Making it Happen Mary Mellor FEASTA April 25 th 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? real- world economic review 54 net/PAEReview/issue54/Mellor54.pdfwww.paecon- net/PAEReview/issue54/Mellor54.pdf Lectures on Youtube