New Money for a New World

by Bernard Lietaer

  These initiatives burden no one and offer benefits to the whole of human society. These innovations do not require raising taxes, the redistribution of wealth, bonds, charity, or loans from lending institutions or government. Given what is at stake and what has already been achieved, it is encumbent upon us to at least carefully consider what is now possible.

  New Money for a New World is dedicated to pragmatic improvements in conditions through a greater understanding of money, and through monetary initiatives that better serve the diverse and sometimes divergent needs of each member of our global society and the living systems of this planet.

  An Overview of New Money for a New World

  The goal of each of the four parts of this book is to report, in as clear and concise a way as possible, the insights and important options that are now available to us by rethinking money.

  In Part I—Our Money, Our World—we explore many of the features of today’s monetary and banking paradigms. The topics examined include:

  the ways and means by which one city was able to tackle many of its concerns without having to raise taxes, redistribute wealth, or seek outside assistance (Chapter One—A Tale of Two Cities);

  the great mismatch between our money and our age (Chapter Two—Welcome to Moneyville);

  critical issues facing our world and the monetary questions they pose (Chapter Three—Megatrends and Money);

  long-held mysteries and some important agreements related to our money (Chapter Four—A Money Primer);

  seemingly innocuous properties of our monetary system, particularly the feature of interest, and the profound influence of the architecture of our money system upon society (Chapter Five—Money is Not Value-Neutral);

  a little-known, historical Golden Age and its unusual monetary paradigm (Chapter Six—Back to the Future);

  how our banking and monetary systems replicate beliefs, perceptions, and objectives of a former age (Chapter Seven—A Change of View);

  traditional theories and assumptions about how economies work and the measurements used to gauge their supposed health (Chapter Eight—Economic Myopia);

  how several communities were able to not only meet their needs but prosper during the depths of the Great Depression, and the potential dire consequences of not heeding these vital monetary lessons (Chapter Nine—Lessons from a Depression);

  how limited understandings regarding money impact reigning economic notions and policies (Chapter Ten—The Blind Spot).

  In Part II—New Money—we explore some of the many monetary tools and new economic understandings available to us to help address the issues facing our world today. The topics explored include:

  the unparalleled shift now taking place in society (Chapter Eleven—Great Change);

  new economic insights derived from our understandings of natural ecosystems and other complex flow systems (Chapter Twelve—Efficiency, Resilience, and Money);

  insights regarding what constitutes economic vitality, and its relationship to accepted notions of economic growth (Chapter Thirteen—Sustainable Development);

  two of the most ubiquitous complementary currencies in use today (Chapter Fourteen—LETS and Time Dollars);

  currency designs to help address specific social concerns (Chapter Fifteen—Social-Purpose Currencies);

  currency designs to help meet the needs of business, especially small and medium-sized enterprises (Chapter Sixteen—Commercial-Purpose Currencies);

  a global reference currency design that addresses many of the limitations inherent in today’s international environment (Chapter Seventeen—The Terra, a Trade Reference Currency);

  the likely consequences of addressing societal conditions within the framework of the existing bank-debt monetary paradigm (Chapter Eighteen—Two Worlds).

  In Part III—The Mystery of Money—we explore the profound relationship between money and the human psyche. The topics examined include:

  patterns of emotions and actions that can be observed across time and cultures (Chapter Nineteen—Archetypes);

  a fundamental archetype and its deep-rooted relationship to money (Chapter Twenty—The Missing Archetype and Money);

  the long and systematic repression of this same archetype (Chapter Twenty One—Repression of an Archetype);

  the manner in which repressed psychic energies manifest (Chapter Twenty Two—Shadows);

  the link between collective psychology, Taoism, and money systems (Chapter Twenty Three—Money and the Tao);

  the impact of the current monetary paradigm on society (Chapter Twenty Four—Consequences of Repression).

  In Part IV—Money, Archetypes, and Past Ages—we explore the monetary systems, archetypal constellations, and general conditions of several notable civilizations down through history. The topics examined include:

  medieval Western Europe viewed from an archetypal perspective (Chapter Twenty Five—Central Middle Ages Revisited);

  an historical civilization whose unusual prosperity spanned more than 2,000 years (Chapter Twenty Six—Dynastic Egypt);

  Dynastic Egypt from an archetypal perspective (Chapter Twenty Seven—Dynastic Egypt Revisited);

  the particular monetary and archetypal characteristics of an unusual culture that has endured for more than 1,000 years and continues to this day (Chapter Twenty Eight—The Balinese Exception);

  a review of the findings and key conclusions of this work, and an invitation to continue our exploration of money online (Chapter Twenty Nine—Invitation to a New World).

  the vital role of monetary amendments as part of an ongoing process of societal maturation (Chapter Thirty—The Dynamics of Transformation and Money). This bonus chapter and additional supporting materials are available online at our companions websites:

  http://www.newmoneyforanewworld.com

  and

  http://www.lietaer.com

  A number of chapters contain inserts that, while not essential to the argument at hand, offer supplementary information that may be of interest to the reader.

  PART I - OUR MONEY, OUR WORLD

  Economics is about money, and that’s why it is good.

  ~WOODY ALLEN

  And money is about...what ?

  CHAPTER ONE - A Tale of Two Cities

  If the only tool you have is a hammer,

  you tend to see every problem as a nail.

  ~ABRAHAM MASLOW

  Garbage was a major problem in Curitiba, the capital of the southeastern state of Paraná, Brazil.1 Its urban population had mushroomed from 120,000 in 1942 to 2.3 million in 1997. Many of the inhabitants lived in favelas, shantytowns made of cardboard and corrugated metal. Garbage collection trucks could not enter these favelas as the streets were not wide enough. The garbage thus piled up and disease broke out.

  Jaime Lerner, who became mayor of Curitiba in 1971, did not have funds to apply customary solutions, such as bulldozing the area or building new streets. Bond measures, further taxation, or federal assistance were simply not options. Another way had to be found.

  What Curitiba did have was an abundance of food, owing to the fertile lands and tropical climate of the region. It also had a municipal bus system that was underutilized, with many favela residents unable to afford public transportation. Mayor Lerner made use of these local resources to resolve urban issues and transform Curitiba.

  Large metallic bins were placed at the edge of the favelas. Anyone who deposited a bag full of presorted garbage received a bus token. Those who collected paper and cartons were given plastic chits, exchangeable for parcels of seasonal fresh fruits and vegetables. The bus tokens were also soon accepted at local markets in exchange for food. A school-based garbage collection program was started as well and supplied poorer students with notebooks. Tens of thousands of children responded by picking the neighborhoods clean. In one three-year period, more than 100 schools traded 200 tons of garbage for 1.9 million notebooks. The paper-recycling component alone saved the equivalent of 1,200 trees each day! The 62 poor
er neighborhoods of Curitiba exchanged 11,000 tons of garbage for nearly a million bus tokens and 1,200 tons of food. Parents also made use of the tokens to travel downtown, oftentimes to find jobs. Other programs were created to finance the restoration of historical buildings, create green areas, and provide housing, all by methods that placed little or no financial burden on the municipality. Eventually, more than 70 percent of Curitiban households became involved in these programs.

  The many initiatives—environmental cleanup, city restoration, job creation, improved education, disease intervention, hunger prevention—were each tackled without having to raise taxes, redistribute wealth, issue bonds, rely on charity, or obtain loans from the federal government or organizations such as the World Bank and the International Monetary Fund (IMF). The improvements burdened no one. Everyone benefited.

  The results in purely economic terms are worth noting. From 1975 to 1995, the Gross Domestic Product (GDP) of Curitiba increased an average of 75 percent more than its parent state of Paraná, and 48 percent more than the GDP of Brazil as a whole. The average Curitibano earned more than three times the country’s minimum wage. If nontraditional monetary gains such as the exchange of garbage for provisions are taken into consideration, the real total income for residents was at least 30 percent higher still. The results in human terms—in the renewal of dignity and hope for a better future—can only be imagined.

  Curitiba discovered a means by which to match unmet needs with unused resources. They did so by making use of complementary currencies—monetary initiatives that do not replace but rather supplement the national currency system. This innovative approach provided much needed improvements to the local economy. It enabled a developing and formerly impoverished city to empower itself and vastly improve its conditions in the remarkable span of a single generation.

  In 1990, Curitiba was honored with the highest award granted by the United Nations Environment Program.

  Growing numbers of concerned citizens and public officials find it increasingly doubtful that the problems facing our communities, nations, and planet can be successfully addressed. The results achieved by complementary monetary initiatives in Curitiba, however, as well as many other places around the world suggest something quite different. Our current difficulties persist not because they are insurmountable, but rather because we have focused on the symptoms rather than the systemic causes of our many concerns. Most importantly, we have failed to more fully understand and make greater use of one of the most powerful of all human creations—money.

  To help illustrate what is taking place in our world, we offer a fictional absurdity, an allegorical place called Hammerville.2

  HAMMERVILLE

  Hammerville derived its name from a peculiar oddity that distinguished it from other communities of its time. For practically every application imaginable—cutting, painting, cleaning, plumbing, building, demolition, ploughing, harvesting, and so much else—the hardworking people of Hammerville made almost exclusive use of one tool: a hammer. It was the principal object in the hammer throw, hammer bowl, and other popular sports. It was also a vital part of their cultural celebrations and the iconic symbol of civic pride.

  Over time, the hammer also became the most important mark of individual wealth. Although a few hammer-dexterous individuals had the ability to use several hammers simultaneously, there was no intrinsic need to own more than a few hammers. Nonetheless, it somehow came to pass that the more hammers in one’s possession, the higher one’s standing in society became.

  For a while, no one questioned the inherent limitations of their world. With few exceptions, if something could not be built, fixed, or measured with a hammer, it was simply left undone. Screwdrivers, ploughs, wrenches, and paintbrushes were nonexistent. Even the general concept of “tool” was not a part of people’s reality. A hammer was a hammer and that was basically it. No other means existed to even imagine, much less implement, options commonly available elsewhere.

  Over time, Hammervilleans found themselves unable to cope. Their population grew, but no means could be found to keep up with demands for sufficient housing, education, employment, healthcare, and a host of other requirements. Conditions deteriorated, but no one could quite understand why. People increasingly pointed the hammer of blame at one another. Some of the privileged hammer-rich questioned the abilities of those less fortunate, and were, in turn, the subject of mounting resentment by growing numbers of the hammer-less.

  No one ever stopped to look at the limitations of the hammer itself. It was unthinkable that the most important and almost exclusive object of so much good was simply not designed to address all of their needs. Nor could this citizenry grasp the powerful link between their collective ignorance regarding tools, the hammercentric ways in which they perceived themselves and their world, and what in fact they believed to be possible or not. The good people of Hammerville were both defined and fated by the limitations of their hammer-monopolized world, a world that despite all good intentions found itself in peril.

  Of course, the absurdities and collective lack of awareness of Hammervilleans could not possibly occur in our world.

  Or could they?

  TWO WORLDS AND MONEY

  This book recounts the story of two worlds, two paradigms. It offers a brief analysis of current conditions and the logical outcome of attempting to solve existing problems using the same thinking that created many of our concerns in the first place. The main body of this work, however, considers another prospect for society and the systematic means by which it can be pragmatically realized.

  This other world is one in which the long-term interests of humanity and the sustainability of our planet balance the short-term interests of business and industry; where there is meaningful work for all and time for ourselves, our families, and our communities; where the upbringing and education of our children and quality care for our elders are realized and compensated for in equal measure to other forms of employment so vital to society. This other world holds dear the diversity and sanctity of all life and the life-affirming aspects of what it is to be fully human, and consequently, more humane.

  The potential for just such a prospect is not only possible but is achievable within the span of a single generation. Many of the elements required for these improvements already exist. Additionally, a wide assortment of monetary tools similar to those used in Curitiba is readily available to us quickly, safely, and inexpensively by way of a greater understanding of money.

  The current monetary paradigm and its relationship to the critical issues of our day are examined in the chapters that follow. We shall see that intentionally designed currencies can match many of the world’s unmet needs by using the underutilized resources already at our disposal.

  CLOSING THOUGHTS

  Curitiba represents an important 25-year-old practical case study. It offers testimony that a “dual-currency” approach—one that uses both the traditional national currency and well-designed complementary currencies—can successfully address a broad range of seemingly intractable issues promptly and effectively by means that are non-punitive and of benefit to all. Other important case studies, presented later in this work, show the broad range of applications made possible by use of these monetary innovations.

  The lack of awareness that defined and ultimately undermined Hammerville need not apply to us. But we need to better understand money—our hammer—and how it is interwoven into every element of our society.

  CHAPTER TWO - Welcome to Moneyville

  Our Age of Anxiety is, in great part, the result of trying to do today’s jobs with yesterday’s tools.

  ~Marshall McLuhan

  We begin with this two-part, multitrillion-dollar question: How did a smart age like ours get into the mess it now finds itself in, and what do we do to move forward? Consider the following.

  Our achievements over the last century are without parallel. We have gone from the most rudimentary understandings of genetics to mapping the e
ntire human genome, from Morse code to binary code, from horse and buggy to space exploration. We now have near-instant access to one another and more information than all the universities and libraries down through the ages, combined!

  Yet, while we can probe distant planets, we are threatened by a pollution mess on our own planet. Life expectancy is greater than ever before, but retirement is increasingly problematic. We produce more than enough food to feed the world, but too many go without. There is no end to the work that needs to be done, with legions of willing, able people to do it. Nevertheless, we are plagued by a chronic scarcity of gainful opportunities, made more dramatic still by financial crashes and chronic economic instability.

  Though our many triumphs speak to a vast human potential, we currently find ourselves beset by vital challenges that have thus far eluded the many attempts aimed at their resolution. In fact, despite some breakthroughs and many valiant efforts in the public and private sectors, these challenges have escalated in scope and severity with each passing decade. Why is this so?