[P2P-F] Fwd: Submission: A money system for the people - if we want it

Tue Jan 31 02:18:29 CET 2017

The problem with many LETS systems is that they're not credit systems
at all for creating liquidity where there was none before in the
capitalist economy, but rather just glorified green stamps. The most
important function of an alternative currency is to create liquidity
by advancing credit to those who currently lack purchasing power. LETS
systems where you have to take conventional currency you earned in the
capitalist system, and then buy alternative currency with it to use
with participating merchants, is a feelgood measure that may keep more
local dollars in established downtown businesses. But that's about
all.

On Mon, Jan 30, 2017 at 2:53 AM, Michel Bauwens
<michel at p2pfoundation.net> wrote:
>
>
>
> A money system for the people - if we want it
>
> Money creation, like alchemy, is shrouded in ambiguous language and yields
> eternal wealth! For most of history these secrets have been used to empower
> sovereigns to spend money without the painful business of taxing or
> borrowing. Those foolish enough to try to grasp it with their rational minds
> are beffuddled by unexpected politics, propaganda and paradoxes. In modern
> times this power now resides almost absolutely with banks, who lend money
> which doesn't exist, and reap the interest as if it did! Are the alchemic
> fumes making your head spin?
>
> What if those proto-chemists were found to be not 'making gold' but merely
> charlatans 'taking gold'? Some sovereigns managed money better than others,
> but now that power resides with private corporations. The languge of 'wealth
> creation' masks the real intention which is extract money from society as
> fast as possible, to lock it up in tax havens, and to drive the masses,
> deprived of a medium of exchange, back to the bank to borrow more! The
> social conseqences are increasingly acknowledged (although not by banks) to
> include the rich-poor divide, short-termism, erosion of democracy, the
> military industrial complex and, via the growth imperative, climate change
> itself.
>
> Users of money and financial services seem to have very little influence in
> the matter. However much we disapprove of banks, boycotting them (as I do)
> makes normal life impossible. Banks are part of our social DNA, that's what
> Too Big To Fail means.
>
> The problem is not that saving and lending are critical functions which only
> banks can do. Indeed the idea that money is some kind of stuff which we rent
> is merely a misleading metaphor. The problem is that only a bank can
> underwrite your IOU so that everyone else will accept it. If all the banks
> and bank accounts were taken down in some Mr Robot scenario, the only money
> left would be a tiny volume of notes and coins. We wouldn't be able to pay
> each other and the economy would stop dead.
>
> Only by understanding the real function of banks, can we consider
> alternatives that might work for society. You might think the alchemical
> fumes are affecting me when I say the way forward is in the collective
> relocating our trust. But it is worth considering just how much trust we
> place in banks, not only to guard our savings from theft and bail-ins, but
> to invest responsibly without the need for taxpayer bailouts, to set
> interest rates such as LIBOR fairly, not to launder money for international
> drug cartels, and indeed to manage the quantity of money in the economy. And
> compare that trust with the trust we place in our friends, family and
> business associates.
>
> So the essence of bypassing banks, at least to the extent that we don't use
> money to pay interest and taxes, is understanding how IOUs work. In the <a
> href="https://hbr.org/2010/11/the-irish-banking-crisis-a-par">Irish banking
> strikes</a> of 1970s, the whole economy ran on IOUs in the form of cheques.
> Allegedly pub landlords took the role of judging creditworthiness. It wasn't
> the most efficient system but it worked. Similarly in Greece before the
> Euro, it was common practice for strong local businesses to pay their bills
> by cheque, and for that cheque to circulate as money before returning to the
> business.  Both of these are examples of interest free money creation, and
> taken to scale, they create stable economies (no more boom and bust) in
> which credit is always available.
>
> So how could this be instituted today? Its not enough to hope that all the
> banks fail at once, (and wish for the calamity that would cause). It can't
> be expected that a whole culture would participate while banks are still
> omnipresent, But there are thousands of groups worldwide who practice forms
> of collaborative credit - the most numerous are business barter networks and
> LETS (Local Exchange Trading Systems). If only we had the collective sense
> to use them, not only would the economy's liquidity problems be solved, but
> economic policy would devolve much closer to us, the people who actually
> back the money!
>
> A key difference between these systems, which I call 'collaborative credit'
> systems and the mainstream economy is the principle of exchange.
> Conventional money is designed for saving, which means NOT exchanging. In
> fact by making debts more and more unpayable it can be shown even to prevent
> exchange. Many things can be used as a store of value, but a good medium of
> exchange requires that social consensus which is unique to money. Money
> which really facilitates exchange must be always <em>available</em> to be
> earned or borrowed, and it should be less valuable than real things to
> prevent its hoarding. The principle of exchange says that we should give and
> receive the same amount of value; that money isn't valuable in itself, it is
> just a way of tracking the balance of my giving and receiving. By committing
> to give and receive favours in equal measure, we acknowledge that being owed
> favours doesn't put one in a position of power, but brings with it an
> obligation to spend back. Taking responsibility for our own finances takes
> effort yes, but probably less than feeding a parasite! With money no longer
> scarce, competition (for money) gives way to collaboration. Collaborative
> credit implies that everybody's promise has equivalent value, which in
> economics is called fungibility, an important property of money. Because
> every credit is balanced by an equal and opposite debit, aggregate supply
> and demand in the system are perfectly balanced <em>by design</em>. The
> simplicity and elegance of the exchange paradigm makes neoliberal economics
> look like the blind leading the blind up an alley without a paddle!
>
> By forming what the Germans call 'exchange circles', narrow fields of
> reciprocation, we reduce our personal (and aggregate) demands for money; and
> within our own economic circles, we reclaim a measure of power of credit
> issuance and even monetary policy.
>
> So why isn't everybody doing it already? Even in Greece where the need is
> dire, the move to alternatives forms of production and exchange is almost
> imperceptible. I could list reasons all day about financial illiteracy,
> breakdown of trust, atomisation of society, but instead we should look to
> those who ARE doing it.
>
> Fortunately collaborative credit does not require that 'the masses'
> participate, only that the circles have sufficient density. The bigger, and
> more connected exchange circles become, and the more goods and services move
> within them, the more they look and behave like money systems, spreading
> more risk more evenly, and allowing credit of greater quantities for longer
> durations.
>
> If we use legal money, we do so for better or for worse, under the law. But
> the sentiment "I'll scratch your back if you scratch mine" needs no law, no
> regulation, no taxation, and no money. Those who are serious about a fairer
> economy, are the ones finding, trusting and working for each other. There is
> no alchemy for creating wealth, but the obscuration of money creation is
> about appropriating wealth created by others.
>
> Matthew Slater co-authored the Money & Society massive online open course
> with Professor Jem Bendell. Participation is free and it starts again on Feb
> 19th. See http://ho.io/mooc
>
>
>
>
>
>
>
>
> --
> Check out the Commons Transition Plan here at: http://commonstransition.org
>
> P2P Foundation: http://p2pfoundation.net  - http://blog.p2pfoundation.net
>
> Updates: http://twitter.com/mbauwens; http://www.facebook.com/mbauwens
>
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>
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-- 
Kevin Carson
Senior Fellow, Karl Hess Scholar in Social Theory
Center for a Stateless Society http://c4ss.org

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