by Tim Di Muzio
First, a party of the 99% should be organised around the reform of its country’s monetary system.8 The current system of creating money through debt benefits only the owners of the banks.9 The rest of us, with insufficient incomes for what the economy can produce, get mounting debt that pushes up prices (inflation) and an economy that is effectively controlled by whether bankers feel confident to lend at profit (Rowbotham 1998: 292). For those who are confused about why prices must increase with mounting debt, consider the following example. When a bank creates money by making a loan, it creates all of the money and charges interest (which it does not create).10 While businesses can typically cut wages and try to cut other production costs, the one thing they cannot cut is their debt and interest payments. The cost of servicing their debts to lenders is passed on to customers, pushing up prices. For example, at the end of 2013, business debt in the United States stood at US$13.4 trillion. To put this in perspective, the national debt at that time was US$15 trillion (Federal Reserve 2014). If financial lenders charged a 5% interest rate on this sum, within a year they would generate a little over a whopping US$670 billion. To put this into even greater perspective, let us imagine that the US$13.4 trillion is owed not by United States businesses as a whole but by one firm. Suppose this firm produces and sells bottled water and went into debt to expand its facilities. We know that, at the end of the year, US$670 billion has to be paid to the owners of the bank as interest – and they haven’t even started to pay back the principal! Since the debt now becomes part of the cost of production of the bottled water, the firm will have to increase its prices to service its debt. You can start to understand why the banking industry is the second most capitalised industry on the planet after oil and gas. You can also start to understand that inflation is not about too much money chasing too few goods, as in the standard account, but, as Rowbotham (1998: 17) has convincingly argued, most inflation is the result of money created as debt. In other words, our banking system is purposely designed to benefit whoever owns the banks first and foremost. We might do well to find out who they are.
Of course, we might have some sympathy for the banks if they actually acted as intermediaries between those who wanted to save money and those who wanted to borrow, but this is clearly not the case. As already stated, bankers create money out of thin air whenever they make a loan. Since credit is now just numbers in a computer, there is no reason whatsoever why a few dominant owners should get rich thanks to everyone else’s hard work and their need for money in a market-driven society. So any party of the 99% has to go straight to the heart of the matter and reform the monetary system. This is the most important task and it can begin with a worldwide education campaign to notify the publics of the world about the dangers of debt money, after which a democratically controlled debt-free money system can be created. The party of the 99% should fight to constitutionalise the fact that the public is in control of its own money supply and can create it debt-free. There are a number of proposals for how exactly to accomplish such an ambitious task, and each party of the 99% should debate which plan is the most suitable for their country. For example, in the UK, Positive Money is currently making headway educating the public about the corrosive nature of the monetary system. They have also made a number of interesting proposals for the creation of debt-free money.11 So let us be clear: until we get our money right by taking it out of the hands of for-profit bankers who have the power to create it as debt, we will have higher prices for goods and services, mounting debt, more economic crises, more unemployment, more social unrest and an economy dictated to us by the dominant owners of banks and their managers. The current monetary system is a fraud pure and simple and it must be completely reformed.
Whatever the exact technical details, the party of the 99% should introduce a public bank to issue debt-free money. The main investment objectives a public bank should pursue are any mix or any one of the following: 1) investments that create jobs in the local community; 2) investments that encourage the production of the most durable goods; 3) investments in research and development to enhance the quality of life; 4) investments in renewable energy; 5) investments in sustainable public infrastructure; and 6) investments in local sustainable agriculture. The bank will also have responsibility for funding other social goals noted in the paragraphs below. A final thing a party of the 99% might do as it starts out is to ensure that its citizens cannot hide their money offshore to evade taxes. This can be done by banning correspondent banking with the new publicly owned banks and increasing transparency.
Second, education, healthcare and childcare should be universal and free. Once again, there are a number of ways in which this can be accomplished and each party of the 99% will have to orchestrate its own path to implementation. This will be easier to accomplish in some countries than in others, since many of the most civilised countries already provide non-profit healthcare and education up to and including post-secondary education. All three concerns should be run at cost, with salaries clearly negotiated, made public and commensurate with skill and years of service. These services should be accessible to all and paid, debt-free, from the new public banking system. All knowledge produced by these institutions – particularly the universities and hospitals – should be available publicly for free online. Obviously, there will be different ways of setting these goals in motion, but a party of the 99% should ensure their implementation.
Third, a party of the 99% should ban all money from politics. Instead, politicians should be given a reasonable set of public funds to run their campaigns. Such funds will only be released at the beginning of the election cycle if a political party achieved 3% or more of the popular vote in a previous election cycle and if it has a clear political programme. A new political party should be eligible for reasonable start-up money as long as it meets certain criteria, such as a certain number of supporters. This will help eliminate fringe or less serious parties. Campaigns should be short in duration so money can be used for other priorities. Businesses and non-profit organisations should be banned from making political advertisements during the election campaign. Individuals who wish to make campaign videos or posters must attach their names to the work to ensure accountability. Where possible, every effort should be made to move away from representative forms of democracy to more direct forms of democratic decision making. The internet can help facilitate such a project.
Fourth, a party of the 99% should aim to abolish the wasteful and innovation-killing patent system. Patents were the original way in which a monarch granted a monopoly to private interests – typically for an invention. Some believe that patents are the only way to encourage innovation: they reason that ‘inventors’ invent only if they can profit from their discovery. This might be so for a few individuals, but on a societal level where research and development funding can now be offered debt-free, this is highly unlikely. People will be rewarded for their contributions, but no one will be able to claim ‘ownership’ over a discovery. Since knowledge and language are social products and patents are a way of privately claiming a monopoly over knowledge, they should be abolished. This may sound like a radical step to some but it is also the position of researchers at the Federal Reserve Bank in St Louis:
A closer look at the historical and international evidence suggests that while weak patent systems may mildly increase innovation with limited side-effects, strong patent systems retard innovation with many negative side-effects. Both theoretically and empirically, the political economy of government-operated patent systems indicates that weak legislation will generally evolve into a strong protection and that the political demand for stronger patent protection comes from old and stagnant industries and firms, not from new and innovative ones. Hence the best solution is to abolish patents entirely through strong constitutional measures and to find other legislative instruments, less open to lobbying and rent-seeking, to foster innovation whenever there is clear evidence that laissez-faire under-supplies it (Boldrin and Levine 2012).
We have the best chance of uncovering new knowledge, creative work and inventions where people are able to work together cooperatively and share knowledge without the threat of being sued for infringing someone’s income stream. Anyone who is in doubt about this should do themselves a favour and Google ‘Jack Andraka’ and ‘knowledge democracy’. At the age of 15, Mr Andraka found a promising new early detection test for pancreatic (and other types of) cancer. The biggest obstacle he faced was not his own intelligence but accessing information, due to the high paywalls of academic journals. He is a strong advocate of the internet and argues for a knowledge democracy. A party of the 99% should propel this idea forward.
Fifth, a party of, by and for the 99% should make insurance public and not for profit. Insurance works on the principle of the law of large numbers: the larger the number of people involved in the insurance scheme, the less likely it is that everyone will experience the same calamity. People who do suffer an injury or accidental death are paid out of the contributions provided by those who do not experience an accident or injury. There is no reason whatsoever why insurance provision should be owned by private individuals making money out of the misfortune of others. This is the capitalisation of our injuries, accidents, misfortunes and death. Private insurance provision also violates the law of large numbers through exclusion. From a risk reduction and mathematical point of view, it makes much more sense to put the entire population of a country under an insurance scheme that can provide benefits when unfortunate events occur. Once again, the publicly run banking system can provide for this debt-free, with no premiums required. In other words, everyone is covered by virtue of being a member of the political community.
Sixth, a party of the 99% should fund retirement at a democratically agreed-upon age. Those who want to continue to work should be able to but those who want to retire can. There should be a basic yearly amount given to those who choose to retire that is in accordance with the general standard of living. It can be adjusted as need be. Since the aim is to have no debt money in the economy pushing up prices, funding retirement will also be done through the publicly owned banking system. This will be a big change from the many pension systems that act as large capitalists capitalising firms and government debt. Pension fund managers are also concerned with better than average returns for their clients or differential accumulation. Since one of their concerns is the share price of corporations, pension fund managers have in many cases exerted their influence over the economy to the detriment of workers (Harmes 2001).12 The party of the 99% should abolish current pension fund schemes and return the funds directly to the individuals who made contributions or had contributions made on their behalf. This is because pensions will now be guaranteed by the public bank through the creation of debt-free money.
Seventh, a party of the 99% should provide each adult individual with a guaranteed income through the public bank.13 The income should be set at a level that secures a basic standard of living. Critics will immediately cry out that this will lead to universal laziness. It will not. A guaranteed standard of living produces important social goals by taking the power of the sack away from employers. First, it establishes a rule of greater freedom than is currently enjoyed by the majority of workers. The idea is premised on the fact that we are creative, productive beings and work is a large part of our subjectivity or identity. Most people want to work but they want to work in employments that are meaningful to them. With a secure income, we can be sure that those who work for added income will be doing so because they want to contribute to society in some way. Second, a guaranteed income solves the problem of unemployment and does not create any new interest payments. Third, with a guaranteed income, people will likely choose to work less, increasing their leisure time and potentially leading to a drop in the consumption of goods and services. This is a worthwhile goal not only because leisure time is valued by all, but also because people will probably consume less. Without doubt, some will be up in arms about this proposal in such a materialistic economy where social status is connected to possessions and shaped by advertising and marketing. But, from a sane point of view, we know from studies that after a certain threshold of wealth, individuals are no happier having more and more stuff. It seems that acquiring more and more possessions is not about happiness but about power and the demonstration of it. If we displace the logic of differential accumulation and stop creating debt money, no one will make enough money to acquire an inordinate amount of goods in the first place.
Eighth, a party of the 99% should seek every way possible to transition away from fossil fuels. There are no quick fixes here, but time is of the essence if we want the transition to be relatively painless and peaceful. Three important studies have convincingly demonstrated that there is no way to socially reproduce current patterns of high-energy consumption in rich countries with alternative energy (Heinberg 2009; Trainer 2007; Zehner 2012). Of course, a party of the 99% should invest in renewable energy and implement renewable energy schemes wherever possible, but the party should also have a programme to reduce material consumption and promote low-energy leisure activities. As suggested, a guaranteed income should help in this pursuit.
Ninth, all parties of the 99% should work together to demilitarise the world. The military industry is also capitalised by dominant owners and they profit from conflict or the threat of conflict. Most of the bill is paid for by taxpayers and future generations, not to mention with the lives of soldiers and innocents. This is wasteful expenditure and we should not have our scientists working on solutions for how to kill people more effectively. In a social order where everyone is guaranteed a decent standard of living and there is no chance of gaining excessive power over others, there will be no need for a military. Some may recoil at this suggestion and believe it unrealistic, but the idea has deep roots in the liberal tradition. Concerned with the potential for a military dictatorship, people always feared standing armies. It was only with the rise of the capitalist mode of power that professional militaries became a cornerstone of Western states. As the capitalist mode of power withers, so too will the need for wasteful expenditure on an apparatus of violence, surveillance and death.
Tenth, a party of the 99% should ensure that the only income stream available other than the guaranteed income from the public bank comes from a person’s direct labour. What this means is that no one will be able to capitalise the labour power of another or take undeserved rewards. Individuals will be free to form producing associations and, if they require investment, they can issue a proposal to the public bank. Provided that it meets the objectives of the public bank, the money can be created for the project. All projects funded by the bank should be transparent: this means that the entire entrepreneurial plan is made public. All businesses will be run on a not-for-profit basis and the 99% should design a salary schedule for each employment with strict caps at the top. Should some jobs that are necessary for the reproduction of society fall into abeyance because no one wants to do them, the government can offer special inducements where these jobs are necessary to support a decent quality of life for all. It could very well be that those working in sanitation and health end up making the most money – but, of course, always within democratically decided reason.
These ten points are not a magical panacea for a perfect world free of all social ills and of the vast ecological problems we face. There will be much more to do and debate, of course. For example, we need to abolish the debt of developing countries and reclaim the unearned gains of leaders who have stolen much of this money. But I would argue that the measures above would increase human happiness and human security while pushing us on a more sustainable path for future generations. Their implementation would also go a long way in ridding the world of an illegitimate system of power and control that is leading us in the direction of civilisational ruin. The problem is differential capitalisation based on a debt money system owned by the few. In a more democratic and less hierarchical order, no one woul
d be allowed to capitalise the labour of another or of society as a whole for their sole benefit, just as no one is presently allowed to legally own another human being as chattel.
Creativity, power and the meaning of life
I began this book with Braudel’s observation:
Conspicuous at the top of the pyramid is a handful of privileged people. Everything invariably falls into the lap of this tiny elite: power, wealth, a large share of surplus production ... Is there not in short, whatever the society and whatever the period, an insidious law giving power to the few, an irritating law it must be said, since the reasons for it are not obvious. And yet this stubborn fact, taunting us at every turn. We cannot argue with it: all evidence agrees (Braudel 1983: 466, my emphasis).
Braudel considered the period from the fifteenth to the eighteenth century and found this law to be an extremely accurate portrayal of the era. As we have seen, the evidence presented in this book only confirms Braudel’s observation for our own time. But unlike Braudel, who argued that the reasons for this gross inequality of wealth and power are ‘not obvious’, we have uncovered exactly why it is so: the capitalisation of income-generating assets and the logic of differential capitalisation rooted in ownership. Most people on the Earth do not follow this logic even though they are ensnared by it in their everyday lives. The 99% are far more concerned with having a decent livelihood and secure employment than with pursuing power or trying to control and capitalise the labour of others. They work, search for work, and, if they are lucky in this system, have one income stream from their labour. Only a very small fraction of the planet’s inhabitants pursues the logic of differential accumulation, and, as we saw in Chapter 2, the goal of this logic is to achieve greater inequality of income and assets (Nitzan and Bichler 2009). The corporation and ownership are their biggest weapons, and, in order to accumulate, corporations must, as going concerns, exert their power over the entire social process and control and limit human potential and creativity. As we have already discussed in the opening of this book, we know we have the capacity to ensure a decent quality of life for everyone on the planet (our technology and knowhow are there), but this does not happen. It does not happen because we are being held hostage by a logic whose ransom is profit and whose goal is the increasing inequality of power.
