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The Future of Money
An interview with Global Visionary Bernard Lietaer
by Tim Miejan
Bernard Lietaer has some startling but pertinent observations on money systems
worldwide. Author of The Future of Money: Creating New Wealth, Work and a Wiser World,
he not only understands how our current monetary system creates greed, competition,
and scarcity, but he offers advice on how we can live in abundance and sustainability
by creating local complementary currencies.
Lietaer, former senior central bank executive in Belgium, is speaking in St. Paul,
Minn., at 7 p.m. Monday, Nov. 18, in the John R. Roach Center for the Liberal Arts
at the University of St. Thomas, St. Paul. Tickets are $12 in advance online at www.lumaterra.com/lietaer.html, and they will be available for $15
at the door. Call Chris LaFontaine at (651) 270-7538 or e-mail chris@lumaterra.com for more information.
As a senior central bank executive in Belgium, he was closely involved in the design
and implementation of the mechanism that led to the European single currency (Euro).
He was subsequently identified by Business Week as the world's top currency trader,
while general manager of the most successful off-shore currency fund. He was a professional
consultant for more than a dozen years to multi-national corporations on four continents;
and moved to the other end of the spectrum by advising developing countries in Latin
America on how to optimize hard currency earnings.
Lietaer also served as a professor of International Finance and president of the
most comprehensive and cost-effective electronic payment system in the world. His
book The Future of Money, and its sequel, The Mystery of Money, are the basis of
an international television series now being planned.
"I propose," Lietaer says, "that we choose to develop
money systems that will enable us to attain sustainability and
community
healing on a local and global scale. These objectives are in our
grasp within less than one generation's time. Whether we materialize
them or not will depend on our capacity to cooperate with each
other to consciously reinvent our money."
The EDGE conducted an interview with Liatear, who answered questions by e-mail while
traveling on a train in Japan.
In your book, The Future of Money, you describe a global transition taking place
in connection with currency. Please give us a brief idea of some of the things happening
that most of us are not even aware of.
Bernard Lietaer: Here are two examples of recent money phenomena that most people,
even some monetary experts, are often overlooking:
The monopoly of the conventional national currencies has already ended, both in commercial
exchanges and in the social domain. For example, the World Bank and the Economist
estimate that more than $1 trillion in international trade is now performed as "countertrade"
(international barter, not using any national currency in the exchange). That is
more than 10 percent of global trade, and this type of trade is growing at 15 percent
per year, three times faster than normal currency denominated exchanges.
Another commercial example: frequent flyer miles have evolved from a simple loyalty
marketing gimmick into a currency widely used to buy not only airline tickets but
also services from hotels, restaurants, taxis, car rentals or long-distance phone
companies. The number and uses of such private currencies, called "loyalty currencies"
is growing everywhere.
Finally, and most important in terms of its societal impact, there is a global grass-root
movement of social purpose currencies: people using a local currency to solve local
problems. In 1990, there were less than 100 such systems worldwide, but today one
can count more than 4,000 communities that have started using local currencies to
solve a wide range of problems ranging from elderly care, mentoring of kids, environmental
clean up, or improving the competitive chances of locally owned small businesses
against the big commercial chains.
Contrary to an implicit hypothesis in economic theory, there is
clear evidence that money is not "value neutral." Specifically,
the kind of money people use in their exchanges has an impact
on both the type of transactions that are performed and on the
relationships among the people using it. I show that the loss
of community
that so many people regret in the so called "developed world"
is in fact directly due to the kind of currency we use among its
members. Indeed, many case studies show that the use of conventional
national money within a community
tends to destroy it. In contrast, there are new types of "community
currencies" that do exactly the opposite they heal and even
create community
where there was none before.
What factors are causing these changes? Perhaps the shift from an industrial to
informational society?
Lietaer: Exactly. According to the massive research of Glynn Davis (in The History
of Money from Antiquity to Today) there have been only two significant technical
innovations in money during the 5,000 years of its recorded history. They are respectively:
first paper money (originally invented in China, introduced during the Late Renaissance
in Europe, and now generalized around the world); and right now, electronic money.
What is less generally understood is that such "technical innovations"
also have an impact on who ends up issuing money. Paper money enabled the shift of
money creation from sovereigns to the banking system. My view is that electronic
money is now, in turn, enabling the shift of money creation from the banking sector
to a wide range of new private actors, including corporations or local communities.
How is the Bush administration contributing or not contributing to changes taking
place with regard to U.S. currency systems? Do American interests in the Middle East
play a factor?
Lietaer: In the domain of the conventional global money system, the current U.S.
administration is simply continuing the strategy of previous administrations labeled
under Nixon as "benign neglect." In clear, we are on a de facto global
dollar standard, which gives the U.S. major advantages in today's international monetary
arrangements. The dollar is the dominant currency used in reserves of the Central
Banks, making it, therefore, possible for the U.S. to import indefinitely from the
world without having to export anything but dollars to pay for it. Hence, there is
no interest in addressing any of the global monetary issues, such as currency instability
or systematic crises, as any change might threaten the current unusual advantage
of the dollar.
The Bush administration hasn't done anything about non-conventional local currencies
either, in stark contrast with many individual U.S. States. By my last count, there
are at least 31 states that have started to actively promote one particular type
of complementary currency the Time Dollar to address local social issues, simply
because it has proven more cost-effective than the projects using conventional currencies.
I don't think that the Middle Eastern policies have anything to do with either one
of these developments.
How does our currency system relate to greed and scarcity?
Lietaer: Two key features of our conventional money system systematically encourage
these two collective emotions. Bank-debt money, to keep its value, needs to be kept
scarce that is a key role of the Central Banks such as the Federal Reserve in the
U.S. The second feature is interest, which is built into our money. It automatically
concentrates wealth. It also amounts to a systematic incentive to indefinitely accumulate
more and more money.
There is also a deeper collective psychological mechanism that explains why these
two emotions are now so generalized, and why we accept them as normal features in
our money system. This is a process best understood through Jungian archetypes. Greed
and the fear of scarcity turn out to be the shadows of an ancient archetype that
relates directly to fertility and money: the Great Mother archetype. As this archetype
has been repressed for several millennia in Western society, we have ended up building
its shadows into our money system itself. To fully develop this topic would go beyond
the scope of this interview. [There is a whole book on this precise topic entitled
The Mystery of Money. See a synthesis in the "Beyond Greed and Scarcity"
interview posted in the publication section of the website www.transaction.net/money/
].
What lifestyle changes is this vast transition in our currency
system causing for us?
Lietaer: That depends a lot on the extent each of us decides
to participate in the new money systems that are now becoming
available. There is a lot of local activism going on today as
people try to resolve their community's
problems ranging from social or environmental breakdown, education
issues or elderly care.
I see the community
currency phenomenon as a sign that thousands of communities are
starting to understand the connection between such problems and
our money system, and have decided to do something about it. It
is also encouraging that even at this early stage such systems
have already proven that they are effective at addressing such
issues, without having to rely on governmental initiatives or
taxpayer's money.
If you choose not to participate in any such initiatives, this process won't affect
your life. But those who do already participate report that these innovations have
enabled them to revitalize their communities, change their relationships with their
neighbors and help to make their world a gentler one.
What opportunities exist for the average consumer as a result
of this transition?
Lietaer: This isn't about consumer behavior. It is about citizenship,
community
healing and making more effective use of the local resources to
resolve local problems. Make a list of all the projects that you
think are worthwhile, but aren't happening because of lack of
money. You and your friends can now do something about them: starting
your own money system to make those projects happen.
You refer to "Sustainable Abundance" in your book. What does that mean
and how does it affect us?
Lietaer: Many people believe that we have to choose between sustainability and
abundance. They suggest that the only way out is for all of us to return to a "simpler
life," which would entail a lot less comforts or conveniences.
I believe this view to be valid only for certain aspects of our lives. It is, of
course, true that for example more cars mean automatically more traffic congestion,
or that using up more timber requires cutting down forests. However, there are fortunately
also lots of domains where such a linkage isn't so mechanical. For instance, there
is an infinity of learning that could be done; or an infinity of creation or restoration
of beauty.
Nevertheless, educational opportunities or environmental restoration remain scarce
in today's world. The scarcity in those domains is imposed by our money system, not
by nature. And those domains are also where complementary currencies could play a
key role.
What do you mean by "complementary currencies" and is there a working
model now that you would cite as an example of what we can expect?
Lietaer: A complementary currency is a currency that operates in parallel with
the conventional currency, like the dollar, and fulfills some needs that the conventional
currency hasn't satisfied.
The most interesting ones from a societal viewpoint are the social
purpose complementary currencies. They provide a way to solve
problems ranging from elderly care to local unemployment, the
restoration of a spirit of community
in a well-off neighborhood near Washington, D.C., to getting kids
off drugs and crime in ghettos in Chicago. They operate in Mexico
City and in fishing villages in Canada. They use low-tech paper-based
systems in Berkeley, Calif., to high-tech smart card applications
in Asia. They were designed for small groups of 50 people in Australia,
a city of 2.3 million people in Brazil or prefectures of 10 million
in Japan.
While local activists on a shoestring budget have started most of these systems,
some governments now actively support some of these systems, as well:
The city planning office of Curitiba, the capital city of Paraná in Southern
Brazil, has launched and managed for 25 years a local currency that is providing
now up to one third of all income of its citizens, and has been a key for its remarkable
development as the "most ecological city in the world" by UN standards.
In Australia and New Zealand, local authorities are funding local currency start-ups
in high unemployment pockets.
In the U.S., the IRS has declared one such system (Time Dollars) officially tax-free;
and 31 states now pay their own employees to start up such systems
In Japan, the Head of the Services Department of the Ministry of International Trade
and Industry (MITI) has started 40 different experimental "eco-money projects"
to choose the models that would be most appropriate for general application in the
country.
In the UK in 2001, the Blair government financed a £500,000 start-up for a
Time Bank in London.
Notice that I talk about "complementary currencies," not about "alternative"
ones, because their objective is not to replace the dollar, but to operate in parallel
with it.
Why do you anticipate that without such complementary currencies our current system
could crash?
Lietaer: The current conventional money system has become systematically unstable.
The World Bank has made an inventory of no less than 87 countries that have undergone
a major monetary crash during the past 25 years. And there is no reason to believe
that there will be fewer monetary crises in the future: the real question is simply
when and where, not whether.
Europe and the U.S. are relatively complacent about such a risk, because neither
has been hit seriously with this problem. But the volume of speculative currency
activity is such today that no country however big it is should feel immune. The
daily volume of foreign exchange transactions is now a multiple of all the reserves
of all the central banks of the world together, including all the gold reserves of
Fort Knox.
However, contrary to what your question seems to assume, I am actually not claiming
that complementary currencies would stop a crash in the conventional currencies.
What I do claim is that if there is a monetary crash, they can play the role of a
safety net below the conventional system. In Argentina today, for example, the bulk
of what remains of the economy is operating with "creditos," a series of
local complementary currencies. Market days are organized all around the country
where only such creditos are accepted.
Why did you write The Future of Money?
Lietaer: My old friend Willis Harman, the founder of the Noetics Institute in
California, is the one who told me one day: "Bernard, you have been trained
for 25 years to have a unique view on money systems. You need to write a book on
that view." He was referring to the fact that my career happens to have taken
me to a series of typically mutually exclusive ends of the spectrum of money systems.
It includes positions such as central banker and general manager of currency funds;
senior consultant to both multinational corporations and developing countries; university
professor and president of electronic payment systems. Each one of those positions
gave me a different viewpoint often a contradictory viewpoint on money systems. The
Future of Money is a synthesis of these various views and experiences into a coherent
whole.
You will be in the Twin Cities speaking about the ideas in your book. What ideas
will you be sharing with people that they can take home and utilize in their lives?
Lietaer: People allocate a great proportion of their 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? What I hope to be able to clarify for you from
the Twin Cities are the following three points:
You will gain understanding of the real workings of the money world, expressed in
layperson's language.
You will be able to make up your own mind about questions like:
- 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 health care 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?
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. In short, you can create your own "Sustainable Abundance."
For more on Bernard Lietaer, go to www.transaction.net/money/bio/lietaer.html.
For more on the Time Dollar, go to the Time Dollar Institute (www.timedollar.org).
Tim Miejan is editor
of The EDGE. Contact him at (651) 578-8969 or e-mail editor@edgenews.com
Copyright (c) 2002 Tim
Miejan
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