Change your Money, Change your World

By Tim Jenkin

How often do you get that feeling of hopelessness and helplessness when considering the state of our world? Who is it that defines and controls the direction of social progress? Who decides that we should stay on the highway of infinite growth, that human happiness and well-being is dependent on the consumption of every greater quantities of resources and energy. Why is it that our social problems worsen all the time, our environment gets more and more polluted, our planet warms inexorably, resources get depleted inevitably and nothing seems to get done about it?

Politicians, economists, trade unionists and social commentators prescribe every day that economic growth is the solution to all our problems: more investment, more industry, more jobs, more, more, more... The logic is simplistic. We have a growing population and an economic cake. If the cake is not big enough then some are going to go hungry, so we need to have a bigger cake to ensure everyone gets their slice. Why does this cake never seem to satisfy, irrespective of its size? Why does the cake taste more bitter all the time?

The usual explanation for our woes is couched in terms of defective social, political, governmental and economic institutions. All we need to do is sort out these institutions, and alongside a growing, flourishing economy everything will come right. No one stops for a moment to question this prescription in the light of the obvious fact that you can't have infinite growth in a finite world. The world is slowly becoming aware of resource depletion, especially the issue of peak oil which, even according to the most optimistic experts, is only a few years away; global warming is causing serious environmental problems all over the world; environmentalists tell us of the great extinction taking place and the loss of biodiversity; and we can see for ourselves that our air is polluted, our roads are clogged and the number of beggars at traffic lights is increasing by the day. Yet the only prescription is more of the same!

What can we do about all this? Should we protest, form organisations to lobby the 'powers that be', write articles to expose wrongdoings, go on strike, go into hiding or just live it out? Is there something that we can do that does not depend on 'them'?

At the basis of every society is its economy, and at the basis of every economy is its money system. Conventional economics does not see it like this for it treats money as just one of the basic factors of economic life. Money is money just like the other factors, land, labour and capital, and therefore also a scarce resource. Enormous economic assumptions are made using this conception of money and it is out of these assumptions that many of our problems arise.

Conventional economics assumes that money is 'stuff', a 'thing', which like all things has to be created and then distributed. There is therefore a quantity of it that has to be restricted and controlled. Because it is 'stuff' it is subject to the same laws of supply and demand as other stuff. And like any other stuff it must have a value in itself, a value that can go up and down in relation to other things. And because it is a thing it can be possessed, collected, accumulated and withdrawn from circulation. It can be stolen, lost, traded and lent. If someone has some and another has none, the former can lend it to the latter and ask for more back when they return it. The person who borrows it has to work extra hard to return the original amount and the little bit extra. In this way the borrower works for the lender.

Getting this money stuff is not directly related to the delivery of real goods and services. There are a multitude of ways of getting hold of it, some of which do involve the delivery of real goods and services. For most of us the only way to get hold of it is to sell our labour to someone. This is called a job and most of us work in these jobs, not because we love the work or even because the work is socially necessary, but because we need to get hold of the money stuff. Without it we're in serious trouble. Those who have lots of money have to find a way of keeping that money and, hopefully, increasing it. They do that by 'investing' the money in something that will bring in a return. That could involve investing it in machinery that can be used to create real wealth, but there are other ways of investing money that will ensure a greater return.

One of these is by providing the money supply itself. Conventional economics assumes that the money supply is just there, much like the air we breathe. Most of us believe it is there because the government, or the Reserve Bank more specifically, provides it as a public service. This is not so. We have money because private, profit-making institutions (banks) provide it as a business service. The money we use is thus not a neutral mechanism provided to us purely for the benefit of facilitating exchange. All our money is lent into existence and it comes into circulation because banks want to make a profit through the interest that borrowers have to pay for using it. At the time that the banks create the money (as debt) they do not create sufficient to pay back the interest. Bank debt money is thus always in chronic short supply. The only way that this money system can keep going is if there is a constant expansion of bank debt money, an expansion rate that is greater than the amount needed to pay back the principal plus the interest. This is the force that drives our economies and why every economic agent and entity calls for more growth.

The growth-at-all-costs economies that we are saddled with are sitting atop a growth-or-collapse money system. It is thus the money system that it is at the root of our problems, forcing economic growth and causing the environmental and resource depletion problems that we face.

Calling for more economic growth is not going to solve our problems, it will only worsen them. What we need to do is create a money system that is not dependent on constant expansion or it collapses. Reform of the current money system is one route but the forces that sustain it are too powerful and have too much invested in it to countenance any fiddling. After all, the current setup ensures that that there is a constant transfer of wealth from the producers to themselves.

As it is not possible to challenge the conventional money system the only other option is to try to create a new one, and with it a new economy. The CES is an attempt to create a new money system, one that does not require constant expansion apart from the real expansion of available goods and services. CES money does not 'exist' like conventional money and therefore it does not need to be created and distributed. It can never be scarce. CES 'money' is just a score keeping, much like the score on the scoreboard at a game of soccer or cricket. There can never be a shortage of 'scores' for the score is just a record of our relative positions in the 'game' of buying and selling. This is what conventional money is supposed to do too, but very long ago people discovered that they could take advantage of it by collecting it, ensuring that others had difficulty getting hold of it and then lending it to them for profit.

A healthy money system is one that is not driven by profit making, that is not out of kilter with the goods and services available and that is not controlled by a handful of institutions for their own benefit. It is one that is owned and controlled by those who use it. It is democratic money that returns to the people the power of money.By creating our own money system we will gain the power to determine our own destinies and not be left feeling at the mercy of 'them'.

From: Community Exchange News, No.25, 7 December 2005

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