Money and the Sustainable Economy


Summary

This is an analysis of both conventional money and the new community money, in the context of a sustainable economy. A sustainable economy cannot be achieved while we continue to depend on conventional money. This assertion is supported not only by concise theoretical analysis, but also by observations gathered from all around the world over many centuries.

Conventional Currencies

Conventional money is money which :

    • exists in limited supply - - - - is scarce
    • has unlimited mobility - - - - goes anywhere
    • is created by institutions - - -comes from "them"

All national currencies are of this form, and all national and regional economies show evidence of the damaging consequences.

Conventional money tends to seek out the cheapest sources of supply. It therefore drains away from communities that fail to meet the appropriate cost levels.

When a community relies only on conventional money, it is driven to patterns of production and consumption of natural resources which are internally and externally destructive. This is not only observable, but also predictable, since we need money to participate in the economy, and we get it however we can.

This leads to patterns of cash cropping, short term gain without recognition of long term costs, the denial of externalities, money as commodity.

An economy based on conventional money establishes competition as the norm. Co-operation, as an element of the economy, is overlooked or specifically ignored. In fact, co-operation is the actual context within which competitive behaviour is merely a minor anomaly.

Galbraith pointed to the imbalance of private affluence and public squalor. Harding cites the tragedy of the commons. Conventional money tilts the playing field, and the pursuit of self interest becomes inconsistent with and takes precedence over community interest.

This behaviour is evident in the actions of the state, the organisation and the individual.

Addressing the Problem - What Can Be Done ?

To paraphrase Einstein, the problems we face cannot be resolved using the tools that created them. Thus, there is nothing positive that can be done within the current context. This is bad news. However, there is good news.

We act as though money needs to be real - a limited commodity that can drain away. This results directly in unemployed resources - people who want work are not able to find it. Indirectly, and of more damage to the environment, there are also misemployed resources - people doing damaging things simply for the money.

Yet

MONEY ISN'T REALLY REAL

    - MONEY IS INFORMATION

Money is just a measuring device, which we use to measure the value of our real exchanges. Why should a community be short of measures ? How long would we accept a world where no houses were built for lack of inches, no beer brewed because there were no pints, no heating for the lack of degrees?

The need for currencies to address this scarcity of information in the community is surely undeniable. There is no doubt that additional community money is required; the only question is how such currency systems can be designed to be stable.

Design for New Money

The new local money is money which

  • exists in sufficient supply - - - - - - - - - - there's enough
  • is only used within a community - - - - - - it stays local
  • is created by its users - - - - - - - - - - - - it comes from us

The potential for local currencies of such design has no significant constraints :

  • technology is available
  • regulations permit it, and can scarcely do otherwise

Practical considerations of self interest, both personal and commercial, assure the basic viability of local currency systems, as their operation is not dependent on grants or government support.

There are governing factors. The main one is stability, which is primarily a matter of scale. Risks associated with instability provide an essential negative feedback system, assuring that systems will only expand in accordance with a developing public and private competence.

The only significant impediment remains that of simple ignorance.

The Emergence of the Community Economy

A crude analysis of local value-added patterns in the typical western economy indicates that approximately forty per cent of the accounted economy will eventually be transacted through local currency systems, probably within just a few years.

At this stage, all businesses, governments and most people will use several accounts, each one appropriate to a different sector of their activity.

There will be significant trends towards truly sustainable economic processes and conditions in, for example:

    • food and farming
    • transport and energy
    • health and education
    • organisational and community development
    • armaments and other social matters
    • local government.

In Summary.

Maps should represent territory and symbols should serve realities.

The thing that has been in the saddle, riding mankind, isn't any thing at all. It's just information, just pattern - and can be changed as quickly as we may reasonably imagine.

Hermann Daly and John Cobb, in their recent book, The Common Good, identify many instances of "misplaced concreteness of ideas", and the detrimental consequences. Ironically, they fail to cite money at all, although it is surely the most central, profound, embracing and all pervasive example of their thesis.

Just as fish don't see water, economists don't see money.

Until we are studying the implications and effects of the new money, we aren't studying sustainability, merely exploring different forms of unsustainability.


Written by Michael Linton of Landsman Community Services Ltd and Angus Soutar of Robert Soutar Ltd.
Version #003 27-7-96