In closing out Post #19, “Managing without Growth,” I referenced Milton Friedman’s observation that when a crisis comes along that precipitates real change “the actions that are taken depend upon the ideas that are lying around.” It is necessary, he said, “to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”
Nothing today would seem to be more politically impossible then reform of the money system. So intertwined with every aspect of modern life is the way we depend on and use money that it seems truly impossible that we could have a workable society by handling financial transactions in some other way. However, there is a growing body of literature and chorus of views that argue that fundamental flaws in the money system are at the heart of the problem of non-sustainability of modern industrialism. A number of writers are contributing to a set of ideas that are “lying around,” still very much on the fringe of accepted economic and political thinking, that may become essential to the well-being of our grandchildren’s generation, when “the politically impossible becomes politically inevitable.”
The Four Horsemen of the Apocalypse
One of the writers with the longest pedigree for sustained reformist thinking about the failings of the money system is British analyst and commentator, James Robertson. I first became aware of his work over thirty years ago when he wrote The Sane Alternative (1978) in which he argued that “the human race must break through to a new kind of future” if it is to take the next “important upward step on the ladder of evolutionary progress.”
In his latest book, just published in 2012, Future Money: Breakdown or Breakthrough, Robertson asserts that since he wrote those words over thirty years ago “we haven’t made very much progress—the reverse in many ways.” But in the 21st century he is hopeful that because of worldwide mass communication and a shared growing awareness of what it means to be living on the same planet as one another, and a sense of the shared responsibility that goes along with that, that an effective response to financial instability might be forthcoming.
In this latest book Robertson couldn’t be more explicit about what he believes is at stake: “Radical reform of the money system will be a necessary condition, though perhaps not by itself a sufficient condition, of the survival of anything like our present civilization, and perhaps of our species, beyond the end of this century . . . If unreformed, its workings will continue to frustrate all the well-meant efforts of active citizens, NGOs, and government agencies, to deal with our present ills and problems—including worldwide poverty, environmental destruction, social injustice, economic inefficiency, and political unrest and violence within and between nations.”
Equally forthright in his opinion on the centrality of money reform for the future well-being of our grandchildren is American writer and commentator, Thomas Greco. His 2009 book, The End of Money and the Future of Civilization, was praised by James Robertson as “a devastating criticism of the present monopolistic control over credit, exercised through a banking cartel armed with government-granted privilege.” In his own words, Greco says, “If the money problem is not solved, we can expect that the future will bring ever greater misery—continued wars for dominance over resources, accelerating despoliation of the natural environment, continued erosion of democratic institutions, the imposition of a global neo-feudal society, and the beginning of a new dark age.” Whatever else he might say, Greco doesn’t mince words in projecting the consequences of an unreformed money system.
And then there is David Korten who has had a long and distinguished career on both sides of the financial establishment—from the Harvard Institute for International Development and Ford Foundation project specialist on international development, to work as an active critic and founder of citizen-action groups working to promote a new economy agenda. He is the author of several best-selling major works on the need for financial restructuring (When Corporations Rule the World, The Great Turning: From Empire to Earth Community, and The Post-Corporate World: Life after Capitalism), but in his slim Agenda for a New Economy, published in 2009 in the wake of the 2007-2008 financial collapse on Wall Street and around the world, he takes dead aim at the same issues cited by Robertson and Greco. “Why,” he asks, “is our economic system consigning billions of people to degrading poverty, destroying earth’s ecosystem, and tearing up the social fabric of civilized community? What must change if we are to have a world that works for all people and the whole of life?”
Before turning to the answers to Korten’s questions, I would like to cite one more vocal critic of what has happened to economic thought and practice since the days of Adam Smith in the 18th century. Graeme Maxton is “an economist, author and presenter, well-known for his punchy, clearly-articulated analysis on global affairs.” This biographical note is taken from the dust-jacket of his 2011 book, The End of Progress: How Modern Economics Has Failed Us. Maxton’s criticism cuts wide and deep: “Modern economic thinking has led us to under-value our world, accelerating the pace of planetary destruction . . . We use the world’s raw materials on the cheap, leaving others to pay much of the cost. We think primarily about short-term profit and less about long-term social gain . . . We have dismissed widening income inequalities as if they do not matter . . . Modern economic thinking has given us false goals, demanding growth for its own sake, encouraging a mania for consumption that requires the planet to be laid waste, exploited for our convenience . . . We were persuaded that there were no limits to growth . . . As we are about to learn, that was wrong.”
Though Maxton does not refer specifically to the money system as the source for his wide-sweeping criticism of the way economics is failing our society, it is nevertheless clearly implied. Let us now look more closely at the money system as the underlying systemic cause of failing economics.
The Underlying Systemic Cause of World Problems
I have already discussed in some detail in previous posts the concerns of environmental economists about the pursuit of continuous economic growth in developed nations—that it fails to recognize ecological limits, that it is a poor measure of true prosperity, that it keeps poorer nations in perpetual subjugation. What new piece of the puzzle are the above writers seeking to elucidate, to put on the table for policy scrutiny and action with such vehement assertion that if it is not addressed, nothing else we might do as policy correction will make much difference? What indeed? Nothing less than what Greco calls the “underlying systemic cause” that connects all of the problems—environmental, economic, political, social and cultural.
Greco’s contention is that we have to re-invent money, that this is a necessary prerequisite to accomplish goals that would mitigate the world’s major problems. He asserts that the change required to get global civilization onto a sustainable path is analogous to a caterpillar’s metamorphosis into a butterfly. We are presently in the caterpillar or larva stage, eating voraciously so that we grow and grow. If this is not checked in time, we could devastate the whole planet and never reach the next stage. If, however, we can recognize we have grown large enough, we can then, like the caterpillar, enter the pupa stage inside the chrysalis. At this point something miraculous happens. In the caterpillar’s world, its body disintegrates allowing the “imaginal cells,” which were present all along, but dormant, and which carry the program of the emergent butterfly, to become active until the butterfly is formed and crawls out of the chrysalis, spreads its wings and flies away.
In our world, following this analogy, we have to get into the pupa stage of no more growth so that we can transform into something quite different and much more beautiful. The problem is that the money system as it presently works will prevent us from ever reaching the stage of no more growth, because it requires growth to operate. That is why Greco and the other writers cited above argue that reform of the money system is a necessary prerequisite of getting into the pupa stage.
Greco quotes evolution biologist, Elizabet Sahtouris, with regard to what this means for people living at this time: “If we see ourselves as imaginal discs or cells working to build the butterfly of a better world, we will understand that we are launching a new ‘genome’ of beliefs, values and practices to replace that of the current unsustainable system. We will also see how important it is to link with each other in the effort, to recognize how many different kinds of imaginal cells it will take to build a butterfly with all its capabilities and colors.”
As seen by Greco, there is a great struggle ahead of us in this transformation process. It is a struggle between elitism on the one hand and egalitarianism on the other. By elitism Greco means “the centralized rulership exercised by a small privileged class, while egalitarianism implies the dispersal of power and popular self-government.” He warns that we must be watchful for signs of creeping totalitarianism—“government secrecy, stonewalling . . . surveillance of citizens, harassment of dissenters.” These telltale signs in political action are linked to what he calls “the powers of financial capitalism.” He quotes President Bill Clinton’s mentor at Georgetown University, Professor Carroll Quigley, who has candidly revealed that “the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.”
This, then, is the context underlying the assertions of the reformists that a complete transformation of the money system is essential for the survival “of anything like our present civilization . . . beyond the end of this century.”
Purposes of the Money System
The first step in understanding the money system is to consider the purposes of money. James Robertson is quite radical in his criticism of the way money is currently used. Before looking at what should be the proper purposes of a money system, he says we need to be aware that the current system has a number of unspoken purposes:
· To transfer wealth from poorer people and workers to richer and more powerful people.
· To conceal this objective in mystery, myth and technical tricks of the trade.
· To foster international competition in technical, economic and military power.
· To exploit the resources of the planet to the maximum extent.
Some readers may wish to dismiss such comments as radical socialist opinion. Before you do so, however, I encourage you to stay with the discussion until all of the main points are on the table so that you fully appreciate what Robertson and the other critics of the current money system are getting at. One of Robertson’s central points is that the money system affects human behaviour. Depending on how it works, it motivates people to live in some ways rather than in other ways. The current system motivates us to live in competitive, exploitative, consumptive ways, and needs to be changed to motivate us to live cooperative productive lives that don’t destroy the environment on which we depend.
What, then, according to Robertson, would be “the right purposes of a reformed money system?” He suggests that they would be along the following lines:
· “To enable everyone to benefit from organizing the productive exchange of goods and services as fairly and freely and efficiently as possible, and
· to motivate us all to live and organize our lives in ways that maintain the planet’s resources in conditions supportive to the survival and well-being of our species and life on Earth.”
In order to determine how those “right” purposes might be met, we will need to consider the following things:
· How money is created and put into circulation.
· How people are to be rewarded for what they contribute by their efforts and skills to the value of our common inheritance of the world’s resources.
· How people and businesses should be taxed on the value of what they take from those common resources and the common wealth for their own benefit.
· How we might all share in the revenue produced by cooperative effort.
· How our dependence on money might be reduced as we work to provide for ourselves and our families so that we are not increasingly dependent on getting money in order to meet our needs.
Addressing those questions will be the purpose of following posts. Some quite surprising information will be revealed, which will take us into controversial territory. Hopefully, at the end of it we will have a better appreciation of why things don’t seem to be working as well as they should in our world, and what might be done about it for the benefit of the generations coming after us.
I look forward to continuing on this journey of exploration with you.