In this eleventh in our series on money structure and function we begin to consider the ramifications of the knowledge we have gained concerning how money does and can work.
Conclusions
There are a number of conclusions that would otherwise be controversial that follow from the above analysis. Foremost is that the present system is not sustainable, and in addition does not serve the needs of its users, instead concentrating wealth in the hands of the major money authorities.
The way out of this conundrum, in the eyes of this writer, requires a total revamp of the economy. This may seem impossible; not in the realm of feasibility. However in the face of major breakdown, there may well be no alternative, except the drive for fascism, the present direction of the economy: Fascism being defined by Benito Mussolini (the Fascist Prime Minister of Italy from 1922 to 1943) as the combining of government (political) and corporate (economic) power. Fascism is not compatible with the value of provisioning money's users, as well as political democracy, recognized as goals at the beginning of this presentation.
We have to move from the current culture that promotes and relies structurally on first concentrating on taking care of self in an economy of scarcity, promoted by the present money system, to a culture that concentrates as its prime directive on taking care of everyone, and the earth that we depend on for our existence here. The goal is caring for each other in a community of enoughness for all. The structure of our money and economic system will need to be consistent with that end.
We must understand the incompatibility between our present money structures, habits and institutions and a culture that has as its primary directive the provisioning and caring for all of its community members; the earth and all that is in, on, and above it. The actions and habits baked into our present money are self interest and unearned income. These actions and habits are incompatible with the prime directive necessary for a surviving and thriving culture on this earth.
To make our money consistent with the caring prime directive, it will be necessary to move to mutual money, with its positive as well as negative limits on balances and no interest, resulting in sharing instead of personal accumulation of money. This kind of money promotes the inclusion of everyone and everything in our personal as well as our community money decisions; balancing personal needs with personal responsibility to care for community needs and the needs of the earth.
To make this work, we are all required to learn to become responsible leaders, working together, rather than following leaders who are promoting their personal objectives.
One of the characteristics of our present money/economic system is that it promotes a mine-use-throw-away economy. This is a result of the motive to gain unearned income. You can sell more stuff and make more money if it has to be thrown away and replaced on a regular basis rather than lasting and being repairable. Developing a money system that instead reinforces a durable circular economy is an integral part of the task before us. Again, mutual money has the values for that task baked into its structure. It does not require exponential growth and in fact de-grows when that is appropriate.
Because of the fact that the major money authorities are currently taking care of themselves at the expense of our productive economy, the only really good alternative is to turn off the spigot to that community and allow it to go bankrupt, which it will do without continued injections of money to sustain the need for exponential growth.
As noted earlier, much of its money has been accumulated through bets on situations the money creators and managers have manipulated to guarantee unearned income for themselves, resulting in a growing debt of the government and user community to them.
Getting rid of this unearned asset (credit), as well as the balancing liability (debit) on the part of the government and the productive user community, is a necessary step in righting the present situation. It is this writer's belief that this can only be done by creating an alternative money system that makes their services unnecessary and their money useless.
At the same time we must recognize working people who have contributed to funds for our old age, us small-saver unwitting partners in the current system. We have a special responsibility to see to it that while we are taken care of, everyone else in the larger community of humans and other life on earth is also equally taken cared for.
The banking community will have to be replaced by the people, who will be required to pick up the pieces and start over again. Whether this can be done through the government is currently up in the air, as many parts of it are currently bought and paid for by the same powers that are driving continuation of the current system.
Government-created cryptocurrency is not an answer, as the power of management is centralized, not distributed. And all historic examples of government-created money here in the US have left the for-profit banks in place, and all have been re-taken over by the banks over time.
One issue is clear. The institutions of interest and unearned income need to be done away with. They are the cornerstones of the concept justifying unearned profit, which is not compatible with a provisioning economy. Unearned income is the driver of the individual accumulation of money, which in turn is the cause of inequality.
We the people need to democratize the creation and group use of money. Creating and promoting mutual money is the method required, moving decision making to the lowest level consistent with the use of money, and recognizing the requirement of limiting accumulation of money. Seeking unearned income will have to be replaced by balancing needs and abilities as the driver of the market.
More generally, in order to create an economy that doesn't require exponential growth, profit exceeding value traded will have to be removed from the rules of money creation and operation. A democratic economy will also require a rethinking of our relationship with the land and the stuff we have made and built.
We need to consider replacing the institution of ownership with the institution of usership, giving up ultimate control, and replacing it with stewardship; the rights and responsibilities of caring for our land that has to be seen as a part of the commons. Freedom will have to be replaced by the balance between rights and responsibilities.
This will require learning to share resources instead of accumulating individual wealth, at the same time taking care of those who are not in a position to provide for themselves. Financial services that are still necessary will have to depend on demurrage and competitive fees for service to cover their costs.
Getting rid of the tax load of the military complex, an authority-based empire that enforces the present economic empire aspirations of big money, big business and big government authorities, is another necessity. Democratizing tax-levying decisions democratizes the polity as well as the economy.
On the other side of taxation and unnecessary expenses paid for with taxes, participatory budgeting can democratize the group spending process. Part of the community-budgeting process will necessarily be decision-making concerning how much money needs to be raised through taxes to cover necessary community needs, from education to health and other social services, as well as building and maintaining necessary physical community infrastructure, including some niceties, especially when there is a surplus to accommodate them.
Communities can learn to take care of local needs, and decide what exports are possible and imports necessary to balance community import/export budgets. Community-based and -managed money will give a measure to make it possible for each community to have a measure of local imports and exports so that they can be balanced, maintaining a stable local money supply.
It has to be understood that the movement of money away from local communities to the centers of power has been occurring in our economy. The depopulation of rural communities, and the consolidation of property ownership in rural areas, are symptoms of not having the knowledge and power to manage the balance of payments in the local economy.
When a community is unable to meet its needs because of some calamity, communities with greater relevant resources are in a position to aid, and will feel the importance of this action.
Financial services need to be reinforced at the local level, with democratic decision-making in their operation. Credit unions have a place in this, as well as the possibility of postal bank offices if given the power to create local money under the democratic supervision of their users. Richard Werner suggests a network of non-profit banks like the German Sparkassen public banks.
As noted, while these transitional institutions still operate on the authority model, they at least do not siphon profit away from the user community, because the income from interest is all returned through the institution to the user community. Thus, these institutions do not create the scarcity of money found in the private bank model. With this caveat, these institutions have the potential to become a part of the transition toward more democratic and circular control of our money.
Nesting of money institutions, as suggested by the work of Elinor Ostrom, needs to be given serious consideration. Her work documents the fact that the commons is not necessarily a tragedy. Money and banking need to be recognized as a community commons, which her work explores. Provisioning, rather than profit, is the primary directive end that needs to be kept in sight.
