Rethinking Money

by Bernard Lietaer

  The more a value set between the parties is discordant, the further the rating drops. A deal can be accommodated, nevertheless, if both parties agree to a discounting of the value of the currency. Again, the score is predetermined by each user’s own rating tariff.

  If the situation of a low rating occurs—a three or less—it indicates that the values are so out of sync that there’s no amount of money that would close the deal, and both participants walk away. The exchange may not have happened, but both sides can take solace in the fact that they walked their talk and didn’t put their money where their mouth was not.

  “Um, we may have a problem here,” claims Nicholas after a few moments.

  “On first pass, it looks like a block of 4,000 euros was paid to shareholders by Petro-Co. They’ve just had an oil spill in the Caspian Sea. Their money is only worth 40 percent in my preterms, and that’s only because they’re doing a good cleanup job and not ripping the locals off.”

  “My aunt gave me that money for my birthday. She thought I would be able to spend it for full face value because of their efforts! Accidents do happen, you know.”

  “There may well be other takers out there, but I’m not inclined,” says Nicholas as he starts to pocket his phone and takes a sip of his coffee.

  “I would make up the difference, even if your rating is unbelievably tough and unreasonable!” Stephen sighs.

  “No, even if you were to double the difference,” declares Nicholas emphatically.

  “There’s no way we can come to terms, then? I really love the car.”

  “On principle, I can’t. Not on this issue. Not today. Anyway, let me buy the coffee.”

  SÃO PAULO, BRAZIL, NOVEMBER 16, 2031

  Jaime looks chuffed as he moves his knight into position. He sits back and sinks into the overstuffed armchair and takes another snip of his caipirinha. The fourth movement of Dvorák’s New World Symphony plays in the background. A gentle breeze wafts through his friend’s large and opulently appointed study, walled with floor-to-ceiling shelves of first-edition and leather-bound books. Mementos from foreign trips, personally autographed silver-framed photographs from the influential and famous, and gilt-edged degrees and statements of recognition are placed strategically to impress. The evening air is perfumed with the scent of lilac.

  His opponent, Alejandro, ponders his next move. He exhales his cigar smoke slowly and declares, “My friend, I think you’re going to beat me, again!”

  “Well, a 10-year stretch in prison gives one a lot of time to perfect one’s game!” replies Jaime.

  Alejandro throws his head back and launches into a deep-barreled laugh. “It’s a unique friendship, ours, the former car-jacker and the industrialist,” he rejoins, regaining his composure and smiling broadly at his most improbable friend.

  “My children and their kids all had to be specially chauffeured in armored cars to avoid the street rats,” Alejandro continues. “Those days were hell. Miserable for everyone all round.”

  “And it went a lot deeper. You know, I watched my old man sit in his rocking chair waiting to die. He knew his family loved him, of course. But he felt useless in this age of technology. He felt washed-up as nobody really gave a toss about what he thought, what he had to offer. I suppose you would have called him a loser, like the vast majority of his generation.”

  Alejandro nods in agreement and adds, “My father had his orbit of considerable influence, as you can imagine. I never talked to him about this. But if I were to guess, I would say he was lonely, too, just like your Dad. For different reasons surely, but forlorn, nevertheless. Everybody was looking for something from him. Everyone! It was relentless and he ended up trusting no one.”

  “Our funerals will be different, very different from those of our parents,” rejoins Jaime. “Just think of the crowd that will turn up, from all the walks of life that we’ve gotten to mingle with over these past decades. Folks that know us for what we gave and shared, the ones who have come to know us truly for who we are, not for what we might own and have.”

  “Love, actually!”

  “Love and respect.”

  “And we don’t have to wait for the eulogy at the wake to find out.”

  “Nope, isn’t that the truth. My days now are filled with such contentment, wherever I go. I know I’m changing lives, be that in small ways.”

  The men look at each other. After a moment’s silence and changing the mood, Jaime interjects, returning their attention to the game board. “So, do you want me to give you a hint?”

  Chapter Thirteen

  RETHINKING MONEY

  From Scarcity to Sustainable Abundance

  The debate on the future of money is not

  about inflation or deflation,

  fixed or flexible exchange rates,

  gold or paper standards,

  but about the kind of society in which

  money is to operate.1

  GEORG SIMMEL, German philosopher and sociologist

  Scarcity, particularly our warped view of monetary scarcity, which we inherited, can best be summed up in the following allegorical tale.

  A fisherman encounters a philosopher and happily informs her about his discovery: that all life in the sea is at least two inches long. Furthermore, the fishmonger has repeatedly made several market tests that prove his position unequivocally. Consequently, nobody wants fish smaller than two inches because they have never seen one. The philosopher smiles kindly and advises him gently, “There is a simple explanation for your findings: Your net has a two-inch mesh. If you were to use a net with finer-gauged netting, or employ another method, you would find that the ocean is a lot richer than you think. In fact, it’s teeming with life. There are thousands of smaller species of fish in the sea, and oysters, clams, and snails that your nets will never catch. What’s more, your research is skewed, since anyone you’ve ever surveyed could only buy seafood that’s greater than two inches long, or wide, for that matter. Your fishing nets, dear man, predetermine your perception of reality.”2

  Donella Meadows, a systems thinker and advocate for sustainability, puts it another way: “Your paradigm is so intrinsic to your mental process that you are hardly aware of its existence until you try to communicate with someone with a different paradigm.”3

  The paradigm of the conventional, hypercompetitive money system is similar to the fisherman’s net that limits what can be perceived and valued. Furthermore, because this purview has become so ingrained, to believe that there is another way, a cooperative way, is nigh impossible.

  The dire consequences of this misperception are compounded by the many grave issues that now challenge humanity, such as the erosion of the middle class, economic growth without job creation, a deepening ecocrisis, the growing ranks of the uninsured, and an increasing illiterate and innumerate underclass.

  For the most part, our educational systems remain rooted in the outdated and fractured Prussian model, which teaches people to take orders rather than think for themselves. Paired with the technological advances in communications, we are left swimming in an ever-engulfing sea of facts, unable to find meaning, never mind wisdom.

  As entire economies are derailed, retirement plans for those in their golden years and the dreams of younger generations are dashed and left to burn on a funeral pyre of neglect. Growing sectors of the population remain disregarded and underserved. Furthermore, the failing economies make paupers of us all by eroding our well-being, our sense of security, and the honoring of our innate gifts and skills, and perhaps most profoundly, by threatening the very sustainability of our fragile blue-green planet.

  There is plenty of blame to go around. While the rhetoric of culpability cites failed policies, the deeper causes are the flawed structure of the conventional competitive money system and the obstacles to examining it.

  As we have seen, our current beliefs and practices about money, deliberated by high priests in the temples of central banks, were extrapolated from a series of economic
assumptions based on the faulty and incomplete understanding of physics that prevailed at the end of the 19th century. They reflect the limited Newtonian view of a clockwork universe, static and immutable, rather than the more dynamic, complex, highly interdependent, and unpredictable universe of Bohr and the modern school of nonlinear dynamics.

  Policy making, whether in business or in politics, based on forecasts distorted by the conventional money system is at best shortsighted, if not outright erroneous. Classic economic solutions tend to fall into one of two categories: to depend on the vicissitudes of the free market and rely on trickle-down economics or to implement strategies that attempt to redistribute wealth.

  As long as conventional money retains its monopoly, there will always be insufficiency and untended needs. Indeed, this monopoly fuels both rampant fear of scarcity and its partner, greed. The traditional hyperrational explanations offered up for this ongoing universal suffering, disenfranchisement, and injustice fail to address the real issues.

  Until the true problems are uncovered, real and sustainable solutions are unlikely. For example, it is nearly impossible for a corporation to plan for the long term because of the pressure to produce quarterly gains to satisfy their shareholders. According to research, 78 percent of executives would “sacrifice long-term value to meet earnings targets. Moreover, the recent rise in equity-based compensation and the sensitivity of CEO turnover to the stock price has likely increased managers’ myopic tendencies.” 4 Another survey polled 15 nations, most of them in the developing world, and found that the majority of people canvassed want their governments to take steps to fight climate change, even if that entails costs.5

  Money is still the most powerful secular force.

  But money is merely a human construct. And like any human-devised technology, it needs to be reviewed and revised regularly to increase functionality and work out the inevitable bugs. We need Money 2.0, a new monetary ecology in which an array of different currencies, both cooperative and competitive, flow through all levels of society and all sectors.

  Then this technology upgrade—money—transmutes. As shown in the fisherman’s net story, “scarcity is contextual and [this] technology [becomes] an abundance-liberating force.”6

  WORK VERSUS JOBS

  The notion that we can get the global economy back on track by stuffing the technology genie back into the bottle and return to the halcyon days of well-paying employment is a myth. It’s much more complex. Developments in science make it possible now for factories to operate in complete darkness, with robotics replacing the flesh-and-blood assembly-line workers, with alarming alacrity. Jobs in the United States have been exported en masse to China, where labor costs are much lower; yet even in China, plans are evolving to replace the human labor force with robots and androids.7

  And it doesn’t stop there.

  What is being touted as the Third Industrial Revolution is now well underway. “The old way of making things involved taking lots of parts and screwing or welding them together. Now a product can be designed on a computer and ‘printed’ on a 3D printer, which creates a solid object by building up successive layers of material. The digital design can be tweaked with a few mouse clicks. The 3D printer can run unattended and can make many things which are too complex for a traditional factory to handle. In time, these amazing machines may be able to make almost anything, anywhere—from your garage to an African village.”8

  With the press of a button, the replacement for a broken vacuum cleaner part, for example, will be instantaneous and localized, if not at home, then at the neighborhood print shop. In such a scenario, industrial hubs with their networks of roads and railways that support the distribution of goods will become a thing of the past.

  This movement to smaller and more localized production and distribution of goods will be widespread and universal. Energy, food cultivation, and water systems will be designed on a local scale but culminate in a matrix where everything scales from the smallest up to the largest while maintaining the fractal properties. Eventually, many more things will be designed to be distributed, scalable, and replicable. This ensures resilience and interdependence and consequently provides security and peace of mind.

  Physicist Dr. Frank Baylin comments: “This is why, for instance, we see a multitude of smaller-scale, natural farms that follow nature’s heartbeat, why truly renewable and sustainable energy systems will feature many smaller-scale, decentralized facilities in combination with just a few massive plants, and why cooperative currencies are so crucial for the survival of one-size-fits-all national, debt-based, fiat currencies. Furthermore, just as natural systems are inherently diverse, resilient, and able to rapidly self-repair when they are given half a chance, so can economic ecologies thrive when using an appropriate mix of conventional debt-based fiat and cooperative currencies that draw upon the existing but often unsourced talents and passions latent within any culture. If we do choose, however, to not go with the natural flow, we will suffer the obvious consequences of successive crises and ultimate failure.” 9

  As these systems evolve, our concept of work will also be transformed.

  The distinction between job and work is an important one to understand. The word job is relatively new, dating only from the Industrial Revolution. It was initially defined as a “pile of things to be done” or, even more precisely, “something done for hire, with a view for monetary profit.”10 In contrast, work is a very old word. Its first appearance in English dates from the Aelfric Homilies of the 11th century: “That work was begun under God’s will.” In English, the words work and worship have the same root. Some languages, such as Hebrew, still use the same word for “work” and “worship” today.

  As new currencies are designed and circulated, many new means of making a living will emerge. Unlike today, when our passions most often are divorced from our jobs, work will encourage “following one’s bliss.” We will be remunerated for using our abilities and talents in the emergent multicurrency environment.

  This is already happening, as ordinary people are doing extraordinary things within their communities.

  By using additional monetary tools, new possibilities surface to meet the serious challenges of the 21st century. This is achieved not only by the mindful design of innovative cooperative monetary systems, including those already established, but also by those to come that will follow nature’s grand design by creating a monetary ecosystem. This is a system where local, regional, and purpose-driven currencies balance out the role of the larger-scale national and supranational currencies and, by their scale and range, lead to a new paradigm of win-win, a system that benefits all.

  Monetary scarcity can be a thing of the past. This core message has been communicated in various ways.11

  It is powerful and compelling to realize that we now have in our hands the tools to fashion the world we envision for ourselves and future generations.

  We seem to be just baby steps away from starting a journey of revelation and invention. Despite centuries of discoveries, astronomers and physicists say that only 5 percent of the universe is currently known,12 let alone understood. Even closer to home, on our own planet, less than 5 percent of the oceans have been explored.13 Furthermore, we certainly don’t know what we don’t know.

  Humanity’s ability to shift and adapt is grounded in education. Daniel H. Pink writes engagingly about the surfacing of predominantly right-brained thinkers, those who are mentally highly visual, intuitive, and nonlinear in their thinking, and how brains wired this way are the best hope for humanity’s future. Pink says, “The future belongs to a different kind of person with a different kind of mind: designers, inventors, teachers, storytellers—creative and empathic right-brained thinkers whose abilities mark the fault line between who gets ahead and who doesn’t.”14 New paradigms in education are beginning to take into consideration this increase in right-brain dominance, particularly in young children, providing a welcome alternative to the traditional Dickensian dr
ill-and-kill methods.

  “Frankly, it’s not good enough to just simply think outside the box anymore. We need to throw the box away and think in an entirely different way. In order to do that, we need to teach our children how to learn by capitalizing on their individual strengths. And each is unique. That way a life of continual learning, adaptation and empowerment is possible. Each person can truly access his or her genius—a compass to follow one’s individual bliss,” comments Kimberly Kassner, author of You’re a Genius—And I Can Prove It! Each person, when given the opportunity, becomes a unique and brilliant being.15

  This shift away from paradigms that are seated in competition and unmitigated self-interest is taking place in other areas of endeavor as well.

  “Traditional aid and economic development is analogous to the proverbial ‘giving them fish or teaching them how to fish.’ And too often, teaching them where the knowledge cannot be applied because the playing field is skewed against them and rules of the game are set by a few people from a scarcity mind-set. In the context of the globalized world today, the next crucial developmental shift is to not only give them fish and teach them how to fish, but to set new rules from a mindset of abundance based on a just and sustainable world giving them market access, financing, and the expertise to adapt the technologies of angling as the nature of fisheries will inevitably change; and nest these technical skills and systems understanding in people’s agency—their transformational leadership capabilities,” says Dr. Monica Sharma, former director of Leadership and Capacity Development for the United Nations.16

  She explains that contemporary leaders of courage and compassion are operating from a profound space. These leaders are pattern makers, not just problem solvers. They deal with what is not working by creating alternatives. They are able to identify, distinguish, design, and generate responses that integrate the different domains related to the entangled hierarchies of any given situation. They do more than solve complex societal problems at a surface level. They actively address the deeper dimensions of reality. They demonstrate that it is possible to design and implement programs differently: solving problems; synthesizing and making sense of the invisible patterns affecting reality, as well as endless incomprehensible bits of information; breaking new ground; and establishing alternatives—ethical and principled action sourcing their inner values and wisdom.