Daily Archives: January 14, 2010

Money and Politics in the New Decade

James Robertson and I have known each other for many years and I think there is a great deal mutual respect between us. James is quite insightful and his heart is in the right place, and that is reflected in his latest newsletter, part of which I’ve included below. Our main point of disagreement is about what changes are necessary to deal with civilizations current crisis and what might be fruitful approaches to making them. (1) He, like most Brits and Europeans I’ve encountered, still believes in statist solutions. They think they have a chance to influence, if not control, the political process using the existing structures. (2) James also believes that central government should be the provider of exchange media (money). On the first of those, I believe that the nation state has outlived its usefulness, that power has become over-centralized and therefore corrupting and corrupted, and that decentralization and human-scale must be the order of the day. On the second point, I believe in the need for government to relinquish the money power and to repeal legal tender laws that give one brand of money a monopoly and force its acceptance even though it is inevitably abused by improper issuance and misallocation. I address this in the chapter titled “The Separation of Money and State” in my latest book, The End of Money and The Future of Civilization. In 2002 I wrote an appraisal and critique of the proposal that he and Josef Huber published in 2001 under the title Creating New Money: A Monetary Reform for the Information Age. That critique can be found at http://reinventingmoney.com/monetary-reform-information-age/ . James’ review of my book, can be found at http://www.jamesrobertson.com/news-jun09.htm#greco. Subscriptions to his newsletter are free; you can sign up here. — t.h.g. James Robertson Newsletter No. 28 – January 2010 1. EDITORIAL: THE TRANSITION TO A NEW DECADE The ‘Noughties’ have shown that we in the “democratic West”, led by a global super-power in the USA, can no longer claim a specially democratic and influential position in world affairs. The claim to be democratic has been disastrously damaged by our self-imposed dependence on profit-making commercial banks to provide our public money supply, by our elected representatives’ money-grubbing, and by the way the US and Britain invaded Iraq and destabilised the Middle East. The claim to be influential has been shown up at the recent Copenhagen conference on climate change, when the newly powerful nations, led by China and supported by many “less developed” peoples, insisted that their future development prospects should not suffer from the need to repair the global ecological damage caused by Western development over the past 200 years, and that we should bear the main cost of repairing it. In Britain we face a general election within the next six months. There is a widespread sense that none of our mainstream political parties is capable of responding effectively to the range of national and international challenges we now face. If their election campaigns confirm this, the result could be a temporary “hung Parliament”. We electors and our politicians might then recognise the need for deeper-seated changes than mainstream agendas now offer. A two-year transition to the ‘Teenies’ decade could then see the start of a deliberate shift to a new worldwide path of co-operative development and democratic participation. It would give us a much better chance of securing the future of our and other endangered species, than trying to restore competitive Business-As-Usual. 2. MONEY SYSTEM REFORM A major aspect of that new path of development has to be a money system fit for its purpose. 2.1. The Purpose of the Money System The money system’s purpose must change from what it has been since its origins in the distant past. It must no longer be designed to provide a stealthy way to transfer wealth from weaker and poorer people to richer and more powerful ones. (If you don’t believe that this is a fair description, take a look at my short History Of Moneywww.jamesrobertson.com/books.htm#history). Its new public purpose now must be to enable everyone to benefit from fair and efficient exchanges of goods and services, reflecting what we each contribute to and take from the common wealth. It is a purpose for which governmental agencies at local, national and international level must become directly responsible. To get the money system reconstructed for this new purpose, we have to understand it as a system of interacting money subsystems which influences our behaviour at every level – personal, household, local, national, and global. We have to understand how it generates a calculus of values, and how that operates as a scoring system motivating us by rewarding some things and penalising others. And we have to understand how its present modes of operation motivate us to behave in ways that hasten our species’ suicide. The following four governmental decisions primarily determine how the money system works – in other words, what values it generates in terms of the prices and costs of everything compared with everything else, and so how it motivates us to behave:

  • how the public money supply is created, by whom and in what form (as debt or debt-free);
  • how governments collect public revenue (for example, what they tax and what they don’t tax);
  • what public spending is spent on and what it isn’t spent on; and
  • how governments regulate the financial dealings of individual people and other organisations.

Today, all of those urgently need systemic understanding and reform. The full Newsletter can also be viewed here.