Zong Massacre, Sinister Origins of Maritime Insurance, and Human Capital
By: Sebs Solomon—Originally Posted on August 9, 2021 via SolarTsunami
Let’s begin with a little history about the Zong Massacre that took place in November of 1781. The Zong was a British slave ship that sailed in the Atlantic slave trade; bringing stolen human bodies from the western coast of Africa to modern day Jamaica. And yes, there were many slaves who were sold to Europeans by Africans themselves; however, in my opinion, this is inconsequential because either way, the commodification of human bodies is inherently abhorrent (whether it is done by Europeans, Africans, or Arabs). Aboard the ship were 470 slaves and since human chattel was “such a valuable commodity at that time, many captains took on more slaves than their ships could accommodate in order to maximize profits.” As a direct result of the overcrowding, many fell ill and began to die from disease and malnutrition. On the way to Jamaica, the Zong was caught in the “Doldrums” with no wind to sail and drinking water was running low. The cargo was insured against drowning but not dying of thirst; so, in an epic display of creative cruelty, the Zong’s captain, Luke Collingwood, decided to take advantage of an existing loophole and threw some cargo (slaves) overboard to save the ship and to provide the ship’s owners an opportunity to claim for the loss on their insurance. The owner of the ship, James Gregson, never ended up receiving compensation from the insurance company; however, because slaves were thought of as goods or property, the men responsible for killing 132 slaves were never questioned or asked to take responsibility for their actions.
The idea that you can throw slaves overboard in order to reduce financial risk or increase profit margin was popular at that time period and stocks related to foreign trade (and slave trade) came to dominate the British market in the 18th century. In a talk about Social Impact Bonds given by Justin Leroy at the Whitney Museum of American Art, he makes the astute observation that the:
Slave trade itself was a primary motivator leading to the development of robust insurance networks…[and] maritime slave insurance allowed slave traders to hedge against the infrequent, but potentially disastrous interruptions of their profits.
This point is further illustrated by the creation of the Consolidated Association of Planters of Louisiana (C.A.P.L.), a bank set up by planters in Louisiana. Using the C.A.P.L. model, slaveowners monetized their slaves by securitizing them and then leveraging them multiple times on the international financial market. Planters who needed to borrow from the bank would put up their land and slaves as collateral. C.A.P.L. convinced the Louisiana legislature to back millions of dollars in 15-year bank bonds at an annual interest rate “of 5% and if the loan repayments from planters failed and the bank could not pay off the debt, the Louisiana taxpayers were now obligated to pay off the debt. That is, the taxpayer was on the hook.” This persuaded the European markets to get involved and soon the bonds were marketed in London, Hamburg, Amsterdam, Paris, New York, and Philadelphia. These bonds are similar to the securitized mortgage bonds from late 1980s to 2008; both intended to reallocate risk.
Philanthrocapitalism and Social Finance + UN SDGs
After the 2008 financial crash, the proponents of Social Finance devised a new way to make money while, simultaneously, taking actions to benefit society through a method, some call, Conscious Capitalism. According to Northeastern University, the business philosophy of Conscious Capitalism comes from “John Mackey, co-founder and co-CEO of Whole Foods Market, and Professor Raj Sisodia, who together wrote a book on the concept and founded the nonprofit Conscious Capitalism, Inc.” Mackey believes:
Sustainability, corporate citizenship and ESG (environmental, social and governance) integration have become business necessities in our rapidly-changing world…[and] provide a roadmap to help corporations contribute to the goal of achieving a net zero economy and meeting the United Nations Sustainable Development Goals (SDGs).
Mackey was once on the Joe Rogan Podcast where he described intellectuals as the “enemy of business and certainly the enemy of capitalism…because they are not very important in a market society…and don’t have the social status that the entrepreneurs have.” By intellectuals, does he mean critically thinking human beings? Joe Rogan, as always, did not ask sufficient follow-up questions; however, he did push back a tad. I wish he would have asked him what he meant by “market society,” and are human beings commodities, too? Is nature a commodity? How is someone like Mackey, who makes such irresponsible declarations about “intellectuals” in line with the UN’s SDGs? “Quality Education” is actually sustainable development goal number four.
I understand, social impact bonds and sustainable development goals (SDGs) are not “sexy” topics to cover and most people find them boring and irrelevant; however, these dull sounding buzzwords are guiding our everyday lives and it is imperative that we comprehend them beyond the surface-level understanding of the terms. So please, stay with me on this.
According to the Global Impact Investing Network (GIIN), 42% of impact investors are using the sustainable development goals (SDGs) as a tool or indicator for measuring their impact. In September of 2015, all members of the United Nations agreed upon a blueprint for peace and prosperity through the seventeen UN SDGs, which were endorsed by the General Assembly of the Addis Ababa Action Agenda in Ethiopia, a country that plays an important part in the UN’s 2030 Agenda.
Tedros Ghebreyesus, the Director-General of the World Health Organization (WHO), is from Ethiopia; as well as, personally, involved in overseeing the success of the UN SDGs. Ghebreyesus works closely with billionaire philanthropist who brought social impact investing to the US, Michael Bloomberg; the two even launched a STOP Tobacco initiative in 2017 to help countries “better protect their citizens…from the tobacco industry and its products [by using] tobacco monitoring systems.” In May of 2018, the World Health Assembly adopted a five-year plan for advancing the SDGs in accordance with the Global Action Plan. Ghebreyesus anticipated that the agency would focus more on public health, stress nation-level impacts, and improve access to health-related knowledge and information:
The five-year strategic plan adopted at the meeting sets three targets to be achieved by 2023: extending universal health coverage to one billion more people; ensuring better protection from health emergencies for one billion more people; and promoting better health and wellbeing for one billion more people. Taken together, this ambition is referred to as the “triple billion” target.
The UN called upon all countries, developed and developing, to agree on the 2030 Agenda for sustainable development because social and economic growth is contingent upon the viable management of the planet’s natural resources. The new “moral economy” would be overseen by:
Self-proclaimed ethical venture capitalists, charitable foundations and neoliberal governments who propose more responsible investments as an alternative to Wall Street’s sociopathy and more efficient, ‘pay-for-success’ social programmes as an alternative to the austerity-addled public sector.
Instead of multinational corporations, central banks, big banks, and corrupt governments taking responsibility for the role they have played in creating the inequalities, they believe people would benefit more if financial and social goals are blended into responsible or ethical investments. Similar to John Mackey’s emphasis on the importance of entrepreneurship, the proponents of social finance assert that governments need to embrace the entrepreneurial spirit in order to become more responsive to social needs. By promising to bankroll new funding streams for social services, the “ethical financiers” want the public sector to be as accountable to investors as they are to individual citizens.
Social and Development Impact Bonds + Blockchain Solutions
Echoing the sentiments of the ethical financiers, Megan Golden from NYU Wagner Innovation Labs spoke at a NASEM Health and Medicine meeting where she explained that the need for social impact bonds or pay-for-success programs is driven by the government:
Spending too much money reacting to problems after they’ve happened; like prisons, hospitals, special education, and foster care; and these take so many resources that when government budgets are tight, there is not enough money to go around. Therefore, the private sector will invest money into programs that can prevent those types of problems from happening in the first place.
This does not directly privatize public programs, rather, it preserves public jurisdiction over targeted services and designs new ways to make governments pay returns to private investors. Essentially, privatizing government services by outsourcing them to non-profits under conditions of performance based contracts. Thus, the profit is not necessarily the “return on investment” because the profit will come from securitizing the debt which then allows the hedge funds to trade off of that debt. Securitization is the process of taking illiquid assets and, through the use of computer science, statistics, economics, and applied mathematics (quantitative analysis), transforming them into a security (that holds monetary value). Any asset may be securitized as long as it is cash-flow producing.
Similar to the 1700’s, when slaves were thrown overboard, so ship owners could collect the insurance or how slaveowners monetized human bodies by securitizing and leveraging them on the international market; with the innovation of social and development impact bonds, human exploitation will now be amplified on a global scale by the commodification of every single person. Human beings will be invested in like cargo, which creates an opportunity for bad faith actors to hedge against the good outcomes (since the bonds are securitized). Viewing “broken people” as investment opportunities and creating a human capital market is a dangerous game.
In 2019, a paper on blockchain-based solutions for impact investing by the International Institute for Sustainable Development (IISD), stated that cryptocurrencies enable new opportunities through the tokenization of impacts and various organizations have started to look at blockchain as an instrument to advance the UN SDGs. In the report, IISD and the United Nations highlight the importance of private sources of capital in financing the SDGs, given the additional investment needed.
Additionally, IISD indicates that technology “will play an important role in helping impact investing reach scale. With rapid developments in the areas of artificial intelligence (AI), robotics, machine learning, the Internet of Things (IoT), autonomous vehicles and blockchain, some of the fundamental challenges of projects linked to the SDGs can now be overcome in a cost-efficient manner.” MIT even developed the enigma protocol to aggregate financial data for impact investment markets in a mission to increase the adoption of crypto-assets. The Global Impact Investment Network (GIIN) emphasizes that:
Impact investing is an investment approach and not an asset class. It can be made across various asset classes, including money market instruments, fixed income, venture capital and private equity…[and] provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services including housing, healthcare, and education.
The Rockefeller Philanthropy Advisors roadmap to impact investing and the US Sustainable and Responsible Impact Investing Trends report from 2016, both estimate the capital invested with impact is valued to be nearly $9 trillion in the U.S. alone or one-fifth of all investment under professional management. The early leaders in this movement include high-net-worth families, foundations, pension funds and insurance companies. As Alison McDowell points out, this approach to financing the public good has “found bi-partisan support in the United States. Liberal interests are happy that services continue to be provided, and conservatives are pleased government is only paying for ‘what works’ based on data.”
In 2010, Sir Ronald Cohen, father of social impact investing, launched the first Social Impact Bond (SIB) with the Ministry of Justice to reduce prison recidivism in Peterborough Prison in the UK. According to his own website, SirRonaldCohen.org, he is a “preeminent international philanthropist, venture capitalist, private equity investor, and social innovator, who is driving forward the global impact revolution.” He co-founded Social Finance, a non-profit consultancy organization that partners with governments, service providers, and the private sector. Interestingly, SIBs are rapidly being adapted “into development impact bonds (DIBs) to be implemented in emerging economies including Uganda, Mozambique, Pakistan, and Colombia where the bond programmes attempt to discipline such recalcitrant populations into becoming economically viable.” For instance, recently, Social Finance partnered with MUVA, a Mozambican NGO that claims to support women’s “economic empowerment through the creation, testing and adapting of innovative approaches to diminish barriers vulnerable women and youth face to thrive in the labor market.” In addition, two Instant Network School (INS) programs were launched in Mozambique this year. The INS program is a joint initiative with UNHCR, Vodafone Foundation, Save the Children, and Pearson; currently serving 510,000 students in Kenya, DR Congo, Tanzania and South Sudan; all being financed through impact investing with data as the sacrifice since all of the education is tablet based learning (predatory philanthropy).
As I previously stated, the Social Finance apparatus is a global capture of the most vulnerable populations in the world by the most powerful multinational entities under the guise of humanitarian aid. Which would explain why Social Finance is partnering with NGOs in Mozambique since “never let a crisis go to waste” seems to be the motto and the country has had an uptick in “terrorism” and “insurgencies” in the northern region with nearly 800,000 people displaced in the last four years. Cohen argues that a single concept will revolutionize how success is defined for businesses and investors in the future: impact-weighted financial accounts — ascribing a dollar value to the social and environmental costs or benefits of a company’s operations. Sir Ronald Cohen was chairman of Apax Partners, a venture capital firm, when the British United Shoe Machinery (Apax-owned) pension collapsed in 2000 and left 544 workers without any pension. UK Members of Parliament called for proper inquiries, but investigations never took place.
How is Cohen, who was a chairman at a company responsible for hundreds of people losing their pensions, a viable pick to create and pioneer a new “social impact” market that will involve the pensions of millions, possibly billions, of people? I need answers.
In 2012, following the United Kingdom’s footsteps, Goldman Sachs Urban Investment Group and Bloomberg Philanthropies announced the first social impact bond in the US to support the delivery of therapeutic services to incarcerated youth at Rikers Island in New York. The experiment failed miserably; first, the control group fell apart because “wardens at Rikers Island could not separate teenagers who were to participate in a course of cognitive behavioral therapy from those who were not supposed to attend…then the city’s Education Department…pulled out… and the budget of the Osborne Association, which had been enlisted to carry out the therapeutic program, was cut when Rikers’s teenage population unexpectedly fell below the level written into its contract.” Despite the New York Timesopenly stating the program failed, in the same article, they still claim “the experiment succeeded in blazing a new trail.” As usual, the New York Times contradicts itself, this time in the same article; unbelievable.
Since Michael Bloomberg brought the social impact bonds to the United States from the UK, SIBs have spread their tentacles in every obscure sector of the economy, from housing and pre-k to addiction treatment. In 2012, the Obama Administration allocated nearly $100 million to fund Pay-for-Success programs — which is just a different name for the social impact model. The goal seems to be interlocking all of the data produced by the people on who the investments are allocated because, for example, they “can’t justify taking profit off of the fact that you didn’t become addicted, if they can’t track that against some intervention they put you on in middle school.” And since all of that data has to come together for the impact markets, it is no surprise that the World Wide Web Consortium (W3C) has been pushing for a decentralized identifier (DID)which is “a globally unique persistent identifier that does not require a centralized registration authority and is often generated and/or registered cryptographically.” Furthermore, the Rockefeller Foundation and the Commons Project Foundation developed CommonPass, an application and data-sharing structure that enables individuals to securely prove their COVID-19 health status.
To summarize, there is a possibility that the blockchain, digital identity, and the spatial web (next evolution in computing and information technology) will “interface with programmable money and impact investing to create a global digital prison;” a militarized, colonial project built in London, Israel, Hong Kong, New York City, Chicago, and Silicon Valley.