No. 10 - July 2006
Links to other Newsletters can be found here.
1. Editorial: Gordon
Brown has a lot of homework to do
Economy, Common Resources and a New Global System"
3. A Sad Betrayal of Trust
4. Book Review: Babylon and Beyond: The Economics
of Anti-Capitalist, Anti-Globalist and Radical Green
5. "The Politics of Money and Credit
as a Route to Ecological Sustainability and Economic
6. David Boyle's Website
7. American Monetary Institute
Currency: Target 2008
9. The Political Economy of Peer Production
10. New MBA in Social Entrepreneurship
1. EDITORIAL: Gordon Brown has a lot of homework
Scottish grandmother had close family connections with
the Church of
I remember her values clearly. Gordon Brown, the
present UK Chancellor of the Exchequer and Prime Minister-in-
waiting, is not only a son of the manse - his
father being a minister - but was known in his early
years in politics as a
So his background seems doubly at odds with
his congratulations to City of London bigwigs in his Mansion
House speech on 21st June:
"Financial services are now
7 per cent of our economy. Financial and business services
as much as 10 per cent. A larger share of our economy than
they are in any other major economy, contributing £19
billion of net exports to our balance of payments. A success
all the more remarkable because while New York and
Tokyo rely for business on their large domestic base, London’s
international ranking is founded on a large and expanding
London now the home and natural location for:
20 per cent of all cross-border lending,
30 per cent of world foreign exchange turnover,
40 per cent of over-the-counter derivatives trades,
70 per cent of the global secondary bond market."
Why is Brown so sure that this is a matter for congratulation? The
City of London's activities may bring £19bn into
a particular sector of the UK economy; but its activities
also have serious economic, social and environmental
costs - direct and indirect. He should be asking
government departments and the Greater London Authority
to study the impact of the City on their fields of responsibility,
and to publish estimates of the costs as well as the
So far as the future is concerned, the world's money
system will change as opposition grows in the majority
world to the present set-up and as China, India and oil-rich
Russia make their financial muscle felt. It may prove
unwise for us British to have so many economic eggs in
that particular basket.
Almost all the issues covered in this newsletter are
related, more or less directly, to that possibility. The
man who will probably be our next Prime Minister should
become more familiar with them.
2. "POLITICAL ECONOMY, COMMON RESOURCES
AND A NEW GLOBAL SYSTEM"
That was the title of the paper I gave to the 25th International
Conference of the International Union for Land Value
Taxation on 4th July 2006 in London. The conference
was on "The Economics of Abundance".
A summary of some of the paper's themes is as follows.
"I see the case for Land Value Taxation in a
broad national, local and global context. I believe
- A new political philosophy can be based on
sharing the values of "common resources",
such as land, more fairly than at present.
- To be meaningful, the new political philosophy must
define practical reforms which will share the
value of common resources more fairly.
- Those reforms will involve changing the system
of financial rewards and penalties that help
to shape people's motivation - in other words, changing
how the money system works.
- In developed economies today, flows of money
under the government's direct responsibility represent
nearly half the total value of money transactions
and economic activity (GDP).
- Therefore, how the larger money system works
is very heavily influenced by how governments
handle their three main monetary and financial responsibilities.
- These involve:
- the money supply , which everyone uses;
this raises questions about who creates new money
and who decides how it is spent;
- collecting public revenue for governments
themselves; this raises questions about what is taxed
or charged for and how heavily, and what should be
taxed or charged for but isn't;
- public spending programmes ; this raises
questions about the necessary objectives of public
- Big changes in all of these will change economic
relationships between the state, the market, and
- In other words, they will create a new "political
economy" and raise questions about the practical
meanings of "capitalism" and "socialism" in
the 21st century."
Click here to
download the full text of the paper.
Click here to
visit the International Union for Land Value Taxation's
3. A SAD BETRAYAL OF TRUST
How many of us who have enjoyed playing the board
game "Monopoly" have questioned the following
description by its commercial producers? "The
idea of the game is to buy and rent or sell property
so profitably that one becomes the wealthiest player
and eventually monopolist... The game is one of shrewd
and amusing trading and excitement."
In fact, the game was invented in 1903 by a Quaker
supporter of Henry George's Land Value Tax proposal.
She described its object as "not only to afford
amusement to players, but to illustrate to them how,
under the present or prevailing system of land tenure,
the landlord has an advantage over other enterprisers,
and also how the [land value] tax would discourage
When buying her patent on the game, the commercial
producers undertook to tell purchasers what the inventor's
purpose for it was. They then ignored their undertaking.
For details click here - and
for even more details click here.
4. BOOK REVIEW: BABYLON AND BEYOND
Derek Wall, BABYLON AND BEYOND: The Economics
of Anti-Capitalist, Anti-Globalist and Radical Green
Movements, Pluto Press, 2005, 220pp, £14.99
Derek Wall teaches economics at Goldsmiths College,
London. He is associated with the Green
Economics Institute (click here to
read a review of their journal in my last newsletter).
His book aims "to explain the economics of the
anti-capitalist movement and, in doing so, to examine how
a fairer and a more ecologically sustainable world can
It comes with commendations from well-known voices,
green and red. I too commend it warmly to readers
who want to be up-to-date with red/green approaches to
the world's problems.
An Outline of the Book
The following summary
of chapters is only an outline. It cannot convey the
full richness of the subject matter.
1. "Warm Conspiracies and Cold Concepts" sketches
the development of the anti-capitalist movement, what's
wrong with capitalism, the diversity of anti-capitalisms,
and three issues that run through the book:
- capitalism as conspiracy of the rich or as conceptual
- productivism versus primitivism; can economic growth
go on for ever? If not, what then?
- strategy: reform or sudden, even violent change?
2. "Vaccinating against Anti-capitalism: Stiglitz,
Soros and Friends" discusses the Washington
consensus and American imperialism, Keynes and Bretton
Woods, and Karl Polanyi and other thinkers. It concludes
that "by attacking the most obviously repellent
features of neo-liberal globalisation, Soros, Stiglitz
and friends seek to show how capitalism can be maintained
and to channel more radical sentiments into a supposedly
'nicer' form of globalisation".
3. "White Collar Global Crime Syndicate: Korten,
Klein and other Anticorporatists" discusses "the
rise of the corporate criminal", and opposition
to the emergence of "Global Government Inc." as
a coalition of transnational corporations, national
governments and international bodies like the IMF which
makes a mockery of democracy. Wall takes the view,
however, that markets have a destructive built-in tendency
to grow and grow and that market economies are never
fair. The chapter concludes that "there is more
to anti-capitalism than hatred of corporations".
4. "Small is Beautiful: Green Localism" describes
various forms of green economics and concludes that the
green critique at its most radical goes further than
anti-corporate anti-capitalism and holds that "economics
is a system that tends to dominate and distort human
values". But, in Wall's view, it is difficult to
accept the argument by green localists such as Colin
Hines that, "if
the economy were decentralised, democracy and ecological
sustainability and justice would automatically follow",
or the views of "subsistence anti-capitalists" like
Vandana Shiva in favour of pre-industrial societies.
Combining the green critique with socialist theory (as
in Chapter 8 below) will be more promising.
5. "Planet Earth Money Martyred: Social Credit
and Monetary Reform" outlines the case against
the World Bank and the IMF, and describes the activities
of Attac and the Tobin tax proposal. It then examines
message of monetary reform". Its reference to
a "basic economic law" that there is an inverse
relationship between people's contributions to society
and monetary rewards, doesn't mention the possibility
that the present existence of that relationship might
be an outcome of the present unreformed system of money.
It concludes that monetary reformers who "argue
that, if banking were reformed, capitalism would no
longer be destructive or perhaps would not exist at
all" seem "a little simplistic".
6. "Imperialism Unlimited: Marxisms".
The message of this chapter is that "almost all
Marxists agree that capitalism is not just corporations
or banks, but a system. Capitalism is innately destructive.
It cannot be reformed but must be smashed. They agree,
however, on little else." A discussion of various
Marxist approaches concludes that they have enabled us
to perceive the mechanisms of domination; we now need
to discover the mechanisms of liberation, and Marxism
also needs to be "greened". Fidel Castro is
instanced as making some progress there.
The next two chapters, on 7. "The Tribe of Moles:
Autonomism, Anarchism and Empire", and 8. "Marx
on the Seashore: Ecosocialist Alternatives",
break newer ground. Topics and ideas include:
- the anarchic power of grassroots action "with
its emphasis on the actions of the multitude rather
than that of limited policy change";
- the developing links between Marxism and the post-modern "rejection
of grand narratives";
- the perception that "both the state and the
market distort the realisation of human potential";
- Joel Kovel's ecosocialist interpretation of capitalist
globalisation, not as "a by-product of corporations
or the money power, but built into the very DNA of
our economic system" - in the form of markets,
which embody the contradiction between use values and
- inevitability that a market economy will give ever-increasing
priority to exchange values (i.e. to making money)
over use values, with results that lead to disasters
like the Union Carbide disaster at Bhopal;
- thus the market kills people and planet and "must
be broken"; and
- the enclosure of the commons is a very important
theme for ecosocialists.
However, at the end of Chapter 8 the verdict is that, "while
ecosocialism is necessary, it is not sufficient; to transcend
capitalist globalisation it is crucial to go further
The last chapter, Chapter 9, is on "Life after
Capitalism: Alternatives, Structures, Strategies".
Once again, it makes an interesting read. Its statement
that "maybe the biggest revolution is to realise
that [the economic system] is our creation, so it is
transformable" isn't controversial. But the book's
final suggestion, that to get control of the structures
of the economic system "anti-capitalists need
to keep making noise", surely isn't enough - any
more than the approaches discussed in the previous
I agree with many of the book's themes. A central one
is the need for liberation from the systematically
dependency-creating nature of the present economic system.
That has shaped my own thinking at least since I wrote The
Sane Alternative in 1978.
But I don't accept that it is enough simply to oppose
the present economic system or that it can or should
simply be "smashed"; even if that were possible,
it would create utter misery on an unthinkable scale. And
I don't see how a complex world society of over 6 billion
people could function without some
sorts of governmental and market economy processes,
albeit redesigned for a democratic 21st-century world.
A characteristic weakness of much radical academic
thinking on politics and political economy is failure
to appreciate the practical significance of institutions
and the need to change them. An example in this book
is the question whether the ills of the global economy
are a product of conspiracy or the result of abstract
The ills are partly due to both those factors, of course;
but they cannot be cured except by also changing a third
factor that links the two - the relevant institutions.
Those are an important part of present reality. They
have been shaped in the past by the interests of rich
and powerful people, organisations and nations. We have
to understand why those institutions have come to operate
so as to produce the outcomes they now do, and to work
out how - as a system - they can be transformed.
The most important institutions for the economic
system are those which constitute the system of money
and shape how it works. Systematically transforming
the money system will go much wider than monetary reform
narrowly defined (see the paper at Item 2 above, and
the references in it). What is needed is a changed
scoring system for a better game of economic life.
That will help to achieve constructive aims that "Beyond
Babylon" implies. For example,
- treating the value of common resources as sources
of public revenue will be the appropriate 21st-century
response to the enclosure of the commons;
- sharing a good part of that value directly among
all citizens as a Citizen's Income will make
us less dependent on the market economy and the state
for goods and services, and work;
- which will enable us to resist and even reverse
the present pervading compulsion to promote exchange
value over use value.
One final point. I believe that focusing on anti-capitalism
impedes the working out of what actually needs to be
done. The same is true, in my view, of focusing
on the necessity of keeping capitalism but
reforming it, however fundamentally, as I said in my
review of Jonathon Porritt's recent book Capitalism
As If The World Matters.
What both books demonstrate clearly is that "capitalism" and "socialism" are
now operationally indefinable abstractions. It
will be more effective to analyse directly, without
reference to them, the practical causes of the systemic
injustices and malfunctionings of the existing economic
system; and then to work out directly, again without
reference to them, the practical changes needed for
the radical transformation of the system.
5. "THE POLITICS OF MONEY AND CREDIT
AS A ROUTE TO ECOLOGICAL SUSTAINABILITY AND ECONOMIC
For a Marxist understanding of the role of money in
society, and of the issues raised by ecofeminists, greens
and ecosocialists in recent years, I highly recommend Mary
Mellor's 16-page paper in Capitalism, Nature, Socialism (Vol
16, No 2, June 2005). Mellor is Professor in the School
of Arts and Social Sciences at Northumbria University
and, like Wall, is associated with the Green
Ecofeminists have pointed to the gendered dimension
of money systems which reward male-dominated and ecologically
destructive activities, while much of women’s work
and life is marginalised or excluded. Ecological
economists have criticised money accounting systems
for externalising environmental damage and treating nature
as a free good.
Although anti-capitalist critics have long explored
the role of finance capital, the message of the paper
is that money and credit have played a stronger role
in all economic systems, particularly capitalism, than
has been previously acknowledged.
The paper concludes that it is vital for socialists
to have a clear analysis of how and why money systems
operate as they do, and to develop clearly thought
out alternatives. "Exposing the vacuous and deeply
exploitative reality of money issue and making proposals
for putting such a simple yet sophisticated mechanism
in the hands of the people would be a revolutionary
Although personally I believe that the concepts of "socialism" and "capitalism" have
now become obstacles to clear thinking (see
Item 4 above),
I also believe it's important that people who think
of themselves as socialists should take Mary Mellor's
She tells me she would be happy to send the text of
the paper to any reader of this newsletter who emails her for
6. DAVID BOYLE
I have known David Boyle and worked with him since the
1980s on New Economics Foundation and other matters.
He has been justly described by Ed Mayo, former Director
of NEF, as "the
finest radical voice of his generation".
and very interesting website
covers aspects of his "work around history
and future, and although it covers politics, money and
business, it is devoted to one broad theme: the importance
of human-scale institutions over centralised ones,
human imagination over dull rationalism, and the human
spirit over technocratic reduction".
His June 2006 Newsletter included items on:
- Why Prince Charles was right about the National
- Troubadours and trouble
- Clone Towns
7. AMERICAN MONETARY INSTITUTE
The American Monetary Institute will be holding
Conference in Chicago on 21-24 September. On the
agenda will be discussion of a draft American Monetary
Other recent papers from AMI include:
- "Is the Federal Reserve System a governmental
or a privately controlled organization?" (16
July 2006). It concludes that "The money power
vested in Congress by the Constitution has been improperly
delegated to private interests without sufficient
public interest benefit, if any. Congress must resume
the power vested in it".
- A draft Monetary Transparency Act, attached
to the above paper about the Fed, aims to start the
process of making the Fed more accountable to Congress.
- A supporting paper on "The Need for Monetary
Click here to
see details of these and other AMI publications and activities.
8. SOCIAL CURRENCY: TARGET 2008
In a welcome new website Social
Currency: Target 2008,
Paul Nollens responds to the call by leaders of the European
Union in December last year for proposals for a new system
for financing the EU in 2008. He shows that the European
Union budget could be more than fully financed by seigniorage,
if monetary reform was implemented in the EU.
(Seigniorage is the profit that Eurozone governments
would get from the European Central Bank if it
issued the bank-account euros required to increase
the Eurozone's money supply, instead of continuing
to allow commercial banks the privilege of creating
them as profit-making loans to their customers.)
National governments in the Eurozone would not
only be able to stop paying contributions to the EU budget
altogether. They would actually receive from Brussels
more than the amounts they are now having to pay.
The EU Commissioner for Taxation, Laszlo Kovacs, has
put forward a different idea for financing the EU: "In
my view, the most viable path would be to link an
EU tax to energy consumption because the tax revenues
could also serve a secondary purpose of influencing energy
policy so as to support renewable energy resources by
lower (tax) rates".
That is a good idea too. Like monetary reform, it is
a piece of the bigger picture at Item 2 above.
PS. Item 7 of the BIEN May
2006 Newsletter mentions the proposal
in "Social Currency: Target
2008" as possibly relevant to the financing
of a basic (Citizen's) income. Item 1 of that newsletter
reminds us that J K Galbraith had supported a
basic minimum income for all.
9. THE POLITICAL ECONOMY OF PEER PRODUCTION
his article "The
Political Economy of Peer Production",
Michel Bauwens writes "Not
since Marx identified the manufacturing plants of
Manchester as the blueprint for the new capitalist
society has there been a deeper transformation of
the fundamentals of our social life. As political,
economic, and social systems transform themselves
into distributed networks, a new human dynamic is
to peer (P2P). As P2P gives rise to the emergence
of a third mode of production, a third mode of governance,
and a third mode of property, it is poised to overhaul
our political economy in unprecedented ways."
In the article, he develops a conceptual framework ('P2P
theory') for explaining these new social processes.
See also the
website of The Foundation for P2P Alternatives.
10. NEW MBA IN SOCIAL ENTREPRENEURSHIP
In September 2006 the Business School at the University
of Wales Institute in Cardiff (UWIC) is launching an
in Social Entrepreneurship. This will be in keeping
with the strong and thriving social economy in Wales,
and will provide " a unique qualification, offering
the strategic and management skills, as well as the credential,
of an MBA, but with the radical view of the economy found
within the fields of social enterprise and mutual activity".
More information from Molly Scott Cato.
The Old Bakehouse, Cholsey
Oxon OX10 9NU, UK
Tel: +44 (0)1491 652346
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