Rethinking Money Read online

  More praise for Rethinking Money

  “You have no idea what money is. Read this book and find out how simply changing our money system will lead to a more sustainable and peaceful society.”

  —Jurriaan Kamp, Editor-in-Chief, The Intelligent Optimist

  “Bernard Lietaer and Jacqui Dunne’s clear and potent voice tells the story of our distorted and dysfunctional money system and how we can finally free ourselves from it and find our way to the future we yearn for. This stunning book should be required reading for every person who wants a world that works and a sustainable future for all of life.”

  —Lynne Twist, author of The Soul of Money

  “Rethinking Money does a brilliant job of eradicating the concepts and stories that our economists and other professionals in the field hold dear. The authors write that ‘money is our last taboo,’ but they don’t recommend abolishing the fiat zeitgeist. Rather, they wisely call on the various new currencies and other monetary innovations to complement the existing system.”

  —Nigel Seale, former worldwide Chairman, Earth Day International, and founder of Earth Day Canada

  “Rethinking Money is required reading for anyone who is serious about transforming our current unsustainable economic system to one where people and planet can prosper. This is a brilliant analysis of our current monetary system and its pitfalls. More importantly, the authors strategize the way forward with solutions that not only rethink money but revalue human beings, long-term planning, and our planet.”

  —Georgia Kelly, Executive Director, Praxis Peace Institute

  “In the midst of the confusion created by today’s crises, there are few people who can provide viable solutions that not only serve our local communities but also address the global economy. Bernard Lietaer and Jacqui Dunne are such a brilliant force for good.”

  —Mariana Bozesan, PhD, integral investor and author of The Making of a Consciousness Leader in Business

  “The mission of business—the mission of civilization—is to further the path of development that began in nature. We must develop a human ecosystem where we use less and have more. The monetary ecosystem proposed in Rethinking Money makes it possible and provides long-awaited solutions to the crises we face such as climate change, worldwide violence, and the chasm between rich and poor. This book is a must-read.”

  —Tachi Kiuchi, Chairman, E-Square Inc. and Future 500

  “The portrait of an emerging world where issues of lack, intolerance, degradation, and war are replaced by sustainable abundance and economic justice for all is balm for the soul. This shift is brought about, in large part, by simply rethinking money.”

  —Sherry Ruth Anderson, coauthor of The Feminine Face of God

  “The authors have expertly revealed new distinctions in the monetary domain but without the usual economic explanations of dry theory and abstraction. This book is for anyone who wonders why the system is failing us and, perhaps more importantly, what to do about it.”

  —Julio Olalla, founder of Newfield Network and author of From Knowledge to Wisdom

  “An instant classic! Lietaer and Dunne explain how and why our monetary system fails to put supply and demand together, subsidizes and promotes intolerable and unnecessary disparities of well-being, entrenches unearned privilege, undermines democracy, creates boom-and-bust cycles, and rewards unsustainable, destructive growth… Without undermining or vilifying all that money presently contributes, they provide a guided tour to an array of actual alternatives like time banking and complementary currencies to create a sustainable, more equitable monetary ecosystem.”

  —Edgar Cahn, creator of Time Dollars, founder of TimeBanks USA, and cofounder of the National Legal Services Program

  “Rather than just blaming somebody—dumb politicians, greedy corporations, and banksters—Lietaer and Dunne show us the real issue: a system and a technology that are just built on agreements. And they show how we can change them to fit our real needs, live well, and save the planet in the process.”

  —Paul H. Ray, PhD, coauthor of The Cultural Creatives

  “In a time in which money has become a form of madness, this remarkable book offers profound understanding and guidance to the creation of a monetary ecosystem that can build both a better self and a better world. The rethinking of money is one of the most important things we have to do, and the authors succeed brilliantly.”

  —Jean Houston, PhD, author of Jump Time and A Passion for the Possible

  “New currency systems will not solve all the problems generated by physical growth on a finite planet. But we will have zero chance of creating a more satisfactory global future if we do not create new mechanisms for facilitating commerce. Rethinking Money is an incredibly practical and inspiring guide for how we could do that.”

  —Dennis L. Meadows, coauthor of The Limits to Growth

  “The new understanding this book offers is critical because economics has become the dominant—and increasingly only—discipline with which important decisions are being made. This is a must-read for anyone who wants to be part of the timely conversation on how to move forward to create the just, sustainable, and equitable world we all desire.”

  —Thom Hartmann, internationally syndicated talk show host and author of twenty-four books

  “Lietaer and Dunne describe the many thousands of innovative currencies in use by communities worldwide and how these currencies are facilitating the needed transition of human societies to more peaceful, sharing, prosperous, and sustainable futures.”

  —Hazel Henderson, President, Ethical Markets Media (USA and Brazil), and author of Ethical Markets, Planetary Citizenship, and Building a Win-Win-World

  RETHINKING

  MONEY

  RETHINKING

  MONEY

  HOW

  NEW CURRENCIES

  TURN SCARCITY INTO

  PROSPERITY

  Bernard Lietaer

  and

  Jacqui Dunne

  Rethinking Money

  Copyright © 2013 by Bernard Lietaer and Jacqui Dunne

  All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Permissions Coordinator,” at the address below.

  Berrett-Koehler Publishers, Inc.

  235 Montgomery Street, Suite 650

  San Francisco, California 94104-2916

  Tel: (415) 288-0260, Fax: (415) 362-2512

  www.bkconnection.com

  Ordering information for print editions

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  First Edition

>   Hardcover print edition ISBN 978-1-60994-296-0

  PDF e-book ISBN 978-1-60994-297-7

  IDPF e-book ISBN 978-1-60994-298-4

  2013-1

  Cover/jacket Designer: Nicole Hayward

  Cover art: Composite of images © iStock/perets, iStock/James Lee, and Nicole Hayward

  To all the monetary innovators

  and pioneers who’ve been dreaming

  and working for a better world

  CONTENTS

  Foreword

  Introduction: From Scarcity to Prosperity within a Generation

  PART ONE SCARCITY

  1 The Failure of Money: The Competitive Society

  2 The Myth of Money: What It Really Is

  3 A Fate Worse Than Debt: Interest’s Hidden Consequences

  PART TWO PROSPERITY

  4 The Flying Fish: A New Perspective on Money

  5 The Future Has Arrived But Isn’t Distributed Evenly … Yet!

  6 Strategies for Banking

  7 Strategies for Business and Entrepreneurs

  8 Strategies for Governments

  9 Strategies for NGOs

  PART THREE RETHINKING MONEY

  10 Truth and Consequences: Lessons Learned

  11 Governance and We, the Citizens: An Ancient Future?

  12 Our Available Future: The Cooperative Society

  13 Rethinking Money: From Scarcity to Sustainable Abundance

  Notes

  Bibliography

  Acknowledgements

  Index

  About the Authors

  FOREWORD

  John Perkins, author of Confessions of an Economic Hit Man

  We have entered revolutionary times.

  People across the globe have lost faith in the ability of government and business leaders to resolve the problems facing humanity. The global economic depression has shattered the lives of Andean peasants, African fishermen, corporate executives, and the average household alike. Despite claims that the current economic malaise is ending, the general public remains unconvinced, suspicious, and shaken. The promised “recovery” is uneven and uncertain; monumental issues still remain to be resolved.

  In our cash-strapped economy, privatization is proffered as a solution for many of our financial woes. The fire sale is so intense that we cannot be faulted for thinking that there is a going out of business sign over the doors of governments on every continent.

  Officials at all levels are hocking whatever they can—roads, bridges, national monuments, prisons, and even water—to stave off what seems like inevitable bankruptcy. Furthermore, and perhaps most disconcertingly, the very foundations of our social contract, the institutions we once believed would always be honored such as educational and social services, are gutted and sold to private companies. Today, the U.S. taxpayer supports more privately owned soldiers in Afghanistan than members of our national military. Although the public is told that these solutions are more efficient, the fact is they are usually more costly in the long run. Government ownership of these sectors has served us extremely well. Against this emerging social and economic backdrop, part of the agenda of the Economic Hit Man that unfortunately worked so well in other parts of the world, taking advantage of developing countries to enslave them with indebtedness to international financial institutions, has come home to roost in what is referred to as the “developed world,” including the United States.

  Circumstances like these generate revolutions. The Agricultural Revolution. The Industrial Revolution. The American Revolution. We have entered such a time. Future historians, I believe, will define this as a Revolution in Consciousness. People around the world are waking up to the fact that a very few extremely wealthy individuals are enslaving the rest of us. The shackles take the form of the currencies and debt that are interwoven with global monetary systems.

  Rethinking Money: How New Currencies Turn Scarcity into Prosperity shines a bright light on the problems. It exposes the fallacies of privatization, austerity, tax reform, banking legislation, stimulus packages, and so many other fancy-sounding strategies, and illuminates a path toward a sane and sustainable future. Writing for the layman, the authors explore a largely unexamined culprit—the monopoly of our centuries-old monetary system. They reveal its primary role in the current crisis. They then proceed to answer the essential question: What can we do about it? They illustrate how new currencies can resolve not only the inadequacies of regular money, but also how they can energize new behaviors and outcomes with incentives that will help create the world we fervently desire—for ourselves and future generations.

  The monetary innovations described in these pages remove the creation of money from the hands of the banking system. The power returns to communities operating at different levels of society. This allows for the linkage of resources in a given locality to the unmet needs of that community. The ingenuity of the local population can be galvanized; with their own money they are empowered to create the transformations they desire and need.

  Surprisingly straightforward in their clarity and simplicity, Lietaer and Dunne point out that money is a human invention. Our current monetary system was designed some 300 years ago, during an era that knew nothing of natural limits and had a completely different set of objectives and priorities. It’s a tool that should be serving us, rather than being our master. And since it is a man-made construct, it can be re-thought, re-imagined, and redesigned.

  None of this is mere theory. The transformation of money and thus our culture and society is underway. This inspirational book chronicles stories of ordinary people and their communities solving critical problems by using new money systems in tandem with conventional ones. The stories range from addressing hunger to revitalizing neighborhoods, from the crisis of health care to creating work, from providing education for all to the building of sustainable networks.

  This is a book that will strike a chord with readers eager to find meaningful, thought-provoking solutions that can be implemented right now—readers who want to take part in this new Revolution.

  Introduction

  FROM SCARCITY TO PROSPERITY WITHIN A GENERATION

  “On the morning after the Depression a man came to work, building a house, and the foreman said to him, ‘Sorry chum, you can’t work today. There ain’t no inches.’ The man said, ‘What do you mean there ain’t no inches? We got lumber, we got metal, we’ve even got tape measures.’ The foreman said, ‘The trouble with you is you don’t understand business. There are no inches. We have been using too many of them and there are not enough to go around.”1

  Like the foreman in this famous allegory about money, everyone is missing the point. Most of us fervently believe that our current financial woes and tribulations are occurring because there simply isn’t enough money to go around. From this limited vantage point, the usual solutions for scarcity are trotted out, such as austerity measures, cutbacks, and privatizations. The rhetoric on all sides of the political divide is stale and has grown cold, turning glacial and unmovable in its stance. Meanwhile, there is real suffering and anguish among ordinary people, and the rainwater in the streets’ gullies turns red with protesters’ blood.

  It’s time to rethink money. And that’s what this book is about.

  Money is to humans what water is to fish. Humanity exists in an unrelenting flurry of monetary transactions that seem as natural and inscrutable to us as how one might imagine a fish to understand its aqueous environment—it’s taken totally for granted. In the case of money, its dynamics and distinctions are obfuscated or forgotten over time, and further complicated by the fact that the professionals in the field, economists, never actually define what money is; they just describe what it does: how it plays the role of a unit of account, a store of value, a medium of exchange.

  At present, our unexamined money system perpetuates scarcity and breeds competition. Are you aware that money is created out of nothing, as bank debt? And how that particular process of creation breeds systematic compet
ition among its users? Did you know that the prevailing money system generates several other harmful consequences, including short-termism, compulsory growth pressure, cyclical recessions, unrelenting concentration of wealth, and erosion of social and physical or natural capital? All these factors together create a wholly unsustainable financial structure that is, indeed, disintegrating.

  So, how did we get here?

  Modern money, the type we use today, was invented in a very different time with a different worldview and another set of priorities and challenges than we have today. Money is not a product of nature, something that grows on a tree and can be harvested. Rather, modern money is a human construct that was conceived and fashioned back in the 1700s in Europe and then evolved, first in England, to become the engine for the Industrial Revolution. Up until that point, the vast majority of people eked out meager existences, while real wealth was obtained mainly through the spoils of war or colonization, marriage or inheritance.

  Through the emergence of modern central banking and its conventions during this time, it was possible to make money out of money. This gave birth to the new merchant and middle classes.

  Soon money became the tool empires used in a global dash for assets in a world that didn’t seem to lack for earth, water, air, and natural resources. A contrivance of competition, it pitted one against the other in a fabricated Darwinian contest of survival, reflecting and perpetuating the values and the Zeitgeist of that time.

  This epoch produced remarkable advances, thrusting society out of the shackles of superstition and stagnant social order that had preceded it. It brought about the rigor of science founded in that which could be proven, rather than divine dogma. It enabled the individual, no matter how lowly his birth, to scale the heights of his unbridled imagination and keen ambition through learning and labor.

  The mercantile miracle over time became codified as a success story. Those who succeed are free to take their share of the profits after taxes, and those who suffer losses have to bear consequences such as humiliation, bankruptcy, and possible litigation. This has brought about unmatched attainment of wealth, facilitated through competitive markets and driven by a competitive financial system, which, in turn, has spurred on even greater striving for more innovation, ingenuity, and originality. This is the underpinning of the great American dream, which has been triumphantly exported to the rest of the world after the fall of the Berlin Wall and rise of the Iron Curtain. Today, for instance, China, India, Brazil, and Poland, with their meteoric growth and the rise of their own meritocracies, are prime examples.