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Newsletter No. 5 - December 2004

Links to other Newsletters can be found here.


1. Money Values and Moral Values

2. Economic Research Council

3. Welcome thinking from the Bishop of Liverpool

4. What's happening to the Dollar? and why does it matter?

5. FEASTA Review No.2

6. A well-being manifesto

7. World Future Council

8. "To Blazes or Jerusalem?"

9. "The Natural Step; Towards a Sustainable Society"

10. Could your website be improved?

1. Money Values and Moral Values

My last newsletter mentioned a "Markets and Morality" conference planned by the Scientific and Medical Network for 13 November. It was cancelled owing to lack of interest. Perhaps people thought it would just be a sterile debate for and against the facts of economic life.

If so, they were wrong. Two seriously important questions would have been discussed.

(1) Do money values have to conflict with moral values?

(2) Why do they conflict with them now?

The answer to the first must be, Surely not. Are humans so dumb that we can't develop money systems reflecting the values we believe in?

An answer to the second question is that today's money values conflict with moral values because the money system works in the interests of the people and nations which manage it. That is true. But we need to understand a little more, in order to see how to put it right.

Most of the items in this newsletter are concerned with that in one way or another. "The Role of Money and Finance: Changing a Central Part of the Problem into a Central Part of the Solution" deals with it at greater length - see

A version will also be found in FEASTA Review No 2 - see Item 5 below - under the title "Using common resources to solve common problems".

2. Economic Research Council

Recently, going through old papers, I came across correspondence with the then Hon Secretary, Edward Holloway, about a talk I gave to the ERC on "Profits and Social Responsibility" in 1974.

My next involvement with the ERC was 28 years later, when it published "Forward with the Euro - AND the Pound" in 2002 - see

My contact was Aidan Rankin - - who deals with ERC Research and Publications. (In his recent article on "Punch and Judy Politics" - in the October 2004 Ecologist - he argues that adversarial politics encourages stereotyped thinking, shutting off intellectual and practical solutions, and he calls for an end to point-scoring political confrontation.)

ERC historical publications (1939-1993) are now on its website (, thanks to Dan Lewis ( Those reflecting the prime ERC objective, "to promote education in the science of economics with particular reference to monetary practice", will interest monetary reformers.

Among them is "Government Debt and Credit Creation" (1981) - in which Edward Holloway played a major part. It said:

"Recognising that the payment of interest at present high levels places an intolerable burden on the productive sector of the economy, the Economic Research Council decided to initiate an enquiry into the way in which money in all forms comes into circulation. We have been led to the following main conclusions:

(1) That the State should create all the currency and credit needed to satisfy the spending power of the Government and the buying power of consumers:

(2) The power of the banks to increase the amount of credit money in circulation should revert to the State. Had this been done since 1945 some £30,000 million could have been saved by the Government if they had maintained their historic privilege of themselves issuing all forms of money including credit .

It is right that the banks should be fully recompensed for the valuable services they perform, but if we examine these closely we would see that this is essentially book-keeping. It is misleading to describe the banks' services in financing Government expenditure out of newly created credit money as "lending". The word should not have been used in this connection as it creates a false picture of what really happens. As a result we have allowed private institutions to usurp the right to issue our money and to make very handsome profits thereby."

3. "Paying what we owe: People should be taxed on what they use of the earth's resources, not what they earn"

Welcome thinking from the Church. The above article by the Bishop of Liverpool appeared in "The Guardian" on 22 November -

As he says: "The most substantial tax revenue comes from taxing income, especially labour. The time has come for all political parties to rethink fundamentally this balance. We should gradually shift from taxing labour to levying taxes on the use of original resources."

4. What's happening to the Dollar? and why does it matter?

Also on 22 November, in a Times article "The Avalanche is coming", William Rees-Mogg predicted that "the dollar could pitch the world into a financial catastrophe". Since then the dollar has continued to slide.

Sooner or later the world will decide to stop selling goods and services to the US for dollars which it creates out of nothing and can devalue as it decides. Other peoples, poorer and less wasteful than Americans, currently pay them at least $400bn a year for the use of these dollars as international currency.

The experts have known for many years that this "dollar hegemony" could not last for ever. Nonetheless, as Rees-Mogg concluded, "the world exchange crisis is being treated as everybody's problem and therefore nobody's".

But could the dollar crisis be profitable for Europeans? In "Petrodollar or Petroeuro? A new source of global conflict", in FEASTA Review No 2 (see Item 5 below), Coilin Nunan shows that "getting a share of the economic free lunch [now enjoyed by the USA] has been one of the motivations, and perhaps the main motivation, behind setting up the euro".

Nunan's well-documented article is important. So is his conclusion that we should be debating more openly what kind of international financial structure we want to adopt: "A good starting point would be recognition that no country or countries should be allowed to dominate the system by controlling the issuance of currency or currencies used".

Spot on! It would be short-sighted - and unjust - for Europeans to use the euro to grab a share of the "imperial tribute" that the rest of the world has been paying the US for using the dollar.

The only eventual successor to the dollar as the main international currency, other than a new world currency independent of any nation or group of nations, would almost certainly turn out to be the Chinese renminbi.

Could the prospect of China exploiting the world economy later this century, as the US now does, persuade Europeans - and Americans too - that the time has come to replace the dollar with a truly international currency?

5. FEASTA Review No.2

This fine collection of high-quality items (207 double-column pages), edited by Richard Douthwaite and John Jopling, and published in November 2004 by the Foundation for the Economics of Sustainability in Dublin, is something special. Items 1 and 4 have mentioned it already. It can be read online at

On that page, there's also an option to order it for £9.95 from Green Books.

Unlike Feasta Review No.1 (2001), this one has a title - "GROWTH: THE CELTIC CANCER: Why the global economy damages our health and society". But potential readers should not be misled into supposing the Review is about specifically Irish problems or that it is negatively critical.

People everywhere, in search of constructive responses to the damaging outcomes of today's economic "progress", will find a great deal of interest and value in it.

In "Unprecedented growth, but for whose benefit?", Elizabeth Cullen shows that, although the average income in Ireland doubled between 1989 and 2002, the nation's health and the bonds between its people have been seriously damaged.

The economic system, by polarising income distribution in the interests of economic growth, has become the greatest single threat to everyone's health and well-being. (On well-being also see Item 6 below.)

She recommends, among other things: that a basic income should be seriously considered as a way to reduce inequality and reward work that the present economic system fails to reward; and that we should examine why our economic system needs continuous economic growth to avoid collapsing.

How far, she asks, is that due to creating new money by lending it into circulation rather than putting it into the economy in other ways?

In "Freedom to be frugal", Molly Scott Cato reminds us that Adam Smith was aware of poverty's relative aspects: you are poor if you lack "not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even the lower order, to be without".

But she asks us to question today's conventional wisdom that equates poverty with social exclusion. Her message is important: the relative definition of poverty and the dynamic of a capitalist society have a symbiotic relationship, which is catalysed by the advertising industry; getting away from this vicious circle would "represent a move towards development as emancipation, from oppressive economic structures and the ideologies that perpetuate them".

A similarly oppressive ideology equates failure to work for an employer with social exclusion, but "there is no reason why paid work should provide the only basis for our human identity".

Frank Rotering's paper on "Human Economics: putting humanity and the environment before profit" discusses the development of new economic theory and language based on the aim of maximising human wellbeing subject to ecological constraints.

Many difficulties arise - for example, how to decide on what aspect of health should be maximised. There is also the wider philosophical question whether aiming to maximise any particular thing makes sense.

On a different aspect of wellbeing, I welcome Douglas McCulloch's comment that "the division in [conventional economic] thinking between production and consumption may conceal important possibilities for restructuring our economies towards sustainability". Alvin Toffler's "prosumer" theory in "The Third Wave" (1980) still makes an important point.

David Fleming's "The Lean Economy" foresees an inevitable collapse of the worldwide market economy, owing to the depletion of oil and gas, the degradation of the environment and decline of social capital.

In the transformed political economy that could rise from the ashes, a "new domestication" will have to take place in which households will become as productively competent as industry now is.

People and localities will start to provide for themselves most of what they need, and local currencies will be absolutely fundamental. Social cohesion, strengthened by revived local culture, will underpin local economies.

I can mention only one or two of the insights in Stan Thekaekara's three fascinating articles - "People First: Justice in a Global Economy", "Just Change: Humanising Globalisation", and "Globalisation": Who Benefits?".

His many years of work for tribal people in South India have taught him that global economic institutions have aggravated their poverty and deprivation, not contributed to eradicating them.

In the conflict between capitalism and socialism and the concepts of individual ownership and state ownership, "what no one has talked about are the economies of indigenous people, which are based on the concept of NO ownership".

Why does money in one person's hand become capital - a means for investment and the generation of more money - while in another person's hand it is only cash to be spent? He describes his "Just Change" project, now a registered trust both in India and the UK.

It goes beyond Fair Trade to develop a structure of enterprise which involves all the participants - workers, consumers and investors - as shareholders entitled to a share in the surplus.

Richard Douthwaite explains "Why localisation is essential for sustainability". Many of the reasons are connected to the way the money system now operates in a globalised world, "rewarding those countries and companies that consume the Earth's resources most rapidly with incomes that enable them to purchase and destroy even more".

Many of the changes needed are to do with local currencies, local banking, local people investing locally, and other financial aspects of local economies. Once we recognise that "whenever a poorer country or region attempts to satisfy the needs of a wealthier one rather than attending to its own, its dependency and weakness are increased, ... we will begin to think in a radically different way about how our communities can become more sustainable".

Douthwaite is surely right that "there are two possible responses to the inequity, unsustainability and unreliability of the global economy. One is to seek to change the way it works, the other is to build alternatives to it. Both responses need to be pursued simultaneously". Hear! Hear! Those who suppose that this is an either/or, please take note.

Other contributions are about the lack of long-run statistical data for tracking Ireland's social health (Ana Carrie), environmental taxes in Germany (Hans Diefenbacher, Volker Teichert, and Stefan Wilhelmy), the arguments - which I question - for tradable quotas for carbon emissions in preference to energy taxes (The Editors), interest-free banking (Ana Carrie), a democracy for an ecological age (Mark Garavan), and two short pieces - on the need to reinstate political economy (Margaret Legum), and a Socratic dialogue between a Buddhist Lama and a Mainstream Economist (Nadia Johanisova).

Finally, there are eighteen good book reviews. They include a review by Brian Leslie of Bernard Lietaer's and Thomas Greco's recent books on money. If you support alternative currencies or support mainstream monetary reform and mistakenly suppose they are an either/or, please read it!

(John Rogers goes into the same question at greater length in "Two Sides of the Money Coin: Monetary Reform and Complementary Currencies", in the August 2004 issue of "Prosperity" - He is Project Co-ordinator of the Wales Institute for Community Currencies. Both camps should take seriously his conclusion that "there is no either/or, only a cosmic both/and".)

To sum up. Feasta Review No.2 would provide excellent material for a whole course on a new economics for a humane, sustainable future. Just dipping into it makes for rewarding reading too.

6. A well-being manifesto

The New Economics Foundation published a well-being manifesto in September 2004 - download free from

It shows that, although GDP in Britain has nearly doubled in the past thirty years, economic growth has not resulted in increasing life satisfaction, levels of depression have risen, and levels of trust have fallen.

It concludes that "it is clearly time that government stopped focusing on proxies, like economic growth, and sought to address the true ends of policy, the well-being of its citizens, head on".

Among the manifesto's key proposals are that: advertising to children should be banned; environmental "bads" like fossil fuels should be taxed, instead of taxing "goods" like high-quality work; and a universal Citizen's Income should be brought in which would redistribute income to the poorest, end the "benefits trap", and help people to reclaim their time.

There are questions about what constitutes well-being and what affects it, which the manifesto discusses, and some of its proposals may be arguable. Nonetheless, as the UK political parties prepare their manifestos for the general election next year, they should not ignore its underlying message.

7. World Future Council

"Creating The World Future Council" (October 2004, 79 pages, £5.00 from Green Books), by Jakob von Uexkull and Herbert Girardet, reports progress by an inspiring new initiative - "a group of thinkers and activists from around the world working to create the World Future Council. At this defining moment in history, this new global institution will speak out about the things that are essential for a viable future - sustainability, peace and justice".

It plans to set up 24 expert Commissions on such subjects as "Healthy Food for All", "Good Work for All", "Monetary and Tax Reforms" and "Education and Media" - eight within each of three main fields covering Environment, Economics and Politics, and Social Issues.

They would like to "hear from people inspired by ethics, experience and wisdom who know how to make the connections between the many complex problems facing us". Anyone interested should get in touch at

I hope many readers of this newsletter will do so.

8. "To Blazes or Jerusalem?" is an 8-page printed pamphlet which is free from Peter Cadogan. To request it, please send your name and address to to

Peter Cadogan was one of the people whose ideas jolted my rethinking in the 1970s. His advocacy of direct democracy and the gift economy chimed in with my growing awareness that the existing institutions of politics, government and economy are designed to create domination and dependency, and the challenge of our time is to make them enabling and empowering.

This pamphlet is based on a lecture he gave in June 2004, originally entitled "The End of Imperial War". The US imperial enterprise, dating from the early 20th century, is now clearly self-defeating and doomed, and - because we have become oil-dependent - the people of the world, especially in Western Europe and America, are trapped in a political-military-economic crisis.

An alternative political structure is waiting in the wings, in the shape of "the grossly neglected urban community with its maze of internal neighbourhoods". A new classless alliance of volunteers, authentic professionals and others may help to bring it to birth. Could what emerges "after the self-limiting, materialist, violent disaster we call civilisation" be a society without money, war, church or state - like William Blake's Jerusalem?

9. "The Natural Step; Towards a Sustainable Society", 2004, is Schumacher Briefing No11 (, 96 pp, £6 from Green Books. It describes what TNS is, how it works, and what it has been doing with companies and communities since Karl-Henrik Robert set it up in Sweden in 1989.

It is an interesting story, well and clearly written by David Cook, the Chief Executive of TNS International. His enthusiasm comes across.

He emphasises the scientific basis of TNS. The four System Conditions for a sustainable society are that nature will not be subject to systematically increasing

(1) concentrations of substances extracted from the Earth's crust,

(2) concentrations of substances produced by society, and

(3) degradation by physical means;

and that

(4) people are not subject to conditions that systematically undermine their capacity to meet their needs.

He describes the TNS methodological framework suggested to organisations wanting to decide and carry out a sustainability strategy.

A chapter on Social Sustainability discusses the fourth of the System Conditions. It is good to see TNS recognising the dynamics of ecological and social interaction - "ecological threats leading to social unrest resulting in greater ecological threats".

David Cook identifies these dynamics as "the basis of deeply unsustainable patterns of behaviour in which humans are currently enmeshed", and recognises that "it is essential that social parameters are seen as intrinsic to sustainable development. They cannot be dealt with separately from the sustainability agenda".

An important part of the TNS philosophy is that "we do not need more science at the detailed level, simply telling us about the impacts, downstream, of our unsustainable behaviour. What we need is a better view of the whole system. We need knowledge about what is going on upstream, where the problems begin".

So it is disappointing that the TNS strategy fails to recognise that a principal upstream cause of unsustainable economic behaviour is the way the worldwide money system now works. It systematically encourages unsustainable behaviour and penalises efforts to change it.

So long as that continues, what initiatives like TNS can achieve will continue to be limited. Until business leaders use their influence to help to change the scoring system for the economic game they - and the rest of us - are forced to play, businesses will have to conform to today's money values in order to survive and succeed.

With that reservation, I commend this Briefing. Perhaps the efforts of TNS and initiatives like it, valiantly swimming against the tide, will help more people to see that the tide itself must be changed.

10. Could your website be improved?

If you think it might, Francis Miller, who set up my website, is offering to review your website and then spend 20 minutes with you on a free consultation.

Go to for details. His offer is available to UK businesses only, but his definition of "small business" includes non-profit as well as profit-making enterprises.

13th December 2004

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