In Russell Hoban’s novel Riddley Walker, the descendents of nuclear holocaust survivors seek amid the rubble the key to recovering their lost civilisation. They end up believing that the answer is to re-invent the atom bomb. I was reminded of this when I read the government’s new plans to save us from the credit crunch. It intends – at gob-smacking public expense – to persuade the banks to start lending again, at levels similar to those of 2007. Isn’t this what caused the problem in the first place? Is insane levels of lending really the solution to a crisis caused by insane levels of lending?
Yes, I know that without money there’s no business, and without business there are no jobs. I also know that most of the money in circulation is issued, through fractional reserve banking, in the form of debt. This means that you can’t solve one problem (a lack of money) without causing another (a mountain of debt). There must be a better way than this.
This isn’t my subject and I am venturing way beyond my pay grade. But I want to introduce you to another way of negotiating a credit crunch, which requires no moral hazard, no hair of the dog and no public spending. I’m relying, in explaining it, on the former currency trader and central banker Bernard Lietaer.
In his book The Future of Money, Lietaer points out – as the government did yesterday – that in situations like ours everything grinds to a halt for want of money(1). But he also explains that there is no reason why this money should take the form of sterling or be issued by the banks. Money consists only of "an agreement within a community to use something as a medium of exchange." The medium of exchange could be anything, as long as everyone who uses it trusts that everyone else will recognise its value. During the Great Depression, businesses in the United States issued rabbit tails, seashells and wooden discs as currency, as well as all manner of papers and metal tokens. In 1971, Jaime Lerner, the mayor of Curitiba in Brazil, kick-started the economy of the city and solved two major social problems by issuing currency in the form of bus tokens. People earned them by picking and sorting litter: thus cleaning the streets and acquiring the means to commute to work. Schemes like this helped Curitiba become one of the most prosperous cities in Brazil.
Tab sis cov haujlwm uas tau ua pov thawj zoo tshaj plaws yog cov kev tshoov siab los ntawm German tus kws tshawb fawb nyiaj txiag Silvio Gessell, uas tau los ua tus thawj tswj hwm nyiaj txiag hauv Gustav Landauer lub doomed Bavarian koom pheej. Nws tau hais tias cov zej zog nrhiav kev cawm lawv tus kheej los ntawm kev poob nyiaj txiag yuav tsum muab lawv tus kheej txiaj. Txhawm rau kom cov neeg tsis tuaj yeem khaws nws, lawv yuav tsum tau them tus nqi (hu ua demurrage), uas muaj txiaj ntsig zoo ib yam li cov paj laum tsis zoo. Hauv qab ntawm txhua daim ntawv nyiaj yuav muaj 12 lub thawv. Yuav kom daim ntawv tseem siv tau, tus tswv yuav tsum tau yuav ib lub thwj txhua lub hlis thiab muab lo rau hauv ib lub thawv. Nws yuav raug rho tawm ntawm kev ncig tom qab ib xyoos. Cov nyiaj ntawm hom no yog hu ua stamp scrip: ib qho txiaj ntsig ntiag tug uas ua tsis tshua muaj txiaj ntsig ntev npaum li koj tuav nws.
Ib qho ntawm thawj qhov chaw sim nrog cov tswv yim no yog lub nroog German me me ntawm Schwanenkirchen. Xyoo 1923, hyperinflation tau ua rau muaj kev cuam tshuam credit ntawm ntau hom. Ib tug Dr Hebecker, tus tswv ntawm lub coalmine hauv Schwanenkirchen, hais rau nws cov neeg ua haujlwm tias yog tias lawv tsis lees txais cov ntawv pov thawj thee uas nws tau tsim - Wara - nws yuav tsum kaw lub mine. Nws tau cog lus tias yuav pauv nws, piv txwv li, rau zaub mov. Lub tswv yim tam sim ntawd coj tawm. Nws cawm ob lub mine thiab lub nroog. Tsis ntev nws tau txais los ntawm 2000 cov koom haum thoob plaws lub teb chaws Yelemees. Tab sis nyob rau hauv 1931, nyob rau hauv lub siab los ntawm lub hauv paus bank, lub Ministry ntawm nyiaj txiag tau kaw qhov project, nrog rau kev puas tsuaj rau cov zej zog uas tau los rau ntawm nws. Lietaer taw qhia tias tsuas yog qhov kev xaiv uas tseem tshuav rau German kev lag luam yog kev npaj nyiaj txiag tsis zoo. Puas yog Hitler tuaj yeem muaj hwj chim yog tias Wara thiab cov tswv yim zoo sib xws tau tso cai kom muaj sia nyob?
Lub nroog Austrian ntawm Wörgl kuj sim tawm Gessell lub tswv yim, xyoo 1932. Zoo li feem ntau cov zej zog hauv Tebchaws Europe thaum lub sijhawm, nws raug kev txom nyem los ntawm kev poob haujlwm loj thiab tsis txaus nyiaj rau pej xeem ua haujlwm. Es tsis txhob siv lub nroog cov nyiaj meager rau cov haujlwm tshiab, tus kav nroog muab lawv tso rau hauv qhov kev lees paub rau daim ntawv pov thawj uas nws tau muab. Los ntawm kev them nyiaj rau cov neeg ua haujlwm hauv cov txiaj ntsig tshiab, nws tau taug kev hauv txoj kev, rov qab kho cov kab dej thiab ua tus choj, tsev tshiab thiab dhia ski. Vim tias lawv yuav poob lawv cov nqi sai sai, Wörgl tus kheej cov nyiaj txiag tau nthuav dav sai dua li cov nyiaj tau los, nrog rau qhov tshwm sim uas txhua chav tsev ntawm cov txiaj tau tsim tawm 12 txog 14 npaug ntau dua kev ua haujlwm. Cov qhab nia ntawm lwm lub nroog nrhiav kom luam tawm cov tswv yim, thaum lub sijhawm ntawd - xyoo 1933 - lub tuam txhab nyiaj hauv tuam txhab tau muab nws tawm. Wörgl cov neeg ua haujlwm raug pov tawm haujlwm dua.
Similar projects took off at the same time in dozens of countries. Almost all of them were closed down as the central banks panicked about losing their monopoly over the control of money (just one, Switzerland’s WIR system, still exists). Roosevelt prohibited complementary currencies by executive decree, though they might have offered a faster, cheaper and more effective means of pulling the US out of the Depression than his New Deal.
No one is suggesting that we replace official currencies with local scrip: this is a complementary system, not an alternative. Nor does Lietaer propose this as a solution to all economic ills. But even before you consider how it could be improved through modern information technology, several features of Gessell’s system grab your attention. We need not wait for the government or the central bank to save us: we can set this system up ourselves. It costs taxpayers nothing. It bypasses the greedy banks. It recharges local economies and gives local businesses an advantage over multinationals. It can be tailored to the needs of the community. It does not require – as Eddie George, the former Governor of the Bank of England, insisted – that one part of the country be squeezed so that another can prosper.
Perhaps most importantly, a demurrage system reverses the ecological problem of discount rates. If you have to pay to keep your money, the later you receive your income, the more valuable it will be. So it makes economic sense, under this system, to invest long-term. As resources in the ground are a better store of value than money in the bank, the system encourages their conservation.
I make no claim to expertise. I’m not qualified to identify the flaws in this scheme, nor am I confident that I have made the best case for it. All I ask is that, if you haven’t come across it before, you don’t dismiss it before learning more. As we confront the failure of the government’s first bail-out and the astonishing costs of the second, isn’t it time we considered the alternatives?
References:
Bernard Lietaer, 2001. The Future of Money. Century. London.
Published in the Guardian, 20th January 2009