All about what money does,but nothing about what money is.
(Image by 401(K) 2013) Permission Details DMCA
In the first installment of this series we described simple money. In this second article we will talk about the kinds of relationships that this system engenders, and how it handles money capital.
In the simple money system, market group members are integrated persons -- traders - rather than split-schizoid producers and consumers as is now the case. Decisions about what to create money for are made by the traders affected, balancing individual needs with community needs, using compassion and justice rather than creating larger balances. The idea is to have enough, not more.
Democratic money is an example of applying what I call the rights/responsibility equation. In a democracy, the more rights (freedom) we the people have, the more responsibility we each have toward our fellows and to the earth that sustains our lives. If democracy is to work, this relationship between rights and responsibility must be respected. Operating our own mutual money system for our trade brings rights and responsibility together in our daily relationships.
all traders' balances close to zero requires some kind of mechanism
so the system isn't taken advantage of. If transactions create
a negative or positive balance in a trader's account greater than
what they have agreed to with their peers (the rest of us) a utomatic
stops can be put on them, just like with our current credit and debit
Such a system works best in a community small enough that the traders know who each other are. Scaling the system can be done by multiplication and connection of local groups, rather than by 'biggerization'. This isn't a money system created by some central authority. This is a money accounting system that is created by people and their communities for their own use.
As local communities gain trust between themselves, they can consider import-export trade, and commitments together with other communities for larger projects or specialty goods/services. This trade is facilitated by the use of the same rules of money creation in all local groups. Reed's law of group-forming networks applies to this structure.
There is no need to manage the amount of money in circulation in a simple money system, as money is automatically created as needed, and disappears when balances are brought back to zero. Some examples of existing efforts that include some of the principles of simple money are Time Dollars, the Swiss WIR, and Mutual Credit systems. Simple money is an example of a Mutual Credit system.
capital in the simple system
In the simple system, money capital is seen for what it is in any money system. Money c apital is a claim on the commitment of any/all members of the market community. Small claims and commitments are simply a part of the transaction-clearing operation of the money system.
However if any person or group wants to have a large positive balance (a large claim on commitment/capital) in the simple-money context, they are able to do that with permission from their fellow traders; the rest of us who will hold the commitment on their claim. After all, we will be left holding the bag if they fail, so we need to make a decision based on the value of the proposed purchase or investment to the borrower and the community; the rights/responsibility equation in action.
Alternatively we, the community, can express our willingness to support someone or some group without repayment, as in the gifting community, crowdfunding their aid by committing ourselves to them. An example might be aiding a family that lost their home in a fire.