CHAPTER THREE
Who Would Profit from a New Monetary System?
INDIVIDUAL AND SOCIAL CHANGE seems to happen for three
basically different reasons:
(1) because a breakdown due to a particular pattern of
behaviour has occurred, i.e., in order to avoid
another occurrence;
(2) because a breakdown due to a particular pattern of
behaviour may occur, i.e., in order to avoid the
break-down;
(3) because another pattern of behaviour seems more
adequate in order to achieve the desired result.
The change in the monetary system proposed in the
last chapter may happen for any one, any combination,
or all of the above reasons:
(1) In the past, the cancerous accumulation of wealth
has been dissolved regularly by social
revolutions, wars and economic collapse. The
unprecedented economic interdependency of all
nations today and the multifold potential for
global destruction renders this kind of conflict resolution mechanism
unacceptable. We are forced to search for new
solutions to avoid another war, social revolution
or economic collapse.
(2) According to many specialists in the field of
economics and banking the 1987 stock market
crash in which $1.5 trillion vanished within a few
days was only a small ripple compared to the
imminent danger of a worldwide second Great
Depression, which is likely to happen if we don't
introduce fundamental change within the next
few years. (18) Changing the monetary system
now offers one possibility for avoiding the
enormous human and material costs of such a
disaster.
(3) Whether or not we can see that every exponential
growth curve eventually leads to its own
destruction, the advantages of the change to a
new monetary system are so evident in terms of
social and environmental equity that this path
should be chosen simply because it is a better
one than what we have at present.
However, the main problem in any transformation
process is not so much that we want to stay where we are
or that we don't see the advantages of where we want to
be. It is more: How do we get from here to there, from
this trapeze to the one over there, without endangering
our lives?
In order to make it easier to see how this
transformation could assist in reaching the goals of
many very different social groups, let us take a closer
look first at the flaws in the monetary system and then at
the advantages of a new monetary system for the rich and the poor,
governments and individuals, minorities and the
majority, industrialists and environmentalists, materially
oriented people and spiritually oriented people. The
interesting fact which emerges is that, at this particular
point in time, in this crisis situation which we have
created for ourselves, everybody would be better off with
a new monetary system. We all are in a win-win situation
if we implement the necessary change. But we need to
do it soon.
THE ADVANTAGES IN GENERAL
Up to this point of the analysis we have dealt with
facts and figures which anyone can verify. From now on
we are dealing with "educated guesses," based on
experiences in the past. The accuracy of these predictive
guesses will have to be validated by real-life examples.
The question, therefore, arises: why would any
region or country opt for trying out, and serving as a
testing ground, for a new monetary system?
If our analysis has been correct so far, then the
proposed solution offers among other things the
following main benefits:
(1) the elimination of inflation;
(2) the increase of social equity;
(3) decreasing unemployment;
(4) the lowering of prices by 30-50%;
(5) an initial economic boom;
(6) and thereafter a stable economy.
FLAWS IN THE MONETARY SYSTEM
In most countries, the monopoly to print money rests
in the hands of the central government. Any trial run of
the new money system, therefore - even on a smaller
regional scale - would have to be supported by the
government. Obviously the introduction of an
interest-free money would be a highly political issue. It
takes courage for any government to admit that a system
of such inequity has been tolerated so far. On the other
hand, it is clearly very difficult for most people to see
why a "fee" on money is a better solution than interest.
At present government leaders, politicians, bankers
and economists try to respond to the problems which are
caused by the basic flaws in the monetary system by
treating symptoms and offering band-aid solutions. In
election campaigns there are regular promises to combat
inflation, to improve social services and to support
environmental concerns and conservation issues.
The truth of the matter is that they are fighting with
their backs to the wall, and that the situation is not
improving but rather deteriorating, as we come closer to
the acceleration phase of the exponential growth curve
of the monetary system. Instead of improvements in the
social and environmental sectors, budget cuts force a
deterioration. Whether politicians belong to the
conservative or progressive wing, the room for real
change in the present system is small indeed.
Figure 8
Figure 8 implies why this happens. In any highly
diversified economy one sector is intimately connected
with another. If we take away more than its share from
one sector, we are bound to cause trouble - not only there -
but also in others. If government debts and interest rise,
more money flows to the owners of monetary wealth. At
the same time, those who work have less money to con-
sume. This, in turn, causes market fluctuations with in-
fluences on employment opportunities. Governments
which increase debts in order to close gaps in their in-
come invariably increase the "problem chain." The new
money system would help to reduce the disproportion-
ate rise in debts as well as the concentration of money-
wealth and would secure the steady exchange of goods and
services on a free market.
If we think that the situation seems difficult in indus-
trialized countries, we must look at Third world coun-
tries which carry the worst consequences of the present-day
system. While large American and German banks are in-
creasing their reserves to be prepared for the fiscal break-
downs of their debtors in industrially developing countries,
industrialized countries continue to import capital from
developing countries. By exporting new loans to help pay
off old ones, they prolong and magnify the international
debt crisis. That this trend must change has been shown
clearly in the report of the UN World Commission on
Environment and Development entitled "Our Common
Future." It also proves that the seemingly separate crises
of the world's economy and the planet's ecology are, in
fact, one.
Ecology and economy are becoming ever more interwoven
- locally, regionally, nationally, and globally- into a seam-
less net of causes and effects ... Debts that they cannot pay
force African nations relying on commodity sales to over
use their fragile soils, thus turning land to desert ...
The production base of other developing world areas suffers
similarly both from local failures and from the workings of
international economic systems. As a consequence of the 'debt
crisis' of Latin America, that region's natural resources are now
being used not for development but to meet financial
obligations to creditors abroad.
This approach to the debt problem is short-sighted from
several standpoints: namely, economic, political, and
environmental. It requires relatively poor countries
simultaneously to accept growing poverty while exporting
growing amounts of scarce resources.
Inequality is the planet's main 'environmental' problem; it is
also its main 'development' "problem." (20)
By now according to Mr. Herrhaus, manager of the
largest German bank (Deutsche Bank): "the structure
and dimension of the problem defies traditional
problem- solving techniques." (21)
Figure 9
Those who operate the present money system know
that it cannot last, but either do not know or do not want
to know about a practical alternative. Figure 9 gives at
least one explanation. Compared to the Gross National
Product and the increase in debt, the banks have earned a
disproportionate share of the national wealth. This is in
part connected with lower interest rates which offer
better profits for banks, but also to the increased
speculation with money, leading to an increase in
brokerage fees. The bankers with whom I have discussed
this issue did not know of the alternative. After I
explained it, they often felt that they could not pass the
knowledge on without endangering their jobs.
Banks are not interested in an open discussion of how
the interest system works, unless they take a long- term
view. At present, they behave rather to the contrary.
Figure 10
Figure 10 demonstrates some misleading headlines
which can be found in advertisements of banks in
magazines and newspapers all over the world. Money-
banks say- should "grow," "increase," "multiply." Most
often, they try to impress people with the idea that
money should "work" for them. However, nobody has
ever seen money working. Work has always been done
by people with or without machines.
These advertisements conceal the fact that every DM
or dollar which goes to the investor of money is the
accomplishment of another person from whom this
amount is being taken away, no matter in which way that
might happen. In other words, people who work for their
money are getting poorer at the same rate at which the
investment of those who own money doubles. That is the
whole mystery of how money "works," which banks do
not like to have uncovered.
In my experience, those who should be aware of the
problem and the solution through their education, i.e.,
economists are afraid of being branded as "radicals."
Indeed, by supporting interest-free money, they would
be trying to get at the root (in Latin = radix) of one of
the world's most pressing economic problems.
Two of the great personalities of this century, Albert
Einstein and John Maynard Keynes clearly saw the
importance of Gesell's monetary reform ideas. Keynes
actually stated in 1936 that "the future would learn more
from the spirit of Gesell than from Marx." (22)
This future, however, has not started as yet; although
bankers and economists do not need to be terribly
farsighted to recognize that a new money system would
enable them to resolve the central dilemma which they
have been wrestling with for decades. Instead, as
economic historian John L. King states in his book On
the Brink of the Great Depression II:
Their number-crunching and computerized formulas have
proven to be wildly irrelevant and thus their predictions have
become famously wrong. It's as though we have educated these
people beyond their capacities to think. (23)
My observation is, that in contrast to most engineers,
economists do not really understand the danger incurred
in exponential growth. They may recognize its danger in
the proliferation of AIDS or in the "population
explosion." In their own field, however, they seem
almost blind, and naively confident that symptomatic
treatment, here and there, will prove sufficient to slow
down the danger.
Governments introducing monetary reform soon
would go a long way towards securing social equity,
ecological survival and curing the money diseases which
have plagued the so-called "free market economies" for
decades.
ADVANTAGES FOR THE REGION OR COUNTRY WHICH INTRODUCES
THESE CHANGES FIRST
The possibility to invest and produce without having
to pay interest would not only lower the prices for these
goods and services in the regions or countries which
introduce the new money system, but also create an
enormous advantage for industries and products competing
on the national or world market. Whatever the going
interest rate, products and services could be sold that
much cheaper. This would result in a fast economic
boom in the regions introducing interest-free money
first.
A disadvantage could be seen in this change as being a
threat to the environment. However, apart from the
possibility of creating a better system of taxation (as
described above), we might look at the following
possibility.
Many products and services which at present cannot
compete with the money-making power of money on the
money market would suddenly become economically
feasible. Among these would be many ecological
products, social projects and artistic endeavours which
often would be carried out if they could just "break
even." This would result in a more diversified and stable
economic base, which is anything but threatening to the
environment.
Unemployment rates would drop when economic
activities blossom, decreasing the need for social
security payments, ever larger bureaucracies and higher
taxes.
If introduced in a particular region, there would have
to be an automatic low cost exchange rate to facilitate
trade between this region and other regions in the
country. Until the whole country would adopt the new
money system, certain regulations might have to be
established to prevent speculative exchange deals.
If introduced in a whole country, trading with foreign
countries would continue as it does today. There would
still be an ordinary exchange rate. Comparatively
speaking, however, the "stable money" would attract
higher exchange rates over the years in comparison with
other currencies, because it would not be subject to
devaluation through inflation. Therefore, investments in
this money could be quite advantageous in comparison
with fluctuating currencies such as the dollar at present.
As in the case of Wörgl described previously (see
Chapter 2) - it would be possible even for two monetary
systems to exist side by side. We could keep the one we
have at present and introduce the new money, even in a
smaller region or town. According to Gresham's Law,
"bad" money displaces "good" money. What we are newly
creating here is - in his sense - "bad" money - money
which is subject to a use fee unlike the present money.
Wherever people can
pay with the "bad" money, they will pass it on - and
they will hold on to the "good" money. Thus the new
money will be used wherever possible, which is exactly
what we want. The old money will be kept and used to
the extent necessary. Therefore, introduced as an
experiment in a specific region in the beginning, the
proposed money system could also co-exist with our
present system until it had proven its usefulness. Who
else would benefit from a new monetary system?
THE RICH
One of the critical questions which is always asked
by people who begin to understand the effectiveness of
the hidden redistribution mechanism in our present
money system is: Will those 10% of the population who
profit from this mechanism at present allow any change
which might eliminate their chances to extract a
work-free income from the large majority of people?
The historic answer is: Of course not, unless they are
forced by those who pay. The new answer is: Of course
they will, if they become aware of the fact that "the
branch on which they are sitting grows on a sick tree"
and that there is a "healthy alternative tree" which is not
going to collapse sooner or later. The second means
social evolution, the soft path. The first means social
revolution, the hard path.
The soft path offers rich people the chance of
keeping the money they have gained through interest.
The hard path will invariably lead to sizable losses.
The soft path means no accusation because of profits
from interest, until we introduce the new money system,
since their behaviour has been totally within their legal
rights. The hard path of social revolution may well be
more painful.
The soft path means no more interest earning money
but a stable currency, lower prices and, possibly, lower
taxes. The hard path means growing insecurity,
instability, higher inflation, higher prices, and higher
taxes.
So far my experience with people in the "richest 10%
category" has been that they are neither fully aware of
how the interest system really operates, nor that there
are any practical alternatives. With few exceptions, they
would tend to opt for security rather than more money,
since they mostly have enough for themselves and
sometimes for many generations to come.
The second question is: What happens if the rich
transfer their money to other countries where they get
interest, instead of putting it into their savings account
where it retains its value but it does not accumulate
interest?
The answer is that within a very short period after the
introduction of the reform, they may do just the
opposite. Because the margin of profit between what
people gain in other countries from interest after they
deduct inflation would most likely be about the same as
the increase in value of the new money in their own
country which is not subject to inflation.
In fact, the danger may be precisely the other way
around. What we may create is a "Super-Switzerland"
with a stable currency and a booming economy. For
several years in Switzerland, investors even had to pay
interest in order to leave their money in a bank account.
In contrast, the U.S.A. offered the highest interest rates
in the early Reagan era and attracted surplus money from
all over the world and soon had to devalue the dollar
drastically in order to meet its obligations to creditors
abroad. At 15 % interest, the U.S.A. would have had to
repay about twice the amount invested by foreign lenders
after 5 years. There was no way in which this could have
been achieved had the dollar been kept at its original
value. One further consequence of this policy was that
the U.S.A. changed from being the largest creditor to
being the largest debtor nation in the world within a time
span of only eight years.
The huge amount of speculative money which is
estimated to be as high as $50 billion - circulating the
world from one banking center to the next in search of
profitable investment - shows that there is a shortage of
sensible investment opportunities rather than a shortage
of money. This would change, in any region or country,
which by introducing interest-free money created a
booming, and finally stable and diversified economy.
Chances are that surplus money from outside would be invested here
rather than that surplus money from inside would leave
the region.
In many ways, it would be more profitable for rich
people to help monetary reform to happen and to
support a stable system rather than to support growing
instability and risk the inevitable crash.
A third question concerning the richest 10% of the
population relates to those who live on their capital and
are too old to work. What happens to them if interest is
abolished?
An example taken from Germany (in terms of average
interest and inflation rates) shows that those who can
live off their interest now can live off their capital at
least for one, if not for two or more, generations. If we
assume capital assets of 1,000,000 DMarks, an average
interest rate of 7 % and an average rate of inflation of 3
%, the gross income amounts to 40,000 DMarks per
year, without depleting the capital.
In the new money system we abolish interest and
inflation, thereby reducing the prices of all goods and
services as well as taxes by about 40%. This means that
this person needs a gross income of 24,000 DMarks per
year in order to keep the same standard of living as in
the present system. If we divide 1,000,000 by 24,000,
we see that this person could live for 40 years off her or
his capital.
The point of this example is that almost anybody who
can at present live off their own capital will also be able
to live off their capital if we change the monetary
system.
Among the richest 10% of the population in terms of
wealth are those with assets over one million DMarks.
But there are some who gain more than one million DMarks
from their interest every day. According to official
sources, (24) the daily income of the Queen of England,
the richest woman in the world, was 700,000 pounds
(roughly two million DMarks) in 1982. Although neither
the Queen nor firms like Siemens, Daimler-Benz and
General Motors have much official power, their
ownership of money is, in fact, unofficial power.
Scandals concerning the pay-offs by leading industries
financing political parties in Germany, the U.S.A. and
other western countries have demonstrated that all
democracies are endangered where the monetary
re-distribution mechanism is allowed to proliferate. As
time goes on, those who think that they live in
democracies will live at best, in oligarchies or at worst,
under fascist regimes. In medieval times, people thought
they were badly off when they paid tithes: a tenth of their
income or produce to the feudal landlord. In this respect,
they were better off than we are nowadays. Today, more
than one third of each DM or dollar goes to service
capital. Those who gain most are the super rich,
multinationals, big insurance companies and banks.
The question is whether we are finally willing to
comprehend the social injustice that is caused by our
present money system and change it or whether we wait
until a major world-wide economic or ecological
breakdown, war or social revolution occurs. As there is
no way in which single individuals or small groups alone
can change the monetary system, we must try to bring
together those who understand how it can be changed
with those who have the power to change it. It should be
clear that:
- there can be no accusation of those who, at present,
profit from the interest system as this is totally within
their legal rights;
- what can be stopped, however, is the continual ongoing
extraction out of a without work;
- there should be no given economy of money regulation as to where or how
money may be invested in the future by those who have
more than they need. If they are intelligent, they will
keep it in the country anyway, which would create a
new economic boom by abolishing the interest system.
Figure 11
THE POOR
Would the poor also benefit from a new money system? If
resources were averaged, every German household in 1986
would have a private fortune of 90,000 DMarks. This would
have been a splendid proof of our prosperity if it were evenly
distributed. The ugly reality is that one half of the population
owned 4% of that wealth and the other half, 96% (Figure 11).
More exactly, the wealth of 10% of the population grows
continually at the cost of all others.
This explains why, for instance, lower middle-class families
in Germany increasingly seek financial support from social
welfare agencies. Unemployment and poverty are growing in
spite of a sizable welfare system set up to overcome both.
The largest factor in the redistribution of wealth is
interest which transfers daily millions of DMarks from
those who work to those who own capital. Although most
governments try to rectify the resulting imbalance through taxation, the
result is nowhere near a balance. In addition, the costs
of growing bureaucracies are affecting everybody
through increased taxes. The human costs in terms of
time and energy, plus the humiliation involved in getting
through the "red tape," are seldom if ever taken into
account.
The absurdity of a monetary system which robs
people first of their fair share in the "free market
economy" and then - through some of the most
inefficient procedures imaginable - returns some of this
money in the form of welfare payments to the same
people, has rarely been exposed by the "experts" nor
been discussed in public. As long as those 80% of the
people who pay don't understand how they pay, could it
be otherwise?
Figure 12
A practical comparison of rising interest rates and
increasing bankruptcies in business and industry, as well
as unemployment rates following with a time-lag of
about two years (Figure 12) provides another compelling
argument for the introduction of an interest-free
monetary system. Also, social costs like alcoholism,
families breaking up and increases in criminal behaviour
are additional costs which are not taken into account in
the above statistics but could be effectively reduced by
the monetary reform.
Figure 13
If we look at the dilemma of Third World countries
(Figure 13), we see our own situation through a
magnifying glass. It is like a caricature of what happens
in industrially developed countries, due to the same
structural fault in the monetary system. However, the
difference is that industrially developed countries as a
whole, profit while the developing countries pay. Every
day we receive $300 million in interest payments from
Third World countries: that is, twice the amount of the "development aid"
which we give them.
Figure 14
Of the Third World countries' total debt of one
trillion dollars in 1986, about one third was lent in order
to repay interest on previous loans. There is no hope that
these countries will ever be able to pull out of the
situation without a major crisis or fundamental policy
change. If war means hunger, starvation and death, social
and human misery, we are right in the middle of the
"Third World War" (Figure 14). It is an undeclared war. It
is a war fought with usurious interest rates, manipulated
prices and unfair trade conditions. It is a war which
forces people into unemployment, sickness and criminal
behaviour. Do we have to tolerate this indefinitely?
There is no doubt that those who are at present worse
off in the monetary system we have created account for
more than half of the world's population. The situation in
the Third World would change momentarily if their
debts were to be written off partially or totally by lender
nations and banks. This is often advocated by progressive
economists and, in fact, is already happening. However,
unless the basic flaw in the money system is abolished,
the next crisis is pre-programmed. Therefore, one of the
important steps for a more stable economic system on a
world-wide scale is to make known among those who
would undoubtedly gain most - the poor and the
developing countries - that an alternative system could
be chosen.
THE CHURCHES AND SPIRITUAL GROUPS
Many of the great political and religious leaders such
as Moses, Jesus Christ, Mohammed, Luther, Zwingli and
Gandhi have tried to reduce social injustice by
prohibiting interest payments. They understood the
cause of the problem. However, they did not come up
with a practical solution, and thus, the basic flaw in the
system remained unchanged. The prohibition of interest
payments in the Christian world by the Popes during the Middle Ages in
Europe, for instance, just shifted the problem to the
Jews, who became, at that time, the leading bankers of
Europe. While the Jews were not allowed to take interest
from each other, they could do so from the Gentiles. In
Islam, people do not pay interest for a loan, but the
lending banks or individuals become shareholders in
their business and take part of the ensuing profits. In
some cases this may be better - in others worse - than
paying interest.
Nowadays the Christian churches and charitable
organizations exhaust their followers with calls for
donations to alleviate the worst social problems in
industrially developed and developing countries. This
remains symptomatic treatment as long as the systemic
fault in our monetary system continues.
What is needed instead is the dissemination of
information and an open discussion about the effects of
the present monetary system and the solution in terms
of monetary reform.
In Latin America, for instance, the Catholic Church
is split between the conservative top hierarchy tending
towards the western model of capitalism and the progres
sive base which is oriented towards the communistic model.
The historic opportunity now is to present an interest-
free economy as a third type of solution which is to be
found neither in communism nor in capitalism but tran-
scends both. It would go farther in providing social jus-
tice than any aid program. It would create a stable economy
and offer the churches significant assistance in their ef-
forts to bring peace to this earth.
In spiritual terms everything we find in the outside
world is a reflection of our own inner selves, our belief
systems, our wishes and our thoughts. A transformation
of the outer world, therefore, requires a transformation
of the inner world. One without the other is not possible.
The proliferation of esoteric knowledge and skills in
many parts of the world indicates a profound shift in con-
sciousness of an increasingly larger number of people.
Their work on inner change provides the basis for outer
change. Without this work a peaceful transformation of
the monetary system may be impossible. Therefore, a great
responsibility rests with those who serve humanitarian
goals and are aware of the practical possibilities of mon
etary reform as one aspect of global transformation.
BUSINESS AND INDUSTRY
In an interest and inflation free economy the prices
of goods and services would be regulated, as in today's
capitalist societies, by supply and demand. What would
change, however, is the distortion of the "free market"
by the interest mechanism.
Figure 15
On average, every workplace in the German industry
carries a debt load of DM 70-80,000 (> $35-40,000).
Interest alone makes up as much as 23 % of the average
labor costs (25) (see Figure 15). To the share of interest on
borrowed capital must be added the interest share on the
firm's own capital. The latter orients itself along the
same interest rate as the former. This is why debts
increase about two to three times faster than the
economic productivity of the country (see Figure 5). The
proportion is constantly getting worse for those who
work and for those who want to start a business.
We are witnessing increasing concentration in the
industrial sector. Small businesses and industrial firms
are being bought up by larger ones and larger ones are
being bought up by even larger ones, until one day
almost everybody in the so-called "free market
economies" may work for a multi-national corporation.
This development receives its impetus from the
so-called "economies of scale" and from automation of
larger industrial firms, but also from the surplus money
gained by these businesses on the money market.
Siemens and Daimler-Benz in Germany, for instance,
earn more money through investments in the capital
market than in the production sector. In fact, they have
been characterized in the German press as large banks
with a production front.
In contrast, smaller and medium-sized firms in order
to expand usually have to borrow money and, therefore,
are trapped in the interest and compound interest
system. They can not capitalize on the economies of
scale, and they cannot capitalize on capital.
Up to now our economy depends on capital. The
German industrial representative, Mr. Schleyer, once
said fittingly: "Capital must be served!" But in the new
monetary system capital would be designed to serve the
needs of the economy. It would have to offer itself to
avoid penalty, i.e., it must serve us!
FARMERS
Because of the devastating effects of interest on our
agricultural system, farming provides a particularly good
case for a new money system. Agriculture is an industry
based on ecology. In general, ecological processes
follow a natural growth curve (Curve A in Figure 1)
Industrial processes must follow the exponential growth
curve of interest and compound interest, at present
(Curve C in Figure 1). Since nature cannot be made to
increase like capital, the industrialization of agriculture
has created threatening problems for our survival.
In the first phase of industrialization, farmers bought
bigger and better machinery. Then bigger farmers bought
up smaller farms to become even larger, with the help of
government subsidies and tax incentives. Then the signs
of sickness began to appear and multiply: the depletion
and pollution of water supplies; fertile soils becoming
like dried-out and compacted deserts; the loss of more
than 50% of all species; the overproduction of special
items which could only be sold with more government
subsidies; hybrid produce which is tasteless and
poisonous; total reliance on oil for transportation,
artificial fertilizers, insecticides, pesticides; vanishing
rain-forest to supply packaging materials for long hauls
between the places of production, storage, processing,
selling and consuming.
While interest is only one factor contributing to this
development, introduction of an interest-free money
system would be of particular importance for this
societal sector which secures our survival. Interest-free
loans, combined with land and tax reforms (see Chapter 2
), might allow a larger number of people than presently
expected to return to the land. Together with new
methods of sustainable agriculture, we may witness the
evolution of a different lifestyle, combining work and
leisure, hand and "brain" work, high and low technology,
to serve a more holistic approach to individual,
agricultural and social de
velopment.
ECOLOGISTS AND ARTISTS
When we talk about economic growth, measured in
the percentage increase of the GNP and compared to
previous years, we usually forget that this increase is
related to a larger amount every year. Thus, 2.5 %
growth today is, in fact, four times as much as 2.5%
growth during the 1950s (Figure 16).
Figure 16
Why politicians, industrialists and union leaders still
call for measures to boost economic growth is easily
explained: During phases of decreasing growth rates,
the discrepancy between income from capital and labor
or the redistribution of wealth from labor to capital
becomes more severe. This means increasing social and
ecological problems and economic and political
tensions.
Continual economic growth, however, results in the
depletion of natural resources. That means, in the
present monetary system, we have a choice between
ecological or economic collapse. In addition, the concentration of money
in the hands of fewer people and large multi-national cor-
porations creates a constant pressure for large scale
investments, e.g., atomic power plants, huge dams for hy-
droelectric power, and arms. From a purely economic
angle, the U.S.A. and Europe are displaying politically
contradictory behavior. Installing bigger and better weap-
ons against Russia on the one hand, and sending butter,
wheat and technological know-how to Russia on the other,
made perfect economic sense: Military production is the
only area where the "saturation" point can be postponed
indefinitely as long as "the enemy" is equally able to de-
velop faster and better weapons. Profits in the military
sector are far greater than any profits made in the civil-
ian sectors of our economy.
As long as every investment has to compete with the
money-making power of money on the money market,
most ecological investments, aimed at creating sustain-
able systems (i.e., stopping quantitative growth at an
optimal level), will be difficult to implement on a larger
scale. Today, people who have to borrow money for eco-
logical investments usually lose - economically. If inter-
est could be abolished they might at least break even,
although the difference from other investments (e.g., in
the arms business) would still remain the same.
Let us take an investment in solar collectors as an ex-
ample. If we can expect only a 2 % return on our money,
it would be economically unwise to invest in this other-
wise sensible, ecological technology for producing hot
water, since our money in a bank might pay a 7 % return.
A change in the monetary system would provide people
with a chance at least to break even if they invest in the
maintenance and improvement of the biological basis of
life. This would create a very different impetus for
individuals and groups to engage themselves in
conservation measures and ecologically sound
technologies.
Even the volume of economic activities would be
more easily adjusted to real needs. Since high capital
returns in order to pay off interest would not be needed
any more, the pressure on overproduction and
overconsumption would be considerably reduced. Prices
could be reduced by 30 to 50% which pays for highly
capital intensive technology. In theory, people would
need to work only half of the time in order to keep the
same standard of living.
Within the new monetary system, quantitative growth
would most likely be changed into qualitative growth.
People would have a choice of leaving their new money
in a savings account where it would keep its value, or
investing it in glass, china, furniture, art work or a
solidly built house, which would keep their respective
values. They might well opt for those investments which
would enrich their daily lives. However, the higher the
quality demanded, the more it would be produced. Thus
we could expect a total revolution of values, which
would almost certainly effect cultural and environmental
issues. Many investments in art and ecological
technologies would be able to compete given a "stable"
money and sustainable way of life, and pay without
making large profits. Thus art and ecology would soon
become "economically feasible."
Women
Why do so few women operate in the money sphere?
Whether on the stock market or within the banking world,
this is still a man's realm and exceptions only seem to prove
the rule. I have ascertained from a fairly long-standing
experience with women's issues and women's projects that
most women intuitively feel that there is something wrong
with this money system, although, like men, they do not
clearly know what is wrong.
Women's fierce fight for equality, which is also largely
an economic issue, has made them resentful about pro-
cesses that produce inequity, like the money game. Most
women understand experientially that whatever somebody
gains without work, i.e., through interest and compound
interest, somebody else has to work for it. The latter (in
many cases) will be female. Of that half of the popula-
tion which owns only 4% of the total wealth (Figure 11),
the majority are women.
Women overwhelmingly carry the load of the economic
chaos and social misery caused by the present money sys-
tem everywhere in the world. The introduction of a new
money system which serves as a "technically improved
barter system" may well change their lot dramatically. For
this reason, I expect a high percentage of women to be
among the main movers for a more equitable exchange
medium. They understand what it means to be exploited.
Following the conversion, they may well get involved in
banking and investing to a much larger extent. This would
happen because they would understand that it would be
a life-enhancing rather than destructive system in which
they would operate. Last but not least, this money
system fits their concept of power much better.
Men are used to the hierarchical model of power with
an almighty top and a powerless base. Whoever gets a
chunk of the cake leaves less for the others. It's a
win/lose situation.
Women more often experience power as an infinitely
expandable concept. Whenever someone adds power to a
group, the whole group becomes more powerful. It's a
win-win situation.
A monetary system which expands with growing
needs but stops when these needs have been met almost
automatically creates a win-win situation for everybody
in the long run. Even in the short run, in a crisis
situation, which is what we are in right now.
What women will want most for themselves and their
children is that, instead of another of the hard
revolutionary transitions which have caused such an
endless amount of human misery in the past, the change -
if it could happen before the crash - would provide a soft
evolutionary transition.