Transcript Making-it-HappenFEAS..

Making it Happen
Mary Mellor
FEASTA April 25th 2014
What do we want to happen?
• An ecologically sustainable, socially just
economy based on sufficiency – enough
• An integration of work and life
• An end to indiscriminate growth
• Democratic social and/or public debt-free
money – or a social accounting system of
some form – that would enable the
‘provisioning’ of human and planetary
nourishing
It should have happened
• Massive crisis of debt and oversupply of bank
created money
• Unpopular financial sector
• Demonstrated need for public money (QE)
and public rescue
• Imposition of austerity – punishing the people
• Long history of alternative money theory
• Long history of local money initiatives
Why didn’t it happen?
• Alternatives scattered and small scale
• Tendency to anarchist rather than public
politics
• Not taken up by wider social movements/
political parties
• Hegemonic domination of ‘handbag
economics’ – universities to ‘commonsense’
Handbag Economics
• All money and wealth is created in the private
sector
• The public sector is entirely dependent on
extracting this wealth - State as household
• Public expenditure must be limited to what
the private sector can ‘afford’
• Ideal is to ‘balance the books’
• States must not create (print) money
Handbag Economics
• States can only increase expenditure by
borrowing from the financial sector – which
‘crowds out’ private investment
• Bailout money is seen as being ‘borrowed’
from the banks and ‘money markets’ it is
rescuing
• Leads to accounting deficit - Austerity
A crisis of money
• The money supply has been collapsed into the
credit supply
• Money systems based on debt are
unsustainable
• Deficit hysteria – and the need for deficit in
money systems
Deficit hysteria
• Handbag economics’ deficit hysteria is totally
mistaken. More money must always be issued
than is reclaimed – otherwise there will be no
debt free money to circulate
• Deficit as the allocation, spending or lending
by money creators of more money than is
reclaimed (taxation rates were never 100% banks demand 100%+)
• Bank deficit occurs as default on loans
The contradiction of debt-based
money
• Money issue through debt is subject to crisis
because it demands permanent growth if the
money borrowed is to be repaid with interest continued money supply depends on the
capacity to take on more debt
• Debt issued money means that economic
priorities are determined by borrowers –
speculative finance
MONEY ISSUE AS DEBT: THE
CONTRADICTION
The Two Money Circuits
• Debt-based bank circuit – credit –
investment/expenditure – repayment with
interest – demands perpetual growth
• Debt-free public circuit – public expenditure
or allocation – provisioning – reclaim partial
fees or tax – no need for growth
THE PUBLIC MONEY CIRCUIT
DEBT FREE CREATION - TAX
Why no public money?
• Myth of barter origin of money
• Limit of precious metal coinage – ruler
borrowing
• Ambivalent position of central banks –
creators and lenders of public money
• Confusion of bank credit with currency
• Decline of use of cash
Misunderstanding of Money
• Commodity – something of use or exchange
value in itself – precious metal, beads, cattle,
barley – more correctly barter
• Abstract Value – currency itself has no
use/exchange value – a ‘fiat’ credit for the
holder – a debt on the commonwealth
• Money as a social and public construct
Money – Public, Social, Commercial
• Social convention or trust – something
accepted that will be honoured in future
payment
• Public – something respected because of the
authority behind it - needed to pay tax
• Commercial – can be exchanged privately for
something of use/exchange value
Three stages of Money?
• Ruler dominated era undermined by the use
of precious metal – scarcity plus ideology of
commodity
• Bourgeois era – mainly based on credit
instruments - but ideologically identifies with
bullion – problem of ‘realisation’ needs
constant borrowing or public money to create
interest/profit
• Socialised money – economic democracy
Reclaiming Public Money
• Money as a public resource – a ‘commons’
• Ability to create new money removed from
banks
• All new money issued free of debt on the basis
of democratic priorities
• Monetary management through taxation
• Private investment should be based on a real
transfer of money (as the text books say)
Defending Public Money
• All money is public (public rescue)
• Debt- free money essential – removes the
need for growth
• Social/public money can create wealth – i.e.
provisioning of goods and services
• Sustainability: money creation and
expenditure priorities should be under public
democratic control ( a one-step rather than a
two-step economy)
Public Money for the People
People’s Money for Sufficiency
• Sufficiency provisioning – enough for all
• A one step economy – prioritising needs-led
expenditure and shared work
• Not for profit infrastructure and services
• Multi-level currencies
• Community/Specialist banks
• Basic income
• Income for ‘commons’ resources and wild nature
Money as Social Solidarity
• Money as an expression of trust in the future
provision of goods and services is only as
‘sound’ as the provisioning capacity of society
and its social distribution
• A simple example is the babysitting circle – a
free issue of tokens (money) enable the
exchange of labour (babysitting). The ‘value’
of the tokens is trust in reciprocation – the
solidarity of social debt.
Further Reading
• Mary Mellor (2010) The Future of Money:
From financial crisis to public resource (Pluto)
• Mary Mellor (2010) Could the money system
be the basis of a sufficiency economy? realworld economic review 54 www.paeconnet/PAEReview/issue54/Mellor54.pdf
• Lectures on Youtube