What central problems in today’s monetary system should be solved with this solution? Concentration of power, inequality, systemic instability, boundless greed, competition, pressure to grow, environmental destruction, fear, stress, burnout, alienation, materialism, diseases. The focus on returns & the pursuit of profit would give way to a systemic orientation toward the common good.
Money of the Future – Paths to Democratization | Solution – Money as a Public Good
by Christian Felber
[This article is translated from the German on the Internet, http://www.geld-der-zukunft.org.]
8 Solutions – 1 Vision
The Money of the Future project presents 8 solutions for a public welfare-oriented money of the future – democratic, sustainable, and fair.
Money as a public good
In this free booklet from the Money of the Future project, you will find the solution “Money as a public good,” with all of Christian’s answers word for word, so that you can get a detailed picture.
Christian Felber is an Austrian author and political activist, born on December 9, 1972, in Salzburg. He is a founding member of Attac Austria and initiator of the “Economy for the Common Good” movement and the “Bank for the Common Good” project.
Felber is known for his work on the model of the economy for the common good, which promotes economic systems that place social well-being above profit. He has written several books on this topic.
Felber is also a lecturer and dancer in Vienna. His initiatives aim to transform the economy towards sustainability and social enrichment.
Money of the future – paths to democratization | Solution – money as a public good
Introduction
What problems need to be solved? From what perspective does the solution come, i.e., what should it achieve? And what are the most important definitions and terms for this solution?
1. Starting point and problems:
What central problems in today’s monetary system should be solved with this solution? Concentration of power, inequality, systemic instability, boundless greed, competition, pressure to grow, environmental destruction, fear, stress, burnout, alienation, materialism, diseases of all kinds.
The focus on returns and the pursuit of profit would give way to a systemic orientation toward the common good. The “casino,” the part of the financial system that is not concerned with supporting and promoting sustainable real economic activities, but primarily with making more money from money, would be closed. The prevailing external and means orientation would be replaced by a stronger internal and value orientation.
2. Prerequisites:
What economic, political, social, or reformist conditions must be met in order to solve these problems?
The rules of the game for the monetary and financial system should be established and rewritten in a participatory-democratic manner through financial citizens’ councils, democratic money conventions, and bottom-up-initiated referendums. In economic education, a new image of the economy—a network of various activities oriented toward the common good to satisfy basic human needs—should be conveyed. The monetary and financial system should be presented as part of this economy for the common good, the role of money should be critically examined and redefined as a means of increasing the common good.
3. Goals:
a) What are the main goals of the solution?
Sovereign democracy (deeper, more direct, more participatory than today, with more separate powers), ecosystem stability, financial stability, distributive justice, social cohesion, trust, gender equality, North-South reparations, post-colonialism, post-patriarchy, closeness to nature.
Money of the future – paths to democratization | Solution – money as a public good
b) What sub-goals are being pursued to achieve the major goals?
Steady-state economy/post-growth society, full employment, zero poverty, limited inequality, low inflation, democratic central banks and monetary policy, limited public and private debt, balanced current accounts.
4. Definition and reference theories
a) How is “money” defined in this context?
As a means for the common good, as public infrastructure, functionally as a means of payment, means of production, store of value, and measure of value.
b) Are there specific characteristics or properties of money that are emphasized in this solution?
It should consistently be a means of serving the democratically defined common good and its sub-goals and values.
c) Are there specific terms or new concepts used in this solution that need to be explained? Which relevant reference theories or approaches influence this solution?
Public good, sovereignty, public welfare banks, public welfare stock exchanges, public welfare product, public welfare audit, public welfare economy, public welfare balance sheet, ethical world trade, Globo, Bretton Woods II.
d) Which relevant reference theories or approaches influence this solution?
Full money theory, positive money, MMT, critique of growth, heterodox economics, ecological economics, feminist economics, Keynesianism, Keynes Plan, tax justice, postcolonial studies, Aristotle’s distinction between “oikonomia” and “chrematistiké.”
Why am I structuring the solution in this way in order to solve the problems described? How will the new money, its institutions, and thus the new monetary system be designed, and how will it contribute to achieving the objective?
5. The solution:
a) Money creation: How is money created and put into circulation?
Via public and democratic central banks, by minting coins, printing banknotes, and at the click of a mouse on a computer.
b) Coverage: What does the money cover?
Economic performance. A constant correlation over the economic cycle correlation could be aimed for, e.g., 50 or 75 percent of GDP. This value can be adjusted based on experience.
c) Money supply: How is the money supply controlled and regulated?
See previous answer: If the economy grows, the money supply is increased in step 1; if it shrinks, the money supply can be reduced. However, this is done countercyclically. MMT for the purpose of climate protection or the remuneration of care work can lead to an increase in the money supply, in which case inflation must be kept in check.
d) Credit and debt: Is money still created through credit? Are there cases of interest and compound interest?
Preferably as an asset, then it enters circulation as a gift from the central bank.
Disadvantage: Money in circulation is then not reflected in the central bank’s balance sheet. The positive interest rate system with its negative redistributive effect (many net interest losers and few net interest winners) could be replaced by a negative interest rate system with a positive distributive effect (few net interest losers and many net interest winners). In such a system, the market (credit) interest rate would be zero in order to avoid a growth driver.
Money of the future – paths to democratization | Solution – money as a public good
e) Financial markets: Where is the need for capital, foreign exchange, and stock markets?
Capital and stock markets: Regional public welfare exchanges provide meaningful and sustainable companies with interest-free equity capital, as a supplement to interest-free debt capital from public welfare banks. The shares are only returnable, not tradable. Foreign exchange markets: In a Bretton Woods II system with a Globo as the global trading currency, there would no longer be foreign exchange markets in the current sense. Currency exchanges would be conducted via the Globo at fixed exchange rates that are adjusted to real economic indicators. All participating countries would have a Globo account with an international clearing house (Keynes Plan). Currency exchanges would only be possible for real economic activities (trade, tourism, investment).
f) Capital accumulation: Would it still be possible to make more money from money? How would profit be generated? And would equity capital still be needed?
There would be no savings interest, dividends, or capital gains, i.e., no capital income whatsoever. Ultimately, there would also be no more profit distributions, instead salaries and entrepreneurs’ wages for real services. Profit continues to arise from the surplus of a company’s income over its expenses.
However, various uses of profits would no longer be possible, e.g., return-driven financial investments, hostile takeovers, or party donations. Companies are required to prepare a public welfare balance sheet, which makes profit orientation difficult or impossible. Equity capital is still necessary, but it no longer earns interest, see above.
g) Economic evaluation: GDP still? How are social and ecological criteria defined and monitored, if applicable?
A democratically composed public welfare product replaces GDP, whose sub-goals are defined bottom-up by the democratic sovereign, and the measurable indicators are defined top-down by the interdisciplinary scientific community.
sub-goals are defined bottom-up by the democratic sovereign, and the measurable indicators top-down by the interdisciplinary scientific community. The corporate public welfare balance sheet and the financial public welfare audit are derived from the public welfare product
h) Central banks: What is the role of the central bank(s)?
Money issuance through creation, refinancing of banks, interest-free lending to the state (MMT), countercyclical monetary policy, full employment, financial system stability, price stability.
Money of the future – paths to democratization | Solution – money as a public good
i) Banks & financial institutions: What role do banks or other institutions play in this monetary system? See Article 157 of the Bavarian Constitution: “The monetary and credit system serves to create value and satisfy the needs of all residents.”
The task of (public welfare) banks is therefore to provide (interest-free) credit to the sustainable real economy. Regional public welfare exchanges provide companies in the region with (additional) equity capital.
j) Regulation: Is further regulation needed in the solution? What about existing banking and financial market regulations?
The design of the monetary and financial system would be changed through democratic monetary conventions, including some fundamental elements such as the sovereign money reform or the adoption of a Bretton Woods II agreement. Regulation concerns fine-tuning, e.g.: banks would no longer be allowed to distribute profits, they would only be allowed to lend to the real economy, and all financing would only be allowed after passing a public welfare test.
Broader context
Our society and the future of money are caught in a conflict between fundamental questions. How does the solution relate to or fit into these macro issues?
6. Democracy, economy, ecology, and society
a) How important is the democratization of society for the solution, and are there any specific measures proposed for this?
The model of “sovereign democracy” is the procedural twin sister of the economy for the common good, and this also applies to the common good-oriented monetary and financial system. Through financial citizens’ councils or democratic money conventions, for example, the profit orientation of banks can be ended or inequality can be limited.
b) Will market economy principles be retained?
Yes, but the importance of markets will be reduced to one of several arenas of economic activity. Others include: public goods and services,
c) Will the current role of property be affected in any way?
There will be six fundamentally equal forms of property: public, private, collective, social property, as well as the use of nature and the protection of nature without use. All are regulated in the constitution by limits and conditions. This creates plurality, stability, and resilience.
d) Is increasing digitalization and automation taken into account in the solution?
This is not an end in itself, but, like any technical application, a means to the end of human dignity, greater democracy, higher social cohesion, and deeper sustainability. Technical infrastructures that run counter to these goals will not be implemented.
e) Where does the solution lie on the centralization-decentralization axis (state vs. private)?
States are deeply democratized through sovereign democracy, thereby decentralized, and the economy is regionalized and deglobalized thanks to ethical world trade. In the long term, there could be a global concert of sovereign bioregions – or microstates :).
f) What role does the “ecological question” play in the solution?
Living and doing business within the planetary ecological limits is a maxim of all policy areas and the basis of economics and economic education.
g) How does the solution relate to the question of growth and the imperative to keep growing?
GDP growth is not a goal; GDP will no longer exist as a measure of economic success. If “the economy” grows, this means at most that health, happiness, and social cohesion are growing and ecosystems are regenerating, because these are the goals and components of the common good product, which would be good.
Outlook
Where are the problem areas for the solution and how can a successful transformation be achieved?
7. Potential problem areas of our own solution:
Every idea and solution projected into the future, especially one of this magnitude, moves into the unknown.
a) What risks or negative effects could arise with the solution?
Money itself will not be abolished. If the problem lies in money and its alienating effect, this would not be remedied. The same applies, by extension, to profit and equity capital. It is possible that the overall model of the GWÖ is too reformist.
b) Are there issues that are hardly addressed or greatly neglected in the solution? If so, why?
1. The separate banking system, because in my opinion it should not be about separating good and bad/risky banking, but only allowing good & boring banking.
2. A one-sided criticism of interest rates, because it is about all capital income and profit equally.
3. The unconditional basic income is treated dispassionately/agnostically, especially since social security for all can also be achieved in other ways: revaluation of care work as a public good + reduction of working hours + full employment policy +solidarity income. The proposal is for the right to four sabbaticals during a working life.
8. Transformation:
Are there specific recommendations for implementation or further research? Are there steps or measures that need to be taken to ensure a smooth transition?
The preparation, design, and implementation of democratic monetary and economic conventions would be both a meaningful research program and the establishment of the legal basis for the implementation of the open-ended overall paradigm.
8 Solutions – 1 Vision
The Money of the Future project presents 8 solutions for a public welfare-oriented money of the future – democratic, sustainable, and fair.
More about the Money of the Future project
http://www.geld-der-zukunft.org