The Future of Money | Introduction – Chapter 1 – Part One | Bernard Lietaer (1999)

Reproduced from: https://philoma.org/wp-content/uploads/docs/2009/09_10_24_-_Texte_-_Your_Money_-_B._Lietaer.pdf

The Future of Money © Bernard Lietaer August 1998

Your Money

Whence it came, Why it is changing, Where it is leading

(Book #1: USA Version)

June 1999
Copyright by Bernard A. Lietaer

These bullets are not part of the book
they are “marketing points” that help positioning the book

The following bullets are reality-checks extracted from The Future of Money, illustrating the dramatic changes we face in the near future.

  • Your money’s value is determined by a global casino of unprecedented proportions: $2 trillion are traded per day in foreign exchange markets, 100 times more than the trading volume of all the stockmarkets of the world combined. Only 2% of these foreign exchange transactions relate to the “real” economy reflecting movements of real goods and services in the world, and 98% are purely speculative. This global casino is triggering the foreign exchange crises which shook Mexico in 1994-5, Asia in 1997 and Russia in 1998. These emergencies are the dislocation symptoms of the old Industrial Age money system. Unless some precautions are taken soon, there is at least a 50-50 chance that the next five to ten years will see a global money meltdown, the only plausible way for a global depression.
  • Exorbitant compensations are paid to the very few at the top: it started with movie stars and sports heroes, and has now spread to top lawyers, traders, doctors, and business leaders. In the 1960’s CEO’s salaries were only thirty times greater than those of the average worker, compared with two hundred times today. Is this the dawn of a society where “Winner-takes-all” or a short-term last gasp of the transition out of the Industrial Age?
  • The value of barter transactions – exchanges which do not use any money as medium of exchange – totaled almost $6.5 billion in 1994 in the US and Canada, and is increasing three times faster than normal exchanges. The magazine “Barter News” covers the industry’s development and now has 30,000 subscribers. It estimates the total barter worldwide at $650 billion in 1997, and growing at an annual rate of 15%.
  • All of the above is part of an irreversible process of change in our money system and our societies. We are now in a transition period, an interval of great risk but also of great opportunity. The risks are not only financial, some of the emerging money technologies could create a society more repressive than anyone of us thought possible. More importantly major opportunities are also becoming available: now more than ever it has become possible to address some of the most critical issues of our times, such as enabling more meaningful work, fostering cooperation and community, even realigning long-term sustainability with financial interests. None of this is theory, real-life implementations have pragmatically demonstrated such results. Combining these innovations can make available a world of Sustainable Abundance within one generation.
  • Specifically in Europe, the traditional ways to handle unemployment are increasingly failing. In areas with high unemployment, people have already demonstrated that living conditions can be significantly improved by creating their own complementary currencies instead of just relying on welfare. Surprisingly, it is in fact not the first time that such solutions have been successfully implemented in the Modern world. During the 1930’s many thousands of such initiatives were operational in the US, Canada, Western Europe and other areas affected by the Depression. Complementary currencies could become a key tool to buffer a region from the shocks caused by failures and crises in the official money system. Finally, this approach is a win/win for both locally owned businesses and society at large.
  • The degradation of the environment due to short-term financial priorities can similarly be addressed with pragmatic money innovations. Short-term thinking is shown not to be due to human nature, but to the prevailing money system. It is also possible to reverse this process, by using a currency designed specifically for multinational trade and contracts which would make long-term thinking a spontaneous process, focusing the attention on long-term sustainable solutions without the need for regulations or taxation. Historical precedents have proven such results, some of them lasting over several centuries.

For your children;
and the children’s children.
And the trees..

email: blietaer@earthlink.net
website: http://www.transaction.net/money


Introduction

The last beings to comprehend the nature of water are fish. Similarly this is true of people and the nature of money. We allocate a great proportion of our physical, emotional, and mental energy to getting, keeping, and spending money–but how many of us really know what money is or where it comes from?

Three Promises

As you start reading this book, I make three promises:

  1. You will gain understanding of the real workings of the money world, expressed in layperson’s language. On some level, this may be similar to those first conversations you had as a kid about the real story of sex. The real story of money is just as compelling–and even more obscured– than the topic of sex was once upon a time. Western society used to have three main taboos: sex, death and money. The sexual revolution of the 1960s took care of the first one, not to speak of periodic media frenzies around some sex scandal. The AIDS epidemic of the 1980s has forced us to talk about death combined with sex, even with our youngsters. Monetary issues promise to force us to face the last taboo–money–during the first decade of the Millennium. This book is a discovery guide to the current money system — the way money is created and managed in our society. It also provides a road map for the monetary journey out of a decaying Industrial Age to an Information Age, where greater opportunities become available. This will be an informative journey, revealing both the positive and negative implications of today’s money system. It is peppered with humorous and surprising anecdotes on how the system came to be what it is today.
  2. You will know enough to find your own answers to questions such as:
  • Why is meaningful work so scarce?
  • Why have we less and less time, even with repeated promises that technology and productivity will give birth to a leisure society?
  • Why is decent healthcare or a good education for our children becoming less affordable?
  • Why is it that the better off we are financially, the more starved we are for community?
  • Why is long-term sustainability not a compelling concern in our society?
  • Why is money becoming an obsession for so many?
  • Why is the global monetary system in growing turmoil, and what does this mean for you?
  1. You will discover that another way is now possible, and that you can participate in making it happen. You will learn about new possibilities to create and support a world that works for everyone, where the cooperative and competitive ethos blend in harmonious synergy. I will call this “Sustainable Abundance”. Sustainable Abundance is not merely a theoretical possibility, but a concrete reality. In the midst of incredible change and uncertainty (including roller coaster stock markets, monetary meltdowns on three continents), there is also an unmistakable, quiet monetary revolution taking place. This book chronicles the birth of over 1,900 complementary currencies flowering independently of national banks in over a dozen countries. You will read about how new types of currencies have already proven effective at bolstering employment, community and sustainability. Operating as complements to traditional national money, these emerging new currencies may well be the solution for these apparently intractable problems. The appearance of these new money systems comes as a consequence of a broad shift in societal values, particularly those values previously tagged as “feminine” concerns. The search for a cooperative ethos — one based on collaboration among people, community building, and a sustainable relationship with the environment — is increasingly perceived by men and women alike as critically relevant for our future. Complementary currencies offer a key to balancing these emerging cooperative priorities with the competitive values, that, until recently, have dominated the economic world. You will see that these new currencies enable transactions to occur that otherwise would not take place, thereby creating new wealth, both economic and social. It is the combination of the traditional national currencies and the complementary currencies that gives birth to what will be called the Integral Economy, the master key towards Sustainable Abundance. If you so choose, you can become part of this new monetary future, and start creating Sustainable Abundance, right here, right now.

Underlying Viewpoint

This is not a book on economics or economic theory. Rather, it addresses real-life issues by combining money innovations, each of which have already been tested somewhere in practice. Instead of following any particular economic or monetary school of thought, it is a whole systems approach which has informed my viewpoint on money and has been – hopefully unobtrusively – woven below the surface of this book.

A systems analysis involves identifying and describing four aspects of a given reality:

  1. Its actors, (individual or collective),
  2. the processes (interactions between actors),
  3. the rules (e.g. laws of nature, or in our case human laws governing the creation and flow of money),
  4. and the context, identified by the interactions of the money system with other systems and the broader environment.

A whole systems approach defines this context in a broader way than economics does, so as to integrate as much as possible the most important side-effects. This includes specifically in our case the effects of different money systems on the character of human interactions, on the evolution of human society, and on ecological systems.

In this context, each Part of this book can be seen as a step toward broadening your understanding of the whole system that relates to money. Part One elucidates the mysteries of the conventional national currency system. Part Two widens the view to encompass newly emerging money systems. The current book deals therefore with money in the world outside of us, describing how different money systems shape society.

The forthcoming Mystery of Money: Beyond Greed and Scarcity completes our money tour with the one residing inside our own heads. It thereby steps up the scope of our money landscape one last notch by exploring the imaginal world of money and the collective emotions embedded in different money systems.

The challenge is to bring these ideas down from the academic and monetary ivory towers while keeping them conceptually sound, and ending up with a fun text accessible to the broad public. I have used footnotes and technical Appendices to explain complexities that are not essential to following the main arguments of the text. This is not a Treatise on money, as my intention is to bring to light only those aspects that are essential to understanding the money choices at our disposal for shaping our future over the next two decades.

Sidebars

Short vignettes or intriguing anecdotes illustrating a point will be enclosed as sidebars like this. They can be skipped without harming comprehension of the main text. But you may miss a few laughs and surprises in the process.

Stories

There will also be stories that take many forms, from totally real to quite imaginary. They include newspaper clippings, letters to a friend, fairy tales for my seven-year-old godchild, or notes from my time travel days. They are an integral part of the text, and will be identified by boxes like this one. Although they make a point where they appear, they can also stand alone.


Chapter 1: Money – The Root of All Possibilities

“Money is like an iron ring we put through our nose.
It is now leading us wherever
it wants.
We just forgot that we are the ones who designed it.”
Mark Kinney

“The future is not some place we are going to, but one we are creating.
The paths are not to be found, but made, and the activity of making them
changes both the maker and the destination.”
John Schaar

“The modern crises are, in fact, man-made
and differ from many of their predecessors in that they can be dealt with.”
Second Report to the Club of Rome1

This book explains how we can create “Sustainable Abundance” worldwide within less than one generation. Between Chapter 1 and 9, you will come to understand why “Sustainable Abundance” is not a contradiction in terms. You will learn of the historical evolution that have hindered its development — until now. You will be given the background knowledge necessary for understanding the trends, currently emerging worldwide, that can make Sustainable Abundance possible in the foreseeable future. This chapter illustrates why such a momentous improvement could paradoxically result from a crisis–specifically, the convergence of historically unprecedented societal and economic challenges that we are facing right now. Whether or not we use these challenges as an opportunity for conscious change, their convergence ensures that significant change has become inevitable.

The Time-Compacting Machine

Once upon a time, the very inventive inhabitants of an extraordinarily lush and beautiful planet created, much to their surprise, a gigantic machine. Most surprising to them was the discovery that this machine compacted time. Because of this remarkable feature, their colossal invention actually forced them to become aware of some incompatibilities–that lay precariously between their most cherished, well-established habits and their own survival.

One day, these people realized that four powerful mega-trends were converging like giant pistons toward the same place and time. Perhaps because they had each been generated by the very inventive people themselves, these four mega-trends were hard for these people to see, and harder yet for them to address. The Time-Compacting Machine created by these ingenious, yet sadly shortsighted, people is represented in Figure 1.1. By the way, if you look closely, you may find that these people, their planet, and their Time-Compacting Machine are very familiar.


Figure 1.1 The Time-Compacting Machine

This extraordinary Time-Compacting machine consists of four giant megatrend pistons moving at varying speeds toward the same destination. Imagine that two pistons are like icebergs–an Age Wave and Global Climate Change and Species Extinction–both moving at a glacier-like pace, but with inexorable inertia, toward the same place and time. The other two giant pistons–Monetary Instability on the one side and the Information Revolution on the other–are moving faster and more erratically, like ships–Titanics–and are also heading toward the same place and time.

All four of these megatrends will be briefly described next. Each issue will be synthesized into a single, hard “money question,” a substantial question to which some kind of response will occur — either by default or by design — within the next decade. The rest of this book will reveal how these “money questions” can be turned around into a surprising opportunity to make Sustainable Abundance a reality.

The first step is to recognize that this is “a bad time to be an ostrich,” as The Economist editorialized on January 1, 1999. An ostrich may experience some short term psychological comfort, but vital parts of its anatomy are at high risk. In short, the time has come to pull our heads out from under the sand. We start with the Age Wave–the slowest of these megatrends, but also the one that is most inexorably certain.

1. Age Wave

For 99% of the existence of our species, life expectancy has been about 18 years. Over the past century, particularly the past few decades, the combined impact of dramatic advances in hygiene, nutrition, lifestyle, and medicine has had a cumulative effect on the number of years that people can expect to live. In the developed world, life expectancy has now risen to 80 years for women, and to 76 years for men. One remarkable consequence is that 2/3 of all human beings who have ever reached the age of 65 are alive today.2 By the way, the age of 65 was initially chosen by Bismarck (founder of the German state) as an official “retirement age” during the 19th century, when the life expectancy in Germany was 48 years. Very few people were expected to reach that hallowed age, and our entire social contract around jobs and pension systems was geared to take care of these few people.

Over the next few decades, a demographic transformation that is totally predictable will play out–all the people involved are accounted for today. In the developed world, about one person in seven is now over 65 years of age. Compare that with only one in 11 people back in 1960. Within two decades, one out of every five people will reach that canonical age; and by 2030 almost one out of every four! (Figure 1.2).


Figure 1.2 The Gray Wave: Percent of Total Population Aged 65 or Over
(OECD)
3

This unprecedented “Age Wave” will transform the economics and politics of the world. One expert’s opinion is that “Global aging will become not just the transcendent economic issue of the 21st century, but the transcendent political issue as well. It will dominate and haunt the public-policy agendas of the developed countries and force renegotiations of their social contracts.”4 There are no historical precedents that we can draw from to handle the issues this Age Wave is raising around the world.

“Global Aging: Some Facts and Figures5

  • In Florida today, almost one in five people (18.5%) are 65 years or older. It represents a model of the future everywhere. This “Florida benchmark” will be reached for the following countries as a whole in the years indicated:
    • Italy 2003
    • Japan 2005
    • Germany 2006
    • UK 2016
    • France 2016
    • Canada 2021
    • USA 2023
  • This aging process is not only an issue in developed countries. In fact, in developing countries, the aging process is starting somewhat later, but will unfold faster than in the developed areas. For instance, in France it took one century for the elderly to grow from 7 to 14% of the population. For South Korea, Taiwan, Singapore and China this is projected to happen in a time span of only 25 years.
  • The United Nations forecasts that by 2050, the number of people aged 65 to 84 worldwide will grow from 400 million to 1.3 billion (a three-fold increase). The number of people aged 85 and older will grow from 26 million to 175 million (a sixfold increase). Finally, centenarians (100 and over) will grow from 135,000 to 2.2 million (a sixteen-fold increase). Some people may believe such an Age Wave to produce only superficial changes in society (see New York cartoon). In fact such a massive demographic shift is bound to change the very structure of society.”

New Yorker Cartoon
“206 isn’t old”

This global graying trend does offer a few positive effects. For instance, you are more likely than anybody in previous generations to join this unprecedented population of elderly. One could even hope that, with such a high percentage of mature people, the incoming Knowledge Society might evolve into an era that deserves to be called a Wisdom Age. Time will tell.

More sobering issues, however, will need to be addressed during the current transition period. For example, unfunded pension liabilities are a serious problem. These are benefits already earned by today’s workers, but for which no reserves exist because the funds have been paid out as benefits to the currently retired population. These unfunded liabilities have now accumulated to $35 trillion in the OECD countries alone6 (this is more than four years of the entire Gross National Product of the US economy). Adding in healthcare to the cost would more than double that figure. And even these staggering numbers do not take into account the future growth in the number of the elderly reflected in Figure 1.2.

  • The following hard “money question” synthesizes the socioeconomic dilemma that this Age Wave presents: How will society provide the elderly with the money to match their longevity?

2. Information Revolution

Two hundred years ago, Benjamin Franklin claimed that if everyone were to work productively, the workday would need be only five hours. Sixty years ago, Bertrand Russell, an English philosopher, and Louis Mumford, an American authority on culture, both estimated that a 20-hour work week should be enough time to produce all the necessary goods and services in our society. For the past 30 years, many economists have forecast reduced work-weeks or retirement at age 38. The New York Times predicted specifically on October 19, 1967 that “By the year 2000, people will work no more than four days a week and less than eight hours a day. With legal holidays and long vacations, this could result in annual working period of 147 days and 218 days off.”

In contrast with all these predictions, what has actually been happening is a fierce, global struggle for jobs. At least 700 million able and willing people are chronically unemployed or under-employed worldwide. Unemployment used to be primarily a Third World problem, but has now spread to “developed” countries as well. Europe experiences its worst job crisis since the 1930s; Japan its worst employment crunch ever. For the US, the same scramble for jobs has manifested as a worsening of working conditions, rather than as straightforward unemployment. While American labor productivity has grown by 30% between 1973 and 1993, pay has dropped by about 20% in real terms over the same time period. At the same time, average working hours increased by 15% and white-collar workaholism has become a tacit requirement to keep your job. According to psychologist Barbara Killinger, “Workaholism has become the major source of marital breakdown.”7 The United Nations International Labor Organization labels job stress “a global phenomenon.”8

The harsh reality is that the post-Industrial global economy does not need–and therefore cannot and will not provide–jobs for the 6 billion people on the planet today, not to speak of the 8 billion forecast for 2019. Jobless growth for major corporations worldwide is not a forecast, but an established trend. The extent to which the writing is on the wall can be comprehended by statistics quoted by William Greider9: the world’s 500 largest corporations have managed to increase their production and sales by 700% over the past 20 years, while at the same time reducing their total workforce.

Economists will correctly argue that productivity improvements in one sector tend to create jobs in other sectors, and that therefore “in the long run” technological change doesn’t matter. However, nobody can claim that technological shifts are not generating massive displacements of jobs, fundamental changes of the qualifications required to perform a function. If the changes are rapid — as is the case with Information Technology — such job displacements are just as destructive as permanent job losses. How many steelworkers can realistically expect to be retrained as computer programmers or corporate lawyers, however strong the demand is in these sectors?

William Bridges, an expert on the future of employment, has concluded that “within a generation, our scramble for jobs will look like a fight over deck chairs on the Titanic.”10

To add insult to injury, the only societies in the world today that work less than four hours a day are the surviving “primitive” hunter-gatherer tribes, living roughly as they did over the past 20,000 years. Similarly, the common agricultural laborer in 10th to 13th century Medieval Europe spent less than half of his waking hours on work.11 Are we going wrong somewhere?

Wassily Leontieff, Nobel Prize-winning economist, has summarized the overall process as follows: “The role of humans as the most important factor of production is bound to diminish in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors.”12 We could let the horses peacefully die out, but what do we do with people?

  • The “money question” here is: How can we provide a living to additional billions of people when our technologies make jobless growth a clear possibility?

3. Climate Change and Biodiversity Extinction

Consider the following facts:

  • Munich Re, the world’s largest reinsurance company, when it tallied up the total insurance losses due to the September 11 events warned that its worse concerns for the future are not terrorism but climate change. The frequency of major natural disasters is now treble what it was in the 1960s. For each year since 1998, the insurance losses due to storms, floods, droughts and fires are higher than what was paid out for the entire decade of the 1980s. 85% of all insurance payments worldwide now go for compensating for natural disasters. CGNU, the largest insurance company in the UK, forecasts that – at the current rate of increase of the property damages – the cost will be higher than the entire world production by the year 2065.13 A combination of deforestation and climate change is blamed for these problems.14 Of course, all this measures only the minority of the assets in the world which are actually insured in the first place. Another measure of Nature’s increased violence is that now four times more people die in natural disasters than in all war and civil disturbances combined.

Climate Change: Some Findings

  • For the first time ever, a cruise ship sailed through the North Pole during the Summer of 2000, normally blocked by ice. The Arctic ice cap was therefore split into two parts at that point.
  • Snow and ice cores removed from the Himalayas prove that the past 50 years have been the hottest in 1000 years, and the past 10 years the hottest of all. Similar results are found in the highest mountains in Africa and in South America. The consequences for the water supply of vast areas, reliant for the past 10,000 years on the water from these glaciers will be felt long before we have the answers to global climate changes.15
  • Franco Andaloro, from the Italian Institute for Maritime Research, reports that the Mediteranean temperature has increased by 4 degrees C, to the point that many Mediteranean fish species have emigrated towards the North Atlantic and have been replaced by tropical species.16
  • Engineers designing storm sewers, bridges and culverts used to plan for “hundred year storms.” Thomas Karl, of the National Oceanic and Atmospheric Administration says “There isn’t really a hundred-year event anymore. We seem to be getting these storms of the century every couple of years.” Some storms of 97-98, like hurricane Mitch, have qualified as a “five-hundred year storm.”
  • Charles Keeling of the Scripps Institution of Oceanography has shown that Spring starts about a week earlier globally and that temperature swings are growing stronger (Nature July 1996).The years 1990, 1995 and 1997 included the warmest days in the Northern Hemisphere in the past 500 years (Nature April 22, 1998). Furthermore, there is more and more evidence that permanent climate change is possible in remarkably short time periods, in the time lapse of decades instead of centuries, as was thought until now.
  • A major study on coral reefs by marine biologists for the World Bank concludes that in only two years time (1998-2000) between 50% and 95% of all the reefs of the Indian Ocean (stretching from South Africa to the Indian subcontinent) have died. Corals – one of the richest bio-habitats in the world – cannot tolerate a rise in sea temperature of over 2 degrees Celsius (4 Farenheit) for more than a few weeks. In 1998 the temperature rose for the first time 3 degrees Celsius above normal for several weeks. Coral reefs are an essential element in the food chain for coastal people, providing nurseries for fish and shallow hunting grounds for fishing boats. In Kenya, Tanzania, the Seychelles, Sri Lanka and the Maldives, a significant economic impact has already been registered.17
  • The freezing level of the atmosphere–the height at which the air temperature reaches freezing–has been gaining altitude since 1970 at the rate of nearly 15 feet per year. Tropical glaciers are melting at what the Ohio State researchers term “striking rates.” “The Lewis glacier on Mount Kenya has lost 40% of its mass, in the Ruwenzori all the glaciers are in massive retreat. Everything in Patagonia is retreating. …We’ve seen that plants are moving up the mountain. …I frankly don’t know what additional evidence you need,” claims Ellen Mosley Thompson of the Ohio University Team.
  • Not all effects are unpleasant: scientist have found that 35 of the 60 species of British butterfly are now arriving earlier and flying further North than before: e.g. the peacock and the orange tip butterfly arrive 15 to 25 days sooner than two decades ago; the red admiral is now appearing 32 days earlier and surviving 8 days longer than before. A dozen other species are emerging between 8 and 26 days earlier than in previous generations.18
  • The European research satellites ERS-1 and ERS-2 have shown that the West Atlantic Ice sheet in Antartica is receding at the rate of more than one kilometer (6/10th of a mile) per year. Barclay Kamb, a noted glaciologist at Caltech, comments “I was rather skeptical of this idea of Antartic Ice Sheet disintegration. …But now, the evidence for rapid ice changes is good enough that the worst-case scenarios are worth worrying about. …If the ice sheet disintegrated, sea levels would rise by about 5 meters (20 feet).” This would drown many coastlines around the world, transform most harbor cities into swamps, and make many islands in the Pacific uninhabitable.19 On April 17, 1998, US government scientists reported that a 75-square-mile chunk of the Larsen ice shelf (eastern side of the Antartica’s ice sheet) had broken loose and blamed the break-up on global climate change. “This may be the beginning of the end of the Larsen ice shelf” said US National Snow and Ice Data Center researcher Ted Scambos.
  • The Canadian ice-breaker Des Groseillers has been frozen in place in the Arctic as an Ice-Station since September 1997 for project SHEBA, the most comprehensive attempt at establishing a heat budget for the Arctic Ocean. “The final results are not yet in, but SHEBA has already determined one worrying fact: the sea ice is thinner and less stable than usual, and the icecap is receding rapidly.”20
  • About half of the planet’s population lives in the “coastal areas” which would be directly affected by changes in the sea level.21
  • Substantial changes in weather patterns have been observed everywhere (sidebar).
  • In 1998, the American Museum of Natural History made a survey among professional biologists (not ecologists), the majority of whom work for large corporations. A striking 69% of them have concluded that we are living now through the “sixth extinction.” This species extinction seems to be happening more rapidly and affecting a wider range of biodiversity than any of the previous five. This is even faster than the last extinction, over 60 million years ago, when an asteroid wiped out the dinosaurs. The claim is that we are in the process of losing between 30% and 70% of the planet’s biodiversity within a time span of only 20 to 30 years. The other difference from all previous extinction is that this one is due to the actions of one species – our own – which also claims to be the only one endowed with intelligence and consciousness.
  • The following public Warning to Humanity was unanimously agreed to by 1,600 scientists, including a majority of living Nobel Prize winners in the sciences: “A great change in stewardship of the Earth and the life on it is required, if vast human misery is to be avoided and our global home on this planet is not be irretrievably mutilated. …If not checked, many of our current practices may so put at serious risk the future that we wish for human society and the plant and animal kingdoms, and may so alter the living world, that it will be unable to sustain life in the manner that we know. Fundamental changes are urgent if we are to avoid the collision our present course will bring about.”22
  • The prestigious American Geophysical Union (AGU) is an apolitical international organization of scientists. Its 35,000 members include most of the foremost specialists who study both historical and current evidence of global climate change in the atmosphere, glaciers, oceans, forests and deserts. In a recent report, the AGU concluded that “Greenhouse gases rising into the atmosphere from burning fossil fuels and other pollutants will increase the pace of global warming and disrupt many regions of the world. Those gases could persist in the atmosphere for thousands of years, and despite uncertainties about just how high worldwide temperature might go and how to combat the climate changes, new strategies must be developed to deal with the problem.”23
  • In a separate initiative, a global meeting of 2,800 economists, including Nobel-prize laureates James Tobin and John Harsanyi, unanimously agreed on the following opinion: “Global climate change is a real and pressing danger,” carrying with it significant environmental, economic, social and geopolitical risks.24

All these exhortations invariably seem to hit a brick wall wherever serious financial interests are involved. Financial markets focus on the next quarter’s results, and even if a particular CEO were to advocate for longer term priorities at the expense of immediate results, he or she would be ruthlessly punished or even removed from office. Only when we have resolved the next “money question” is there any real chance to address the climate change and the biodiversity extinction problems in a timely and systematic way.

  • So our bottom-line question here is: How can we resolve the conflict between short-term financial interests and long-term sustainability?

4. Monetary Instability

Michel Camdessus, the first to be elected three times as managing director of the International Monetary Fund (IMF), went on record as describing the December, 1994, Mexican near-cataclysm as “the first financial crisis of the 21st century.” A total economic meltdown was avoided only because the US cobbled together a last-minute emergency package of unprecedented scale–$50 billion dollars. However, after the Mexican crash, even Mr. Camdessus did not expect the scale and speed of the Southeast Asian crisis of 1997, which dwarfed the Mexican episode, with emergency packages that made the Mexican bailout look puny. This was followed by the Russian crisis of 1998, and by the Brazilian crash in early 1999. Unless precautions are taken, there is at least a 50-50 chance that the next five to 10 years will see a dollar crisis that would amount to a global money meltdown. Currently, the monetary crisis has spread to three continents. Alan Greenspan, Chairman of the Federal Reserve, stated in a speech at the University of California at Berkeley, “it is not credible that the United States can remain unaffected by a world that is experiencing greatly increased stress.” Mr. Rubbing, the US Secretary of Treasury adds: “The number of countries experiencing difficulties at once is something we have never seen before.”

Paul Krugman, “the most acclaimed economist of his generation,”25 somberly concludes in “Return of Depression Economics” in Foreign Affairs: “As little as two years ago, I and most of my colleagues were quite confident that although the world would continue to suffer economic difficulties, those problems would not bear much resemblance to the crisis of the 1930s. …The truth is that the world economy poses more dangers than we had imagined. Problems we thought we knew how to cure have once again become intractable, like temporarily suppressed bacteria that eventually evolve a resistance to antibiotics. …There is, in short, a definite whiff of the 1930s in the air.” 26

In the next section (the Primer), you will learn why these repeated crashes are not random accidents, but signs of systemic dislocations of the official monetary system. This implies that no country should consider itself immune from such problems: not China, not Germany, not even all of Europe, nor the US.

  • The last money question is straightforward: How can we prepare for the possibility of a monetary crisis?

Money at the Core of the Time Compacting Machine

The extraordinary convergence of these four megatrends over the next two decades shows why Peter Russell was right in predicting that, “over the next 20 years, as much change will happen in the world as has occurred over the past 200 years.”27 I would add that, in order to deal with the challenges just described, we are going to have to change as much in our consciousness about money over the next 20 years as we have over the past 5,000 years.

Figure 1.3 summarizes the four money questions of the Time Compacting Machine. Whether we like it or not, some kind of answer will manifest for each one of these questions. Together, they indicate that something fundamental will have to change in our current way of dealing with money.


Figure 1.3 Money at the Core of the Time Compacting Machine

Today’s interpretation of money needs to be questioned if we are to address these issues. Remaining locked within the prevailing money paradigm amounts to collectively doing what the cartoonist Cardon depicts so soberly.

Cardon Cartoon
“Remaining locked in the prevailing
interpretation of money…”

What is Sustainable Abundance?

However, another outcome is also available — one that would lead to “Sustainable Abundance”. Sustainable Abundance provides humanity with the ability to flourish and grow materially, emotionally, and spiritually without squandering resources from the future. A synonym could be wise growth. It is characteristic of a community, society, country, or global system that gives people the opportunity to express their highest creative calling, without diminishing the prospects for coming generations to enjoy the same or a better way of life. It is about having our material needs met so that we can explore our highest potentiality as human beings.

With such a fundamental commitment, it would be considered our birthright to have a fair chance to develop our true potential–unhampered by a lack of money. Sustainable Abundance addresses issues ranging from grinding poverty in the Third World to the bleakness of community decay in the industrialized areas, from ecological breakdown to the wasting of a child’s mind due to lack of educational opportunity.

Sustainable Abundance is not about taking away from the haves to distribute to the have nots. On the contrary, it is about giving everybody a fair shake at an opportunity to create new wealth. By learning the principles of Sustainable Abundance, you can become a part of this quiet but momentous evolution.

“In times of extraordinary change,
it is no failure to fall short of realizing all that we might dream –
the failure is to fall short of dreaming all that we might
realize.”28

While Sustainable Abundance may seem like a dream, it has now become a realistic possibility. All the necessary seedlings have sprouted and are beginning to take root. The story of these seedlings, the various innovations now occurring within money systems, will be told here. You will also discover why this avenue of change is becoming more plausible as we transit through the current information revolution from an Industrial Age economy to the incoming values of an Age of Knowledge.

Sustainable Abundance may sound to some like an oxymoron, a contradiction in terms. “Greens” support sustainability, but are sometimes suspicious of abundance. Business will be in favor of abundance, but may question the emphasis on sustainability. These apparent contradictions will be resolved once the possibilities of new currency systems are fully understood.

The following core thesis forms the foundation of this book. We are now engaged in a structural shift of the world system, and this shift offers an unprecedented opportunity to give birth to Sustainable Abundance.

Structural change has been formally defined as follows. “In systems terms changing structure means changing the information links in a system: the content and timeliness of the data that the actors in the system have to work with, and the goals, incentives, costs and feedbacks that motivate or constrain behavior”29

What is remarkable is that – even after identifying the key role of information systems in structural change — the most important of our economic information systems, our money system, has been ignored as a key leverage point for inducing the necessary and desirable changes. This is the void that this book intends to fill.

The fact that changes in money systems are increasingly possible during an information revolution should come as no surprise. Money is modern society’s central information system, akin to the nervous system in our own bodies (see sidebar). Mutations in a nervous system are relatively rare but rather important events in the biological evolution of a species. Similarly, a change in the nature of our money system has the potential to facilitate a fundamental shift in our societies.

Money as an Information System

Money is our oldest information system–even “writing was invented in Mesopotamia as a method of book- keeping.”30 The earliest texts available, from 3200 BC in Uruk, describe various financial transactions, including secured and unsecured lending, and “foreign exchange” transactions.

Money is our most pervasive information system, as it percolates through billions of daily exchanges in all strata of society.

Today, money has become a truly global information system–now that trillions of dollars are moving at the speed of light in a totally integrated, round-the-clock, computerized foreign exchange market.

Money has also become our most universal information system, now that even “communist” China has decided to rely primarily on private monetary incentives to motivate its vast population.

In short, our contemporary global money system plays a role similar to the autonomous nervous system of the human body because it is essential to the functioning of the whole, but has remained until now mostly unconscious, beyond the control of an individual’s will-power. In this metaphor, our objective here is to bring conscious awareness and choice to the implications of using different money systems.

It is also important to understand that Sustainable Abundance is not a state, but a process.31

To participate in this process , we will need to:

  • Understand the premises upon which our existing money system is based;
  • Become aware of the existence of other money systems that can perform functions which conventional national currencies have proven ill-equiped to fulfill;
  • Based upon this understanding, make informed choices about which currencies to use for what types of transactions — choices that are compatible with the type of relationship, reciprocal or competitive — that we want to establish with our counterpart in any given exchange.

You will see that conventional national currencies and monetary systems are programmed to produce competition and to remain scarce. With a choice of currencies available, it will make sense to continue using conventional currencies to do business, to purchase a car or gasoline, and to pay your telephone bill. However, you may want to consider using a cooperation-inducing currency to interact with your neighbors, take care of the elderly, or broaden the learning horizons of your children. One can see these two types of currencies as complementary to each other, to be used in parallel. It will even often make sense to use them in mixed payments (part conventional national currency, part complementary currency).

A remarkable variety of non-conventional currencies have already been spawned by current information technologies. Some have become familiar, like the Frequent Flyer Miles. Initially, they were a simple marketing gimmick to build customer loyalty. However, as they have become increasingly redeemable in a variety of services besides airline tickets — such as long-distance phone calls, taxi services, hotels, even magazines — they have developed into a “corporate scrip,” a private currency issued by airlines. Just as significantly, non-conventional currencies include local community currencies–still considered as marginal curiosities by most people (e.g. LETS currencies, Time Dollars, Ithaca Hours, etc.). They also include the Japanese “Caring Relationship Tickets” designed specifically for elderly care, and a Brazilian garbage recycling currency. All these non-traditional currencies are prototypes of the emerging money revolution.

The future of money therefore lies not only with the further computerization of our conventional currencies–such as dollars, Euros or Yen–via smartcards and other new information technologies. Such changes will happen. But these same information technologies also make it possible for new non-conventional complementary currencies to enter the mainstream and provide new tools for addressing some of our most pressing challenges, both locally and globally.

However, Sustainable Abundance is only one of the possible outcomes from the current transition period. It is a development that is neither automatic nor fore-ordained. It would require a shift in our perception of our relationship to money, the first in centuries.

Please note that none of the approaches proposed here are permanent solutions. Instead, they are transition tools, useful for perhaps the next 10 to 20 years, as we transit from the Industrial Age and to a Knowledge Age. We are living through an interval, a supremely uncomfortable time, when we are realizing, along with philosopher Thomas Berry, that “we are in between stories. The Old Story is not functioning properly any more, and we have not learned the New Story.” This book focuses on what we can do in this interval “between stories.”

What Prevents Sustainable Abundance?

The first hindrance to Sustainable Abundance is that we are largely unconscious about our money system, about the way money is created and managed in our societies. Even professional financial managers rarely understand how specific behavior patterns are programmed into our transactions by the type of money we use. We all live deeply enmeshed in a planetary money machine, most cogs of which we are unable to perceive, let alone understand or manage. Yet, the prevailing money system prescribes all of our economics, and much of our current social behavior and political climate. Our lack of awareness also explains some strange facts. For instance, we have the capacity to produce enough food for everyone on this planet and there is ample work as well, but obtaining the money to pay for it all is another matter. This means that the key to Sustainable Abundance lies within the money system itself, the very system about which, ironically, we have remained mostly unconscious–until now.

The second hindrance to Sustainable Abundance is the inertia of tradition and its related vested interests. However, this way of exerting power is now slipping away for the simple reason that as information technologies spread, so does control over currency creation and the related monetary interactions.

It is essential to understand that the money system is currently undergoing irreversible changes–with profound implications. As the Time Compacting Machine illustrates, using the existing money system to control society’s economic well being has become counterproductive to all. Over the last decade, we have seen the official global money system take on unparalleled power, beyond the control of any authority, national or international. The global monetary crises, that periodically make media headlines, expose the cracks in the old money system. The changes go beyond the introduction of the single European currency (the Euro), smartcards, the explosion of e-commerce, or even a reform of the international monetary institutions. With the growing impact of the information revolution, and with repeated shocks to the status quo, symptoms of a much deeper mutation are becoming visible.

One implication of the above is that we see alterations in who is issuing money–not only traditional national banking systems, but private corporations and local communities as well. There are also changes in the conditions for issuing currency, such as the advent of interest-free money. Choosing to use different types of currencies can result in different social behaviors–some money systems midwife cooperation while others encourage competition. Thus, by becoming aware of the various money systems and their effects, we can choose among these currencies when making different kinds of financial transactions. Thus our ability to make knowledgeable choices allows us to imagine, devise and support different futures.

With some understanding of the concepts behind Sustainable Abundance, we can now address what it means in practice. The four vignettes that follow provide insights into what Sustainable Abundance might look like in daily life for different parts of society around the world.

Four Seasons in 2020

All four cameos are set in the year 2020. Each relates to one of the “pistons” in the Time Compacting Machine, and illustrates how it is possible, using an existing complementary money system, to reconfigure an oncoming crisis into an opportunity for creating Sustainable Abundance. The vignettes provide a foretaste of what Sustainable Abundance might look and feel like in 2020. Some of these vignettes may appear almost magical at first. Nevertheless, as the science fiction writer Arthur C. Clarke points out: “magic is any sufficiently developed technology.” What is behind each of these stories is technology–related to money. Each vignette illustrates the result of a money innovation that has been successfully implemented, and is an on-going project currently somewhere in the world. Following each vignette is a first look at where to find an early prototype, today, that demonstrates the realism and plausibility of these stories.

The supporting evidence for the soundness of these new money technologies, and the possibilities that emerge from them, is the focus of the remainder of this book.

Spring

Mr. Yamada’s Retirement Plan

Tomorrow is Mr. Yamada’s 105th birthday–an important day. Everything has been carefully prepared for the feast. Mr. Yamada has manicured the Japanese tea garden through which the guests will enter. His eyesight is too weak for a driver’s license, but still good enough for him to enjoy the Zen-like peace of his bushes and rocks, and to notice the first buds of Spring breaking through on his dwarf cherry tree.

In a few moments, one of the neighbors, a student at the nearby university, will come to bring him his evening meal and help him in the all-important daily bath ritual. He has enjoyed the dignity of independent living for all these years, and his wisdom and life experience are respected by his family and neighbors.

“Good evening, Yamadasan,” says the student. ” I brought your favorite fish stew, Yosenabe, as you like it.” Mr. Yamada smiles back.

Life can be beautiful at 105, even on the meager pension of a long-retired bank clerk.

Japan has one of the fastest aging populations of the developed world. Already today, some 1.8 million elderly or handicapped Japanese need daily care. The current population of Florida, where 18.5% of the total population is 65 or over, is a good indicator of the aging demographics expected for Japan by the year 2005, the population over 65 years of age will reach 18.5% of the total. .

At his retirement in 1991, Mr. Tsutomu Hotta, a highly respected former Attorney General and Minister of Justice, decided to do something about this problem. He created a private organization called the Sawayaka Welfare Institute in 1995, that has been implementing a special currency called Hureai Kippu (literally “Caring Relationship Tickets”). The unit of account is an hour of service.

Different kinds of services have different valuations (e.g. shopping or food preparation for an elderly person is valued at a lower hourly rate than body care for them). About 100 different non-profit organizations agreed to use the same standard unit. The people providing the services can accumulate the credits in a “healthcare time savings account” from which they may draw when they need credits for themselves, for example if they get sick. These credits complement the normal healthcare insurance program payable in Yen, the conventional Japanese national currency. In addition, many prefer to transfer part or all of their Hureai Kippu credits to their parents who may live in another part of the country. Two private electronic clearing houses have sprung up to perform such transfers on a regional level. The Japanese government is currently evaluating the possibility of creating an official national clearing house to make such transfers available for all types of healthcare time credits everywhere in the country.

One particularly important finding has emerged. Because they have experienced a higher quality of care in their relationships with care-givers, the elderly tend to prefer the services provided by people paid in Hureai Kippu over those paid with the conventional Yen. To the student in our vignette, Mr. Yamada is a sort of surrogate for his own elderly father, who lives in another part of the country and to whom he sends part of his time credits.

As of 1999, this is all happening as a complement to the National Health Insurance Plan, which covers the necessary professional health services payable in Yen. For instance, if Mr.Yamada needed regular kidney dialysis or a professional chiropractic session, this would be covered by Health Insurance in Yen. Mr. Hotta foresees that “about one third to half of the conventional monetary functions will be picked up by these new currencies. As a result, the severity of any recession and unemployment will be significantly reduced.”32

In an independent development, a health insurance company in New York state known as Elderplan, has been accepting since 1995 up to one quarter of its healthcare insurance premiums in Time Dollars, the brainchild of Edgar Cahn, a well-known lawyer and professor in Washington DC. Elderplan also operates a “Care Bank” where participants have already earned 97,623 hours of services up to June 1999. It started as a home repair service that fixed potential problems before they caused accidents. The Care Bank has as motto: A broken towel bar is a broken hip waiting to happen.33 Here again, the users report that they enjoy the quality in human relations made possible by this approach. During the year 2000, the Elderplan system is spreading beyond Brooklyn to Queens, Staten Island and Manhattan.

The “Hureai Kippu,” Elderplan, and several other community-enhancing currencies will be described in more detail in Chapter 6.

***

Summer

A World in Balance

It’s 1:00 p.m. For Anna, head of customer service for the largest telecommunications company based in Munich, the day is over. Using the high-speed metro, she returns to her other community, the village nestled in the foothills of the Alps, 15 minutes away.

She really enjoys her job, but she can’t wait to get back to her studio and continue her work with stained glass. She just started her most ambitious project to date–a large stained-glass window depicting seminal events in her little town’s history. At her village’s next arts festival, which lasts two weeks during the Summer, she will donate the window to the Permanent Learning Center.

All of Anna’s company colleagues have a similar lifestyle. Wolfgang in Finance is into African dance and has formed his own dance troupe; Birgit in MIS, whose passion is wood carving, is considering making the special wooden frames for Anna’s window; Reiner in Human Resources restores old lutes and other musical instruments.

Because complementary currency systems support both types of activities, everybody in Anna’s village has the choice to have a dual-career. Some people choose full-time work in a traditional corporate job. Some concentrate their energy on their artistic interests, earning mostly community currencies. Many combine the two because greater choice is available, and because life is simply more livable in a “World in Balance.”

With the growth in productivity that has resulted from the Information Revolution, Juliet Schor, associate professor of Economics at Harvard University asserts that “We actually could have chosen a four-hour day. Or a working year of six months. Or every worker in the US could now be taking every other year off from work–with pay.”

So why don’t we?

The closest prototype that we can find in the 1990s for a “World in Balance” is occurring in Bali and some other traditional societies. People visiting Bali are astonished by the unusually vibrant and artistic quality of daily life. Almost every man is an accomplished artist; every woman a graceful dancer; all find ways to be creative. Every village has 50 or more festival holidays held throughout the year, with elaborate ephemeral artful expressions.34 Houses have elegant carvings, landscapes are exquisite.

What is so different about Bali and the Balinese? What if the world, our cities, our lives, became more like those of Bali? Many tourists visiting Bali are not aware that the Balinese consider the performances they see as “practice sessions.” The “real performances” happen in the temple or for temple-organized activities. The Balinese dedicate between 30% and 40% of their working hours to the temple, which organizes the cooperative, caring, artistic, and religious activities. These are what I later define as the “Cooperative” dimension of life. Most Balinese adults also have a professional job where they spend the other two-thirds of their working hours–in what I call the “Competitive” economy, the only one we know in the West.

“Temple time” is part of a long tradition of a “gift economy” in Bali. In the Western world, during the current transition period from the Post-Industrial Age, we may not be ready for a pure gift economy.

Nevertheless, it is possible for our future to include a “Cooperative” dimension in everyday life. What if we needed only a transition tool, a process through which we can re-build community and our trust in a gift economy?

Communities around the world have already created and implemented several types of complementary currencies that are compatible with, even result in, a gift economy. Called “mutual credit” currencies, they can always be created in amounts that are sufficient, rather than scarce. In contrast with competition-programmed national currencies, they are not scarcity based. They are created by the participants at the moment of their transaction. For instance, if you perform a service of one hour for me, you get a credit of one hour and I get a debit for the same amount. A simple barter would occur if I did something in exchange for you that is also valued at one hour. But using the mutual credit currency, you can purchase fresh eggs at the farmers’ market, and I can cancel my debit with someone else. That means that we have created a true currency–one that is not artificially scarce. Whenever we agree on a transaction, we can always create the money.

One of the first scarcities to address is job scarcity. There are now 1,900 complementary currency systems operational in the world today, most of which have sprung up to generate local work in high unemployment areas. More than 400 communities in the UK have started their own electronic complementary currency system called the Local Exchange Trading System (LETS). Similarly, in Germany they are called Tauschring, in France Grains de Sel, and several hundred such grassroots projects are now operational in these countries as well. In the US, 39 communities have followed Ithaca, NY, in creating their own paper currency, redeemable only within the community. All of these systems will be explained in detail later.

These initiatives are often treated as marginal curiosities by mainstream media and academic circles. However, in New Zealand, Australia, Scotland and 30 different US states, regional governments have been funding the start-up of such systems because they have proven effective in solving local employment problems. The European Union is funding pilot complementary currency programs in four purposely very different settings and technologies: two in the countryside of Ireland and Scotland, and two in the major cities of Madrid and Amsterdam. In New Zealand, the Central Bank has discovered that complementary currencies actually help to control the overall inflation in the national currency. More about this will be presented in Chapters 5 and 8.

We can each only imagine what we would create if 40% of our working hours were available for “temple time,” whatever form that might take. Using this approach, would it not be possible for the Information Revolution to evolve into an authentic Age of Knowledge? What would each of us like to learn? What improvements would you like to make in your life?

Imagine what you could create on your own or with others.

***

Fall

A Bechtel Corporation Board Meeting in 2020

The following text is an extract of the minutes of the annual Board meeting of Bechtel corporation, the largest construction and civil engineering company in the world.

“The Board considered the two main investment projects on today’s agenda:

  • A 300-year nature restoration project of the Southern Himalayan watershed
  • A 500-year reforestation project of the sub-Sahara desert

The Board decided unanimously to implement the 500-year sub-Sahara project, given that the Internal Rate of Return on this project is clearly superior. The Chairman added that the contribution of this project to overall global climate stability has been an additional incentive for his own vote for this project.”

Most business decisions today are made with horizons of less than five years, if not from one quarter to the next. Even the “long bond,” the longest-term conservative investment available today in dollars, has a maximum horizon of 30 years. Under contemporary financial criteria, a decision like the one above is unthinkable.

A pragmatic currency system will be presented later that would make decisions of this kind not only possible, but completely logical. Under such a money system, long-term concerns would be the norm, the spontaneous response. These concerns would be not only compatible with financial self- interest, but driven by it. No regulations or artificial tax incentives would be required to motivate corporations and individuals to think and act with the proverbial “seventh generation” in mind.

There have been at least two civilizations which had embedded in their monetary systems a key feature that made it “profitable” for people to make investments for the very long-term. These two historical precedents are Pharaonic Egypt, and the “Age of the Cathedrals” (the Central Middle Ages of the 10-13th century Western Europe). In both cases, this same feature, known as demurrage (a form of negative interest which discourages hoarding in the form of currency), was operational for centuries. The record shows that people spontaneously created buildings and art-forms that were designed to last forever. You can still visit them today. This key mechanism behind such a money system can be replicated and efficiently adapted for the 21st century. Chapter 8 describes in detail how this is possible.

Of our bounty of 20th century creations, which ones will our descendants be able to visit in the year 3000?

If such a long-term oriented money system were operational today, what would be the “cathedrals of the 21st century”?

What would you imagine them to be? They don’t have to be temples or buildings.

***

Winter

Your Grandniece’s Trip to China

Your grandniece is passionate about early Chinese calligraphy and poetry. She has decided to improve her fluency in Mandarin Chinese by going for a six-month residency in China starting next year.

Here is her budget for this endeavor.

  • Airline travel: paid in Frequent Flyer miles that both she and her parents have accumulated
  • Local expenses: she has been saving her “Caring Relationship Tickets” over the past few years by taking care of two elderly neighbors in the university town where she studies. She will simply transfer her credits over the Net to be exchanged for the local currency of the Chinese university town where she plans to live.
  • As your Christmas gift, you have decided to add US $500 in conventional US dollars for incidental expenses that she may have along the way, and as a safety net for any unexpected emergency needs.

Having the option of using sufficiency-based currencies for part of our needs can make a big difference. A complementary currency clearing house could be operating globally on the Net even today. Its purpose would be to enable those participating in any type of complementary currency (LETS, Time Dollars, Hureai Kippu, etc.) to trade with each other over the Net, each using their own currency. Even the idea of your grandniece using complementary currencies as an exchange system during her trip is not new. The Global Eco-village Network (GEN), an association of eco- villages founded in 1994, recommends such joint projects and exchanges between the different participating communities.35

Complementary Currency systems and private payment systems can provide a useful safety net under the official monetary system. A spare tire may seem rather redundant–until you have a flat on the highway. In the monetary domain, the privately run “Golden Crown” payment system is used by a group of Russian corporations to barter amongst themselves. This is a real-life demonstration of just how useful a “spare tire” can be when the national currency gets into serious trouble.36 The same life-saving importance was demonstrated at the grassroots level with the availability of local currencies after the crash of the baht in Thailand during 1997-98, and the ongoing Redes de Trueque (literally “barter networks”) active in Argentina for years. Grassroots currencies are explored in Chapter 5 to 7.

Creating Sustainable Abundance with Complementary Currencies

Without throwing away the positive contributions of the existing system, we can add new possibilities. It is often said that all crises contain hidden opportunities. The Chinese ideogram for “crisis” even contains explicitly the root “opportunity”. The opportunity that will be described in the pages to come may seem as extraordinary as the crisis itself. You will discover how it is possible to turn the Time Compacting Machine into a Sustainable Abundance Machine. This can be accomplished by revisiting the prevailing interpretation of money, by understanding how money actually operates, and by acting upon that knowledge.

The core thesis of this book can now be restated more pointedly as follows: proven money innovations can solve the four “money questions,” summarized in Figure 1.3, and engender Sustainable Abundance within one generation. The key is to introduce–in parallel with the existing money system–complementary currencies that have already proven that they can contribute to solving these uncompromisingly tough questions.

A complementary currency refers to an agreement among a group of people, and/or corporations, to accept a non-traditional currency as a means of payment. They are called complementary because their intent is not to replace the conventional national currency but to perform social functions that the official currency was not designed to fulfill.

Together, the exchanges facilitated by the conventional national currency economies and the complementary currencies form what I will define as the Integral Economy. The Integral Economy includes the processes studied by traditional economic theory, and goes beyond it. For instance, it includes transactions in the 1,900 complementary currency systems already operational today in local communities in a dozen countries around the world.

Such are the money innovations that were the basis for the Four Seasons vignettes of 2020.

We can now begin to see how the Time Compacting Machine could be transformed into a Sustainable Abundance Machine. Figure 1.4 maps how the four cameo stories fit into this process.


Figure 1.4 Mapping the Four Seasons Vignettes to Transform the Time Compacting Machine into a Sustainable Abundance Machine

This book provides detailed evidence that such a mutation is a realistic possibility.

A Road Map to Your Money, Your Future

The first necessary step is to demystify today’s conventional national and international money system and identify the changes that are looming in that system. This is the purpose of Part One. Part One: : What is Money? lifts the veil around money to familiarize us with its nature, and with the creation and operation of conventional national currencies. In addition, the new money frontier– the “cybersphere”–is explored, in which many of the currency innovations are brewing. An inquiry is then launched into different possible futures for our money system and how they would reshape society. This last step uses scenarios that depict different worlds in the year 2020.

With an understanding of all this, it will become possible for you to perceive what is unique about the money innovations going on in the world, which is the subject of Part Two: Choosing Your Future of Money. This Part displays the extensive choice in non-conventional currencies operational today. You will learn how different objectives can be supported–or hindered–by a currency.

Specifically, the creation of work opportunities, the revival of neighborhoods, and the re-aligning of long-term sustainability with current financial interests, can all manifest by using particular currencies designed for such ends.

But let us begin at the beginning, by exploring the deceptively simple question “What is Money?”


PART ONE: What Is Money?

“Economics is about money, and that’s why it is good.”
Woody Allen
And money is about…what ?

“Money ranks as one of the primary materials with
which mankind builds the architecture of civilization”
Lewis Lapham37

“We invented money and we use it, yet we cannot…understand
its laws or control its actions. It has a life of its own”
Lionel Trilling38

When we think about money, we tend to take for granted its basic characteristics, which have remained unchanged for centuries. We are not likely to visit the hidden assumptions embedded in our familiar money system, and we are even less likely to re-examine them in search of solutions.

Part One surfaces our hidden assumptions about money. In doing so, it also brings to light new potentials for our interactions around money. It is not about how to make, invest, or spend money. There are already plenty of books about all of that. It is about the concept of money, and how different money systems shape different societies.

You will learn why fundamental changes in our money system have become inevitable. While these changes may seem frightening in their scale, they also hold the promise of unprecedented opportunity.

The Information Age promises to fundamentally change within decades our entire economy and payment habits. Whether gradual or cataclysmic, significant worldwide changes are underway in the realm of money. Well-known contemporary management expert Peter Drucker claims: “Every few hundred years in Western history there occurs a sharp transformation. Within a few short decades, society – its world view, its basic values, its social and political structures, its arts, its key institutions – rearranges itself, and the people born then cannot even imagine a world in which their grandparents lived and into which their own parents were born. We are currently living through such a transformation.”39

When no safety net has been prepared, experiencing such an unparalleled shift can be very frightening. Just ask any one of the one billion Latin Americans, Asians, or Eastern Europeans who are still reeling from their own very personal encounter with cataclysmic monetary change, that occurred as a direct consequence of a radical shift in power from their governments to international financial markets. James Carville, who directed Bill Clinton’s campaign in 1992, made the remark: “I used to think that if there was reincarnation, I wanted to come back as the President, or the Pope. But now I want to be the financial market: you can intimidate anybody.”

Nevertheless, this transition offers us also an unprecedented opportunity. When money changes, a lot more changes. Almost everything can become possible. With such a fundamental shift will come the opportunity for innovation far beyond what previous generations could even imagine.

Synthesis of Part One

Money matters. The way money is created and administered in a given society creates a deep imprint upon the values and relationships within that society. More specifically, the type of currency used in a society encourages–or discourages–specific emotions and behavior patterns.

Our prevailing system is an unconscious product of the modern Industrial Age worldview, and it remains the most powerful and persistent designer and enforcer of the values and dominant emotions of that Age. For instance, all our national currencies make it easier to interact economically with our fellow citizens than with “foreigners,” and therefore encourages national consciousness. Similarly, these currencies were designed to foster competition among their users, rather than cooperation.

Money is also the hidden engine of the perpetual growth treadmill that has become the hallmark of industrial societies. Finally, the current system encourages individual accumulation, and ruthlessly punishes those who don’t follow that injunction.

However, after centuries of an almost complete hegemony of our ‘normal’ national currencies (US$, Pound, Yen, Deutsche Mark, etc.) as the exclusive means of economic exchanges, the past decade has seen a re-appearance of various forms of private currencies.

For starters, up to one quarter of global trade is now done using barter: i.e. using no currency at all, national or other. Pepsi Cola, for example, ships its profits from Russia in the form of vodka, which it then sells in the US and Europe for cash. The French have built nuclear power stations in the Middle East against payments in oil.

In addition, new forms of corporate scrip are taking hold, such as the various frequent flyer systems, wherein in points or “miles” can increasingly be earned with, and used for, services other than airline tickets (e.g., taxis, hotels, long-distance telephone, etc.). These are currencies in the making for the “international traveling elite”. Further below the radar beams of officialdom is the remarkable and explosive growth of grass-roots complementary currencies already alluded to in Chapter 1.

What does all this mean?

Chapter by Chapter Outline

Money has always been mysterious. For thousands of years the mystery of money was religious in nature. Today, money remains shrouded just as effectively by academic jargon and esoteric equations. This is why in Chapter 2 we start by elucidating the mystery surrounding it. We must also understand the main characteristics of our current money system, and why it has been so naturally adopted worldwide during the Industrial Age.

Today’s fastest growing economy in the world is the cybereconomy. In 1996, an estimated 20 million Netizens made at least one purchase on the Net, resulting in $36 billion in sales. Projections by Price Waterhouse for the year 2000 reach $200 billion. Until recently, almost all payments on the Net have been done by credit card. Credit cards bills are normally paid by checks, a process that falls outside the Net. Hundreds of projects are underway to entirely computerize the traditional national currencies, as well as the newer forms of private currencies. For instance, the largest merchandiser on the Net, Cendant (1997 sales of $1.5 Billion), has already started issuing its own “netMarket cash” which is redeemable in over a million goods and services. In Chapter 3, we will show how this can and will transform our societies–to a greater extent than even those introducing the changes may realize.

By exploring contrasting scenarios, in Chapter 4 we will clarify how changes in our current money system could pull our societies in very different direction. Each scenario will depict a world where a different kind of currency has prevailed, and what impact this would have over a period of twenty years.

Before anything else, we need to establish the basics. The Primer that follows delineates the roles of the key players in today’s monetary system–banks, Central Banks, the International Monetary Fund, the Bank for International Settlements–and the recent developments in the global foreign exchange markets. This Primer will also provide you with a reference map necessary to understand the unprecedented changes that are reshaping the money system now and in the foreseeable future, and how such changes will significantly impact your life. If you are familiar with these topics, please feel free to skip the Primer, and go straight to Chapter 2. Otherwise, the Primer will bring you up to speed on how money is created and who controls it, and how the money world really works.

***

For readers who are not familiar with the technical mechanisms at the origin of money, the role of banks, central banks, the International Monetary Fund, The Bank of International Settlements and the recent developments in the global monetary system, it is recommended to read the Primer which is available in Appendix.

This text synthesizes in a fun and readable way how our money world really works, and will bring you up to date in this changing field.


LINKS TO OTHER CHAPTERS

Table of Contents

INTRODUCTION| CHAPTER 1: MONEY – THE ROOT OF ALL POSSIBILITIES | PART ONE: WHAT IS MONEY?

A PRIMER ON HOW MONEY WORKS

CHAPTER 2: TODAY’S MONEY | CHAPTER 3: CYBERSPHERE–THE NEW MONEY FRONTIER

CHAPTER 4: FIVE SCENARIOS FOR THE FUTURE

PART TWO: CHOOSING YOUR FUTURE OF MONEY | CHAPTER 5: WORK-ENABLING CURRENCIES

CHAPTER 6: COMMUNITY CURRENCIES

CHAPTER 7: SOME PRACTICAL ISSUES | CHAPTER 8: A GLOBAL REFERENCE CURRENCY – MAKING MONEY SUSTAINABLE

CHAPTER 9: A BROADER VIEW – THE TAO OF MONEY | CHAPTER 10: SUSTAINABLE ABUNDANCE | EPILOGUE AND PRELUDE

Endnotes

  1. Mesarovic, Mihaljo and Pesterl E. Mankind at the Turning Point: The second report to the Club of Rome (New York: New American Library, 1974).
  2. All the preceding data about aging trends come from a conference in January 1999 in the San Francisco Bay Area by Ken Dytchwald, founder of Age Wave Inc., and author of a/o. Age Wave, and Wellness and Health Promotion for the Elderly
  3. Data from Petersen, Peter G. “Gray Dawn: The Global Aging Crisis” in Foreign Affairs (January-February 1999)
  4. Petersen, Peter G. “Gray Dawn: The Global Aging Crisis” in Foreign Affairs (January-February 1999) pg. 43.
  5. All data in this sidebar from Petersen, Peter G. “Gray Dawn: The Global Aging Crisis” in Foreign Affairs (January- February 1999) pg. 44-45.
  6. Data in this paragraph from Petersen, Peter G. Ibid. Pg. 46.
  7. Killinger, Barbara Workaholics: The Respectable Addict (Toronto: Key Porter Books, 1991) pg. 7.
  8. “Job Stress Characterized as ‘Global Phenomenon’.” Oakland Tribune March 23, 1993, D-11.
  9. Greider, William: One World: Ready or Not (New York: Simon and Schuster, 1997; juxtaposition quoted in Success Digest March 1997
  10. William Bridges, author of Understanding Today’s Job/Shift in a conference in San Francisco, 1995
  11. This period has been labeled by historians “Europe’s First Renaissance” and “Europe’s Common People Renaissance” because of the unusual high standard of living of the common people.
  12. Quoted by Rifkin, Jeremy in “After Work” Utne Reader May June 1995 pg. 54. Several of the examples provided above are also quoted in that article.
  13. Dr. Andrew Dlugolecki, director of the CGNU, sixth largest insurance company in the world, in his report to the 6th Conference of Parties (COP 6) at the UN Framework Convention on Climate Change, November 23, 2000. See http://ens.lycos.com/ens/nov2000/2000L-11-24-11.html
  14. Report of the Associated Press, filed by Donna Abu-Nasr on November 27, 1998.
  15. USA Today September 18, 2000 pg 11D.
  16. “Klimawandel stoppt den Tourismus in Südeuropa” (Nienburg: Kreiszeitung, Donnerstag 17. Juli 2003) pg 1.
  17. “Coral Reef Degradation in the Indian Ocean” (CORDIO study) reported in The Economist (October 28-November 3, 2000) pg. 44.
  18. Nuttal, Nick “Climate Change lures butterflies here early” The Times May 24, 2000 pg. 5; reporting on a study performed by the Centre for Ecology and Hydrology at Monks Wood, Cambridgeshire from 1976 to 1998 and published in Global Change Biology.
  19. Davidson, Keay “Ice of Antartica May be Melting” San Francisco Examiner August 2, 1998 pg. A4.
  20. The Economist (January 1, 1999) pg. 32.
  21. Caffrey, Andy “Antartica’s ‘Deep Impact’ Threat” Earth Island Journal (Summer 1998) pg 26.
  22. Warning to Humanity
  23. Perlman, David “Warning of Impact of Global Warming: Scientists forecast economic disruptions.” San Francisco Chronicle (Friday, January 29, 1999) pg A-4.
  24. Adbusters: Journal of the Mental Environment (Winter 1997). pg. 41
  25. as receiver of the John Bates Clark Medial, a prize given to the best economist under the age of forty.
  26. Krugman, Paul “The Return o Depression Economics” Foreign Affairs (January – February 1999) pg. 42-74.
  27. Russell, Peter The White Hole in Time (New York: Aquarian/Thompson, 1992) pg. 198
  28. Dee Hock, Founder and Chairman Emeritus VISA International
  29. Meadows, Donella, et al. Beyond the Limits (Post Mills, Vermont: Chelsea Green Publishing, 1992) pg 191 italics in original.
  30. Oates, J. Babylon (London, 1979) pg. 25
  31. Sustainability as a process as opposed to a passive state has been identified earlier in the “Brundlandt Report” prepared for the World Commission on Environment and Development (WCED) entitled Our Common Future (Oxford: Oxford University Press, 1987) and in Meadows, Donella, et al. Beyond the Limits (Post Mills, Vermont: Chelsea Green Publishing, 1992)
  32. In a personal interview of Mr. Hotta conducted by the author in February 20, 1999.
  33. US News and World Report December 30, 1996 pg. 72.
  34. There are more than a thousand temples in Bali. Each temple has its odalan festival every 210 days, which last up to 3 days each.. In addition there are cyclical festivals at every full moon, every 4 yeass, every 10 years, every 100 years. There are also home-based ceremonies, and 5 or 6 major ceremonies in each person’s life, the most important of which is the cremation which can take more than a month to prepare. All in all, hindu Balinese men spend 30%, and women up to 40% of their time preparing for or performing in “temple time”.
  35. GEN includes a series of eco-villages around the world, including the Findhorn Community (Scotland), The Farm (Tennessee, USA), Lebensgarten (Steyerberg, Germany), Crystal Waters (Australia), Ecoville (St. Petersbrugh, Russia), Gyûrûfû (Hungary), The Ladakh Project (India), the Manitou Institute (Colorado, USA) and the Danish Eco-Village Association. They have regional headquarters in Australia, Germany, the USA and Denmark.
  36. The Russian “Golden Crown’ payment system is one of three case studies in Krüger, M. And Godschalk H. Herausforderung des bestehenden Geldsystems im Zuge seiner Digitalisierung – Chancen für Innovationen (Karlsruhe: Institut für Technikfolgenabschätzung und Systemanalyse November 1998).
  37. Lapham Lewis: Money and Class in America: Notes and Observations on Our Civil Religion (New York: Weidenfeld and Nicolson, 1988)
  38. Trilling, Lionel: The Liberal Imagination (New York: Viking, 1950)
  39. Drucker, Peter The Post-Capitalist Society (Harper Business, 1993) pg. 1