Transcript Mødefacilitering * generisk med bruttoslides, 6.4

AARHUS UNIVERSITY
Money, Value and Needs –
in the Light of Self-Determination Theory
8th European Conference on Positive Psychology
Angers, France, June 28-July 1, 2016
Ib Ravn, Ph.D., Associate Professor,
Unit on Practice Research in Organizations
Graduate School of Education
Aarhus University, Campus Copenhagen
Denmark, [email protected]
I
AARHUS UNIVERSITY
1. Overview of my Argument
1. Relation value and prices?
2. Value is related to human needs
(as in SDT)
3. Prices are expressed in money,
but where does money come from?
4. (It comes from the most nefarious of sources – suspense!)
5. Money must be controlled democratically…
6. …so that it serves human needs: A proper basis for economics
I
AARHUS UNIVERSITY
2. Financial Crises and Economics
•
The financial crisis 2008
 unemployment and
inequality
•
We don’t understand
economics and money
•
Crucial to human needs
•
Look at them with SDT
eyes
I
AARHUS UNIVERSITY
3. The Paradox of Value
•
In economics, the question of value is unsolved (Weisskopf, 1956)
•
Paradox of value:
Diamonds are expensive,
yet useless.
Water is cheap,
but essential to life.
•
Early economists tried
to explain how prices
express underlying value
•
(An expensive good must
have value, right?)
•
They failed.
I
AARHUS UNIVERSITY
4. The Labor Theory of Value
•
Smith, Ricardo and Marx: the labor theory of value.
They tried to justify the production economy:
The labor we put into producing a good gives it value.
•
Yet oxygen is extremely valuable to us, but requires no labor.
•
Value was replaced
by utility
and marginal utility
and then dropped
•
Problem intractable!
I
AARHUS UNIVERSITY
5. Value and Needs
•
Others easily identified
values with what
people need.
•
“A value is a measure
of the satisfaction of a
human want”
(Margenau, 1959)
•
But then, people had a very incomplete understanding of human needs.
Hard to disentangle from wants and desires.
•
All too subjective for the emerging “hard science” of economics.
I
AARHUS UNIVERSITY
6. Today, Needs are Scientifically Well-Understood
•
Physiological and psychological needs
identified by medicine, nutrition, human
development, education and psychology
•
Three psychological needs identified by SelfDetermination Theory (Deci & Ryan, 2000):
Competence, relatedness and autonomy
•
Must be met for optimal psychosocial
functioning
I
AARHUS UNIVERSITY
7. Human Needs
as a Basis for
Economic Value
•
Something has value
to the extent it
meets human needs
•
This can be a foundation for economic value theory
•
Economics is then: The study how to produce, allocate and consume goods
and services in such a way that human needs are met (Sen, 1999)
•
Including the social and political conditions required (Piketty, 2011;
UN Development Report, 2015)
I
AARHUS UNIVERSITY
8. Value and Price: No Necessary Relation
•
Today, the disjunction of price and value is readily apparent.
Advertising, fashion and demand by the wealthy drives up prices
•
Price is determined by demand and supply – no necessary relation to value
•
No “paradox” of value: of course, fancy items are demanded by the rich
I
AARHUS UNIVERSITY
9. Does Money Denote Value?
•
Money measures prices, not value.
•
Money gives access to scarce
resources in a market.
•
Money allocates resources –
to those who have money
I
AARHUS UNIVERSITY
10. Money: A Closer Look
•
Cash: Bills and coins
•
Account money
•
Printed by the Central Bank
(US: the Fed)
•
95% of all money
•
Where does account
money come from? (RyanCollins et al., 2011)
•
About 5 % of all money in
advanced economies
I
AARHUS UNIVERSITY
11. Where Does Money Come From?
•
Banks create money when they
“lend” (Bank of England, 2014; King,
2016; Turner, 2015)
•
No intermediation from saver to borrower
– that’s a myth (Jakab & Kumhof, 2015)
•
During lending, digits are entered into
borrower’s account, and a corresponding
amount listed as a credit to the bank. No money transferred from anywhere.
•
When the money leaves the bank, transactions are cleared with similar
amounts leaving other banks – largely cancelling each other (Ravn, 2015)
•
Hardly any money is needed for this. Money is created as “fairy dust”
(Werner, 2014) and is added to the money supply (Ryan-Collins et al., 2011)
I
AARHUS UNIVERSITY
12. Banks’ Money Creation and the Boom-Bust Economy
•
Banks profit from lending: The interest they
charge
•
Bank compete to lend when times are good.
•
Too much money is created  bubble.
•
When it pops: crisis and recession (1929,
2008). Bankruptcies, inequality (Keen, 2001)
•
Boom-bust (“business cycles”) caused by
banks’ money creation (Werner, 2005)
•
Banks control the money supply.
Citizens have no monetary autonomy.
The economy is at the mercy of banks.
I
AARHUS UNIVERSITY
13. Reform: Democratizing the The Creation of Money
•
“Strip banks of their power
to create money” (Financial
Times column by Wolf, 2014)
•
A society’s money is critical
infrastructure.
•
Money to be created in a
transparent, democratic
process by people that can be held accountable (Jackson & Dyson, 2012)
•
The 20 member NGO’s in the International Movement for Monetary Reform
propose that a country’s central bank should issue its money.
I
AARHUS UNIVERSITY
14. Central Bank Could Create All Money
•
A Money Creation Committee decides every month how much money to
create (e.g., 0.2 %) ((Jackson & Dyson, 2012)
•
This amount is entered into the Government’s account at the central bank
and is for the government
to spend on public services.
•
Banks may not create money
when they lend. They will
have to lend pre-existing
money, like everyone thinks
they do now.
•
This will dampen business
cycles and stabilize the
economy, reducing
unemployment and inequality.
I
AARHUS UNIVERSITY
15. Money and Eudaimonia
•
Money is not just a measure of
prices, but a powerful force
usurped by banks.
•
Money must be made to serve
human needs: Eudaimonia
(Deci & Ryan, 2008)
•
If unchecked, banks create money (lend) only for borrowers with collateral:
Speculation in fixed assets (real estate, stock) conducive to hedonia.
•
Banks must be guided to provide credit for innovation in sustainable
production and green, climate-friendly transition (Werner, 2005)
•
Money as societal infrastructure must serve intrinsic, autonomysupportive pursuits, not extrinsic aspirations (like wealth)(Kasser, 2002)
I
AARHUS UNIVERSITY
16. Literature (a)
Bank of England (2014). Money creation in the modern economy. Bank of
England Quarterly Bulletin, 1, 14-27. By M. McLeay, A. Radia, & R. Thomas.
Deci, E. L., & Ryan, R.M. (2000). The "what" and "why" of goal pursuits: Human
needs and the self-determination of behavior. Psychological Inquiry, 11(4),
227-268.
Deci, E. L., & Ryan, R. M. (2008). Hedonia, eudaimonia, and well-being: An
introduction. Journal of Happiness Studies, 9(1): 1-11.
Jackson, A., & Dyson, B. (2012). Modernizing money. London: Positive Money.
Jakab, Z., & Kumhof, M. (2015). Banks are not intermediaries of loanable funds
– and why this matters. Working paper No. 529, Bank of England, May.
Kasser, T. (2002). The high price of materialism. MIT Press.
King, M. (2016). The end of alchemy. London: Penguin.
I
AARHUS UNIVERSITY
17. Literature (b)
Keen, Steve (2001). Debunking economics: The naked emperor of the social
sciences. Zed Books.
Margenau, Henry (1959): The scientific basis of value theory. In: Maslow, A.
(ed.): New knowledge in human values (pp. 38-51). South Bend, IN:
Regnery/Gateway.
Piketty, Thomas (2011). Capital in the 21th century. New York: Basic Books.
Ravn, I. (2015). Explaining money creation by commercial banks: Five analogies
for public education. Real World Economics Review, 71: 92-111, 28 May.
Ryan-Collins, Josh, Greenham, Tony, Werner, Richard A., & Jackson, Andrew
(2011). Where does money come from? London: New Economics
Foundation.
Sen, Amyarta (1999). Commodities and capabilities. Oxford: Oxford University
Press.
I
AARHUS UNIVERSITY
18. Literature (c)
Turner, Adair. (2015). Between debt and the devil: Money, credit, and fixing
global finance. Princeton, NJ: Princeton University Press.
United Nations Development Programme (2005). Human development report
2005: International cooperation at a crossroads. Aid, trade and security in an
unequal world. Oxford: Oxford University Press.
Weisskopf, Walter. (1956). The psychology of economics. New York: Van
Nostrand.
Werner, Richard A. (2005). New paradigm in macroeconomics. Houndmills, UK:
Palgrave Macmillan.
Werner, Richard A. (2014). Can banks individually create money out of nothing?
— The theories and the empirical evidence. International Review of Financial
Analysis, 36, 1-19.
Wolf, Martin (2014): Wolf, M. (2014). Strip private banks of their power to
create money. Financial Times, 24. April.
I
AARHUS UNIVERSITY
Thank you for your attention!!