The cyclical effect of interest bearing money created by hoarding during economic downturns, resulting in money scarcity, and investing money in boom times, resulting in an overheated economy, are also reversed by the use of demurrage money, which is counter-cyclical.
Trust, leadership and power
As noted earlier, accounting money rests on the trust of its users. So we need to think about the moral nature of trust, and what kinds of institutional structures are compatible with trust. This brings us to a study of relationships and decision making. We need to distinguish between two very different dynamics, which are commonly characterized as 'power over' and 'power with'.
'Power over' relationships are characterized by asymmetrical power. This power may be wielded by coercion, by manipulation, or by institutions that mandate that more power be given to one individual or group than another. At George Orwell's Animal Farm, some members were more equal than others. Institutional power, which often leads to structural violence, is an especially insidious form of 'power over'. Power over leads to fear, anger and greed. It is an unrecognized driver of the overt violence in our society today.
'Power with' relationships are symmetrical. No one person in the relationship has a unique all powerful position. The interests of all are acknowledged and taken into account in decisions. Sharing, caring and trust are characteristics of 'power with' relationships.
'Power over' is the current practice in almost all institutional relationships. Even voting in representative democracies exhibits the power of the majority, or other portion of a group necessary to elect representatives or create policy or action.
'Power with' is the standard practice in informal relationships where equality is valued. But it is found formally only in the deliberation of juries, in internally consistent forms of the Sociocratic process,xii in institutions using effective consensus and other forms of coming to common judgment. The longest term current example besides juries in Western society is the 350 year plus decision making experience of The Religious Society of Friends (Quakers). It is usual to think that 'power with' leads to anarchy on the larger group scale, however groups have learned how to institutionalize this dynamic. Sociocracy is the study of this technology.
An institution based on 'power over' cannot in the long run operate on trust. This can be seen in current monetary authorities' uncontrolled actions in an attempt to maintain the operation of the current system; protecting and bailing out the too big to fail banks at taxpayer expense, diluting the currency through continued money creation, called quantitative easing, and manipulating the gold market to stabilize the dollar. xiii In so doing, the monetary authorities are violating the trust of money's users.
Pegging the value of money
Since the value of money has been divorced from the value of any commodity, it has become easy for large players to manipulate this value for their profit. This ability does nothing to make the market more efficient, and at the same time is a mechanism for transfer of value from the productive sector to those who control system operation. If we are to continue to use accounting money, and there are many good reasons for doing so, we need to give it a universal value, so that it is not prone to such manipulation.
What I have argued here may sound extreme, however it is the logical conclusion that comes from the data. It doesn't lead to a dead end, either. It simply tells us that we have to reorder rules of the institutional structures and relationships that govern our financial system. It will also make us think twice about our political structures. In terms of money, it leads us back to the simple democratic money system that was described at the beginning of this piece, and lets us start thinking about how to organize the nuts and bolts of that system on a larger scale.
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