there have been many protests in the last years from the farmers uh and the agricultural sector mainly because the German government has been threatening and has been actively trying to decrease subsidies uh to them that are actually based on oil and so it's

kind of an interesting dynamic because of course like oil is not uh in these days but it has become a dependency for a lot of the food production sector to be able to even produce food at a level where you know they can uh you know uh sell not just for the local market but also to the international market. And so I guess some of those insights is sort of what I now uh led me to also writing my my book about the abolition of the US dollar as a means of achieving uh uh an actual social uh ecological just transition. What does crypto offer that fiat currency wasn't really offering to kind of like make manifest some of those new decolonized ways of of

doing exchange? Where does crypto come in that kind of enables those systems? When it comes to Ethereum, I think there's many really really really good and interested uh interesting people in Ethereum that want to do good and want to like at least sort of the early cyber punks really wanted to change the world. But at the same time, one of the things that we realized over the course of making circles is that if you want to actually democratize the means of the production of something like money, you also have to really at a very deep level decentralize the actual technical substrate upon which that is based upon.

And today, as I said, because blockchains resembles the sort of decentralized feudal structures, you would just be replacing one master for the other as an a central bank for a crypto king. And so this is a very maybe not like a very popular opinion, but it's at a structural level, at the political economy level, I think it's important to reckon with because if we want things like aidium to become a viable alternative, we really have to reckon within with the power structures that Atheidium has in and of itself. Now as I said uh there is a lot of wealth or monetary wealth that comes out of all these digital assets and I think it has not been well mobilized towards actual transformatory change the type of change that we need in the planet right now. So

we're in this kind of awkward situation where we have these structures that can potentially have mobilizing wealth that can catalyze change but it's just being used towards I don't know NFDs or uh stuff like that. Yeah absolutely. So can you help us then understanding the difficulty of imagining sort of a system that's not inherited from the previous systems we were handed. What would that look like? What what is capital generation look like in that system? What does capital exchange look like that is juxtaposed to the system that we find ourselves in in crypto and in normal I guess statehood systems of exchange. Yeah. So I mean this is this is a um I guess a historical question to some extent because human beings have

not uh lived under conditions of being a commodity for all of human history. That's kind of a very recent phenomena. This the sort of idea that we have to sell our labor time for this fictitious commodity that we call money is a sort of a very new thing. And so for most of human history, people have dealt in exchange in production in ways where private property was not the sole principle way on which to organize life. There's many like there's a like plethora of of historical practices that deal with commoning you know common production over over food over the distribution of that food over or

clearing debts within communal networks. One thing that I always like to say is that before the rise of capitalism wealth did not mean money. It meant health uh in the form of food, in the form of uh social relations, in the form of the quality of the social relations that you could have between and within social groups. And that's something that has been kind of forgotten in a way lost because we live in a system where the only thing that we have to maximize for is to make more money or to make money out of money. Right? That's the whole logic uh of the capitalist system. So if we want to go beyond both state structures and the sort of emerging crypto feudal structures, we have to

first engage in what Web Dubois called abolition democracy. There was no real introduction of democratic counter institutions to welcome people out of slavery and help them to be embedded within this new paradigm that they were on. So slaves stopped being slaves and became wage laborers or wage slaves uh with no assets with no land with no initial conditions upon which to build. So then when they became wage laborers they only could sell their labor time. So the question of abolition democracy is like how could we first dismantle these colonial institutions and then bring forth direct democratic ones where the people themselves in like local forms of democracy federated forms of

democracy can actually influence the stuff around them in a way that is meaningful which is something that we don't have today with so-cal representative democracies right so do you see any any difficulty in I guess the transition period or or how do you en envision in a transition period where folks are invited to participate in a more democratic financial system but maybe don't have tools or models for that that are readily come to mind for most of the population. Is that is that where you look to history where you look to historical models that we could sort of learn from in how to do this self-governance? Yeah, I mean there's I mean people have been self-governing for forever and still do today. I mean one of the most interesting forms of

community wealth building or communal structures that people use to this day everywhere in the world is this notion of roskas or rotating saving and credit associations. I mean they exist all over the world in I'm sure they exist in the US in Latin America different countries in Asia etc. Basically it's a system where people come together and then say okay we're all going to put money into a pot and then today the first person will get the whole amount. So it's a way of like collectively aggregating capital assigning it to one person and then the next round the person starts to repay often without an interest uh and then the next cycle the money goes to the next person right so this is a system that is super super super both very ancient let's say or old but also very

contemporary you know it's something that people even used to this day uh I saw in Bangladesh I saw in Guatemala in Taiwan also where I lived so it's not like we lack tools it's not like people don't know other structures it's just that the ones that sort of dominate the hegemonic ones don't really allows ways out. Like today when you hold a piece of of cash, what you're really holding is an IOU. No, it's a it's a promise. So it's a but what is it a promise of? It's a promise of someone else's labor, but the promise is issued by the state. So you are literally holding promises of the state for someone else's labor. But why does the state have to control other

people's labor? Right. Okay, Josh, what was that all about? What's your topline takeaways from this? One of my biggest takeaways is the reminder that wealth is health. It's not just financial health, but the health of our communities, relationships, ecosystems, and cultures. And it immediately made me think of the eight forms of capital framework. It's a way of expanding our understanding of value far beyond just financial. In addition to money, it includes social capital, our relationships and networks. Material capital, our tools, land, and built environment. Spiritual capital, our connection to meaning and purpose.

Intellectual capital, the knowledge we share and grow. Experiential or human capital, our lived skills and embodied wisdom. Cultural capital, our traditions, art, stories, and shared meaning. And lastly, living capital, our soils, forests, wersheds, and all living systems. And when you see the world through that lens, suddenly it's obvious. Thriving means caring for all of these forms of wealth and not just chasing dollars. This is the heart of refi or regenerative finance. It's financial permaculture. Instead of extracting, depleting, and externalizing harm, regenerative finance incentivizes actions that increase systemic health.

It applies nature's principles like cycles, symbiosis, regeneration to how we coordinate and exchange value. Yeah. And Gregory Landoa, one of the original thinkers behind the eight forms of capital, has been a foundational voice in refi from the beginning. And all those ideas are still evolving. Today, we're growing energy around the idea of biofi, a place-based evolution of refi that's deeply attuned to the unique limits, flows, and gifts of specific ecosystems and communities. Because when we think about local or bio regional economies, we're talking about entire living systems that are interwoven, right? And that reminds me, the voice you heard in the cold open, that was Will Zaul. He's the board director at Regen Foundation, which stewards regen

network, which is also a Cosmos blockchain of which Gregory Landu is a co-founder. It's the project which brought the regenerative finance concept to blockchain. And as Ethan emphasized earlier, sound economics is about cycles. Cycles of trust, cycles of energy, cycles of value flowing through and sustaining communities. I want to emphasize, we're not talking about exclusive technoutopias or wonky academic theory here. It's about practices that have existed for millennia. It's about what you do, how you practice it, your techn indigenous, ancestral, biophysical ways of relating to land, people, and resources, many of

which still thrive today. When people talk about concepts like the donut economy, the solidarity economy, feminist economics, it's really pointing to the same underlying shift. economies built around human needs and ecological realities and systems of care rather than extraction and profit. All these lead back to roots of indigenous ways of thinking. Now, stepping back a bit, what similarities did you notice from Ethan's and Julio's conversations? It's what I mentioned earlier. There's this throughine of mimemetic patterns, cycles flows regeneration. Sustainable systems cycle energy. They don't just burn through at

once. and collapse. They recirculate. They sustain. They grow stronger over time. Whether you're looking at Ethan's credit clearing models or Julio's ancestral saving circles, it's the same fundamental concepts. It's less about volume and more about velocity. Quality over quantity. Okay, then why are so many people that are exploring these alternative economics ending up bumping into crypto and blockchain? Oof. Okay, bear with me here while we nerd out for a moment. I have to explain some ways blockchains work like the features they have. I won't get into the how they work this way but there's plenty of resources for that or maybe we could do a podcast on that someday but we'll keep this simple for now. So to start with the obvious

software has some distinct features over hardware in this regard. Predominantly that you can copy and paste it. You can change it and run it again and again without having the scaling barriers of the physical world. This lower replication threshold makes experimentation much easier, more rapid, more cheap. Okay. Second, you know by now that blockchains are decentralized because there's no single gatekeeper. They are censorship resistant, meaning anyone can publish data or run an application. Also, no one can stop someone from doing that. We call this permissionless, and you've heard us mention it before. It helps foster a culture of experimentation in fields otherwise taken for granted like

governance and economics. These are the realms of nation state control. But because even the most powerful governments on Earth can't stop you from running economics or governance experiments on chains like Ethereum. Well, that's towards where people who are interested in these things have gravitated. Uh third, blockchains are good at securely recording data and making it either permanently transparent or permanently private. Last episode, you heard Ben describe blockchains as immutable. That's what he means here. Once the data is on chain, no one can tamper with it. It's recorded forever, which is great for monitoring, reporting, and verification data for things like ego credits so long as it's permanently transparent. Or, as Ethan

mentioned, it's great for debt clearing if the data is private. And there's a whole bunch of other things blockchains offer like automation through smart contracts and interoperability through data standards. But I think the transparency and auditability, the permissionlessness and decentralization suffice to explain why these alternative economics folks are ending up here in crypto. And this is why we see blockchains as the infrastructure to build these democratic counter institutions that Julio was talking about. Decentralized networks where value, cooperation, and mutual aid flow freely between communities outside of traditional systems. And this is why local solutions are so important right now. They're not just isolated experiments. They're the necessary stepping stones towards sovereignty and resilience, real autonomy outside of the

collapsing corporate nation state paradigm that we're living in today. And when we discuss building alternative economic systems, we're talking about worker ownership, appropriate technology, cooperative finance, and resilient local communities. Holistic systems firmly rooted in place yet globally connected, fundamentally redesigned around care, solidarity, and sustainability. And this is the frontier of collective action. Because here's the truth. Economics is capacity building for localists. If we want to steward our communities and ecosystems towards thriving futures, we can't afford to treat economics like a dirty word or somebody else's problem. And we don't need every localist to become an economist either. That would actually be

terrible. But we also can't surrender decisions to those who are only looking out for extraction and profit either. Exactly. We need to engage. We need to experiment. We need to build to reimagine what's possible. And also remember, economics is just how we map our resources. And finance is the toolkit that we use to navigate them. And if we map them differently, if we build different tools, then maybe we can live differently, too. All right. Remember what Ethan said at the top of the episode about what matters is the culture and how we take care of each other. The other voice you heard in the intro was Alana. They are a board of trustees member for hours exchange, a

community currency in Corvalis, Oregon. Alana's experience in tools which strengthen localist networks grounds us in the relational heart of it all. Why the network of trust is more powerful than any individual currency, token, or tool that we've been talking about. And it's about the ends. It's not blockchain for blockchain's sake. It's using the right tools for the right reasons. But it doesn't just function through the currency. It functions through the relationship, right? Like now I know like, oh, who can I ask if I have this question? Like these people are are supporting me. Okay, I have a bunch of extra asparagus right now. I'm going to take it to their house and give it to

them. You know, that that type of stuff happens naturally within the hour exchange and is actually more enduring than the currency. And so those material outcomes seem to include how we relate to each other, the practices that make personal networks stronger. Or as Julio said, health is the quality of social relations between and within social groups. It's really the network piece of the hour exchange that to me feels like the real enduring value of it. The currency has an educational component and like a practical component. Yeah.

It's it's more of a network than it is a currency at this point. So if the ends are better relationships for a more resilient community, the means must support that. And to fuse the ends and the means, we need tools which change our patterns of behaviors. Our techn to be in better relationship with each other. Yeah. So the the word transaction, this is one of those other comparisons between US dollars and hours or local currency, trade, etc. When I have US dollars and I go into a store and I buy something, I do interact probably with the human on the way out of the store and give my money

to them, but that that interaction is is is done. There's no thread generally speaking unless you know I got their phone number or something. But uh but when exchanging money or goods or even just gifting or whatever amongst the network of people, there's an there's something behind it. Like I I at least heard that person's name. Maybe I called them on the phone. Like maybe I saw them in person. Maybe I saw their front porch. You know, there is a there's a thread that is not just transactional. There's a thread of

relationship. And then over time, if that's a good or service exchange that is generative on on one or both ends, those things continue. And that it's it's a relationship economy, not not a transaction economy. So the interviews today opened up a lot of possibilities. Alternative visions for how economies could work drawn from science, tradition, and on the ground experiences. These threads woven together show how these ways of flowing resources offer us an alternative, a future rooted in local resilience and global solidarity. There's many people, many uh groups doing interesting things around the world. Some of the most exciting ones for me is actually in

Brazil. uh have many many comrades there that are doing uh basic income in the form of local currencies. Also in South Korea, there's been many very very interesting basic income experiments and and pilots and systems at the regional level. There's the people at Grassroots Economics in Kenya doing always good work. Dill Green in the UK is also doing good work with mutual credit services, I believe they're called. There's many, many, many, many, many alternatives out there. We just we just need to see them. To learn more about cycles or region network, to pre-order Julio's book, or to get in touch with our guests and follow their work, check the show notes for links. If you would like to learn more, check out ethereum Localism.xyz, which we'll also include a

link to in the show notes. If you want to support this work, share this podcast with a friend. It's really one of the best ways to support the movement, which by now you know why it's as much a social movement as it is a technological one. And finally, if you'd like to get in touch, follow us on Twitter at Eith Forest Dow or find our handles in the show notes. Thanks for tuning in and see you next time where we'll flip over the coin and step deeper into the mechanics of collective action, rethinking power, control, and decisionmaking from the ground up. We're talking about governance.

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