What to Do?• Reform the banks• Financial Inclusion: access to banking; new technologies; affordable credit (microcredit)• Abandon money and banking completely• Reform money at the local level• Reform money at the national level• Reform money at the global level
Reform the Banks• Stricter Regulation• Split banking functions• Break up banks so that they can fail• More capital reserves• Living wills• Limit remuneration• Impose taxes: Corporate, personal, transaction
Reform won’t work• As the system is interconnected, splitting banks or separating functions won’t help• The bonus culture will still exist• Financial sector will still be ‘socially/economically useless’ (Adair Turner)• Banking will move even further off shore – risking further its tenuous link to the underpinning public monetary authority
Reform won’t work• Shareholder expectations will still remain• Saver/investor expectations will still remain• People demanded the state recompense in full e.g. Icesave failure• Money creation will still be in speculative hands• Responsibility will still remain in public hands• Modern banking will still confuse private interest with the public function of money circulation
Financial Inclusion:New Technologies• Mobile phone banking e.g. Bangladesh 2009 15% population have bank accounts 50% have mobile phones• Nigeria national ID card will act as a bank card with biometrics• Will solve problem of local agents in delivering social benefits e.g. food supplies, vouchers• Mobile companies become bankers?
Financial Inclusion: Microcredit• At one point seen as the answer to the problems of economic development• Very good repayment rates initially• Very high interest rates (but less than loan sharks)• Problems of indebtedness : women suffer particularly as they are over-represented among the poor• Commercial banks cashing in
The Money DivideEconomic ‘Man’ Women’s workMarket value SubsistencePersonal wealth Social reciprocityAble-bodied workers Sick, needy, old, youngLabour, intellect BodyExploitable resources Ecosystems, wild natureKnowledge (IPR) Feelings, emotions, wisdom
The Hinterland of Money(From Bennholdt and Mies The Subsistence Perspective Zed 1999)
Reclaiming ‘Economy’• Sufficiency economy would mean living within social and ecological limits• Need to take account of whole of human lives and natural environment.• Need to integrate ‘women’s work’• Notion of ‘provisioning’ to embrace all aspects of human nourishing: paid and unpaid
Abandon Money• Love of money is the root of all evil – greed, usury, exploitation• Money distorts human relationships and our relationship with nature• Society is dominated by those with the most money• The search for profit in money terms drives capitalism and wage labour: M – C – M+ or worse speculation M – M – M+
Abandon Money• Desire/need for money leads to debt• Money boundaries exclude ‘externalities’ unpaid work, ecological damage• What type of economy could be money free?• Should we retain or return to subsistence and self-provisioning?
Subsistence Economy• Need to distinguish – Subsistence as means of production (non market, small scale, home-spun) – Subsistence as means of circulation (not-for-profit LETS, local money, time banks etc.) – Subsistence as sufficiency – slow economy, wants not needs, economy not growth/profit driven
Local Money• Exchange as much as possible outside money systems/profit-based market systems- LETS, Time Banks, local money• Local production for local need• Co-operative/communal forms of organisation• Local money schemes very successful in 1930s – closed down by the state as ‘democratising money’
Problems with Local Money• Problem of limited use outside of the local community• Problem of acceptance• Problem of range of activities covered• Not very practical to abandon money in urbanised societies only possible in small scale economies?
Reclaiming National Money• State is seen as parasitic on the private ‘money creating’ sector - yet it underpins it• Money issue at present is privatised and issued as debt• Current system is crisis-ridden and dominated by financial speculation• Trust in money is based on legal tender – the state’s ability to issue trusted money or tax its public
Reclaiming National Money• How to democratise national money (legal tender) – as the focus for large scale collective social action• Reclaim the issue of money as a public matter• Re-introduce debt-free fiat money issue to avoid bank credit crises• Link fiscal and monetary policy
Fiscal and monetary policy• Present money system separates fiscal policy (tax and public expenditure) from monetary policy (monetary control/independent central banks)• Democratised money would integrate fiscal and monetary policy• Money would be issued through a variety of publically determined expenditures (including bank loans)
Fiscal and monetary policy• Monetary control would be through taxation as the withdrawal of money to prevent inflation• Taxation could also be used to redistribute wealth and encourage ecologically or socially desirable activities• Technical determination of monetary balance• Democratic determination of expenditure and investment priorities
Examples• Iceland has taken back state money issue• Channel Islands issue money for public projects – taxed back over time
Democratic Money• Prioritise socially necessary expenditure – one step economy – no unnecessary growth• Democratic control of priorities for expenditure/ investment through regional/local or specialist banks (e.g. agriculture, housing etc).• Direct money issue : Citizen Income• Private sector would respond to socially determined priorities
Reclaim Global Money• Current system dominated by reserve currencies (dollar, yen, euro, pound) and by unstable and unequal exchange rates• Need to remove the power of reserve currencies and even out inequalities• Keynesian solution of banc-or and penalties for surpluses
Reclaim Global Money• Need a source of global money supply• What to base global money on?• Green suggestion of energy basis for money• Keynes suggested a global basket of currencies• Anchor ‘globals’ to median income?
Summary: Money as a Public Resource• Money issue through bank loans is producing a publically guaranteed national resource• Money creation should give seigniorage to the public as they underwrite the money created• Need to reclaim money as a public resource with democratically determined priorities• Creates the possibility of a sufficiency/steady state economy
Sufficiency: sustainable provisioning• Production for need not profit• Provision on the basis of ‘sufficiency’ and minimise the ecological costs of production and distribution• Broaden the meaning of ‘economy’ to internalise excluded aspects of human life• Recognise the needs of the environment and other species
Reclaiming the Economy• Money access as democratic right (citizen income, right to meaningful work)• Use of socially issued money to prioritise economic activities (social need, public services)• Any residual market system would be regulated and serve the demands of a needs- based provisioning economy
Money, Equality and Sustainability• Money is arguably the most socially based institution in our society.• Money should be seen as a ‘commons’ social resource like air or water is a natural resource it should not be privatised or accumulated• Currently no basis for ‘enough’: future security bread or money?• Money as a public resource would create the possibility of a ‘sufficiency’ economy