New Money for a New World

by Bernard Lietaer

  The elderly receiving care report strong preferences for the services offered by Fureai Kippu caregivers to those who are instead paid in conventional national currency. The main reason cited is the qualitative difference in the relationships. Fureai Kippu recipients consider the care to be more personal. Many of the caregivers involved in these programs report similarly that they often perceive the elders they treat as surrogates for their own parents. In short, the relationship is different!

  An estimated 387 Fureai Kippu systems are now operational in Japan.251 The economic savings are substantial; the human support network makes it possible for the elders to stay in their own homes longer or return home sooner after a medical intervention, rather than remaining in far more costly clinical or hospice settings. The savings, the human interaction involved, and the greater sense of community that is engendered benefit all. And, as in the case of Curitiba, Brazil (see Chapter One) these benefits are derived without having to raise taxes or divert funds from other vital programs. No one is burdened for the improvements.

  Takeo Hiranuma, a former head of Japan’s METI, stated in no uncertain terms: “The use of complementary currencies can bring an end to the long-lasting deflation of the Japanese economy by supplying additional monies of various types at the local level.”252

  To give some sense of the sheer magnitude of the initiatives now taking place in this prominent world economy, the following maps of Japanese complementary currency initiatives are offered. Keep in mind that the 387 branches of Fureai Kippu have not been included, as they would simply overwhelm the map to the point of making it unreadable.

  The Japanese Exception and Its Significance

  The two decades long “Japanese crisis,” as it is typically described in the Western media, may not be an isolated Japanese economic problem. Their ongoing recession may instead be the symptom of a structural world crisis that chronologically happens to have hit Japan first. The arrival of the so-called Information or Knowledge Age represents a major structural shift; it is not only a new beginning but marks an end as well. The last shift of such magnitude occurred when the Industrial Age precipitated the end of the Agrarian Age. Such dramatic shifts are far from painless. One need only look at what happened to the farmers, many of whom lost their livelihood and way of life; or the landed gentry, who saw their values, power, and traditions fade into irrelevancy as the Agrarian Age ended.

  If Japan is but the first nation to experience what is inevitably waiting for the industrialized world, then the rest of us had better take notice.

  Until recently, the classical European recipe has been to do a little more like the United States and everything will return to normal. In the aftermath of the Great Recession, however, with millions left unemployed, after the bursting of the U.S. high-tech and real-estate bubbles, Europeans are slowly facing up to the realization that what happened in Japan may also happen in the United Kingdom, Italy, France, Greece, and elsewhere. The specter of deflation—a systemic sign of overcapacity across the board—is now considered a serious possibility outside of Japan as well.

  A similar path of denial can be expected in the coming years by the United States, repeating a mantra heard by the Japanese for more than a decade: “Next year, the economy will be back to normal.” We can also expect similar economic proposals and debates regarding tax cuts, lower interest rates, and public works. But if we are in effect living through a structural shift at the end of the Industrial Age, such recipes will predictably fail, similar to what has transpired in Japan.

  It is under this light that what is going on in Japan in the domain of complementary currencies is relevant for the rest of the world. One of the world’s leading economies has turned itself into a real-life laboratory for resolving a variety of economic and social problems from the bottom up, thanks to monetary innovations. China and Switzerland are now in the process of implementing Japanese-style Fureai Kippu system experiments for their own elderly and disabled. Can the rest of the world afford not to learn from those experiments?

  THE SABER

  The Saber (“sah-BAIR), derived from the Portuguese word for “knowledge,” is a Brazilian complementary currency initiative created to address educational needs, designed in collaboration with Professor Gilson Schwarz from the University of Sao Paolo.253 Unlike LETS and Time Dollars, both of which are mutual credit systems, the Saber currency is backed by conventional fiat money. Though intended specifically for use in education, this particular design also helps to illustrate how limited public funds can be leveraged to provide a much greater return for use in meeting societies’ needs.

  Brazil’s institutions of higher learning are running below capacity; university lecture halls are rarely if ever filled. This is related to the economic realities of the country, with large numbers of poor. As elsewhere, adolescents from poor backgrounds are less likely to pursue higher educations. Though the economics of education is a very complex issue, inadequate subsidies limit the availability of educational tools, resources, and personnel to help students excel, particularly those students from economically depressed areas. Additionally, poorer students, even those who do excel, usually lack sufficient personal financial means to afford higher educations.

  When Brazil privatized its mobile telephone industry in 1998, it introduced a special one percent tax that was earmarked for higher education purposes. By 2003, this Education Fund had grown to more than $1 billion. The question on Professor Schwarz’s mind was how to get the best bang for the billion? Conventional solutions, such as the American GI Bill, which helps finance education for those veterans who have served in the military, provide student loans directly to individual applicants for their own education alone. Brazil’s proposal instead creates a “learning chain” that co-involves a number of students and allows each to benefit from the same initial amount of money.

  The original design for the Saber education currency was allocated first to primary schools, particularly in poorer communities where school funding is not sufficiently available. This currency is designed to incentivize students to help both themselves and other students through tutoring. Each Saber is first given to the youngest students in primary schools, who transfer this currency to older students (for instance, 3rd graders) in return for the help they receive with their schoolwork. In compensation for the hours spent mentoring, these older students can make use of the Sabers they earned to get assistance from 4th or 5th graders, and so on.

  Through this learning chain, anywhere from five to ten students receive help from advanced students using the Saber. At the end of this cycle, the currency would finally go to senior students who could then use the Saber to pay for part or all of their university tuition.254

  Private universities could exchange Sabers for conventional money with the education fund, but at a discount of up to 50 percent. This approach not only helps students, but makes economic sense to universities. The marginal expense incurred by an additional student has little impact on universities as most of their expenditures are fixed. Similar to empty seats on an airplane or in a movie theatre, universities remain open and professors teach whether a lecture hall is full or half empty. Better to get half of a tuition fee for an otherwise vacant seat than none at all.

  The benefits of the Saber not only include economic savings but extend to other important social returns as well.

  A Learning Multiplier

  Several decades of research have shed new light on learning retention, that is, how much of what is being taught is remembered. Retention depends less on the person who is learning or on the particular topics of study, but is instead more directly related to the kind of delivery mechanism involved—the process by which the learning takes place. Research shows that average learning retention rates are dramatically higher when learning occurs actively rather than passively, as illustrated in the learning pyramid, next page.255

  What is striking is that traditional education systems commonly use the two least effective methods avai
lable: lecturing and reading, by means of which only 5-10 percent of what is being taught will be remembered. In stark contrast, an impressive 90 percent retention rate applies to what one teaches others. There is therefore, a ninefold to eighteenfold increase in learning retention rates.

  Factoring in retention rate gains and other benefits derived by using Sabers amounts to a very significant bang for the educational buck:

  Figure 15.1 - Learning Pyramid

  a fivefold minimum leverage increase via the learning multiplier (the number of students making use of each Saber), which allows educational funds to be used for many more than one student;

  a tenfold average leverage increase in learning retention, via active tutoring (actually from ninefold to eighteenfold increase, but averaged out to its near lowest estimate);

  a twofold leverage increase as a result of the 50 percent discount applied to redemption of Saber complementary currencies by the Education Fund.

  The overall multiplier effect of using Sabers is at least a hundredfold (5 x 10 x 2 = 100).

  This rough estimate of $100 billion in education benefits by use of the Saber compared to $1 billion obtained through conventional scholarships, though significant, still does not tell the whole story. Other benefits, though less-readily quantifiable, include: maximization of university facilities; the hope, opportunity, and stronger bonds generated among students; and the related benefits to family members, the community, and society as a whole of increased educational opportunities.

  The Saber program could also be expanded beyond the conventional classroom. Students could, for example, teach their newly learned reading and writing skills to illiterate parents or grandparents, or help the elderly and handicapped by reading or recording oral histories of a region. These types of programs would encourage intergenerational relationships and further learning, provide extra-needed assistance for the elderly without burdening government coffers, and offer students the opportunity to experience the sense of accomplishment that comes with active citizenship through rendering service to others.

  The Saber and the Brain Shift

  One of the few certainties we have about our collective future is that it will require a massive amount of learning by just about everybody, everywhere. As noted by a background paper for the OECD Innovation Strategy, improvements in learning could very well become a key leverage point for successfully meeting the challenges of the 21st century: “Only countries that implement policies to reform their education to promote adaptability and creativity in adults and children are likely to remain at the forefront of human development and technology.” 256Other recent reports from different countries have come to a similar conclusion.

  The problem is that most educational systems today are not designed with 21st century understandings or objectives, and do not promote adaptability and creativity. Current education and training systems instead tend to develop conformity and alignment instead of creativity, competition instead of collaboration, and knowledge reproduction instead of knowledge creation!257 The public educational systems in the United States and many other countries today are, in fact, based on a very narrowly-focused set of industrial-age assumptions and objectives that, like our monetary system, date back centuries (see insert).

  The Origins of today’s Public Education

  Today’s education system is based on a model to create a society of dutiful, obedient foot soldiers. As Thom Hartmann points out in his book, Beyond ADD, our system of learning dates back to early 19th century Prussia (now Germany), a country renowned for its merciless and efficient army—until it suffered a staggering military defeat at the hands of Napoleon. Prussia’s shocked leaders were determined to find out why their soldiers had gotten so soft. Philosopher Johann G. Fichte, in his “Address to the German Nation,” indicted the country’s school system, citing its failure to produce compliant pupils. Brash, undisciplined students, he asserted, went on to become disobedient and rebellious soldiers.

  In 1819, Prussia established a universal compulsory school system with the goal of producing dutiful children who would follow orders and become winning soldiers. This strategy worked, at least for a time. Over the next five or six decades, Prussia became a leading industrial and military power due largely to an efficient, though uninspired workforce and army.

  Governments from other nations sent representatives to Prussia to discover its secrets of success. Horace Mann, an influential educational figure from America, was among those summoned. Duly impressed, Mann raved about how the disciplined Prussian school system could be useful in America to cure social ills, tame the Wild West, and provide quality workers.

  Not surprisingly, U.S. industrial leaders embraced the concept of a system that would provide colonies of compliant workers to labor in factories and on railroads. In the words of Hartmann, "So began the dumbing down of America.”258

  Like our monetary paradigm, the education system that came into being in the 19th and 20th centuries confined itself to a very narrow set of industrial-age objectives and suffered from the limited understandings of the period regarding human intelligence and learning. Moreover, this system of teaching was unaware of and not prepared for the shift that has been taking place in recent decades from left to right brain thinking.

  It has been known for some time that there are different forms of intelligence. Project Zero at Harvard has documented eight distinct types, out of which primarily two are developed and measured in the conventional education system: the verbal/linguistic and the logical/mathematical. The other six forms of intelligence tend to be simply ignored.259 A child who is gifted primarily in one of the other modes of learning—musical, spatial, bodily/kinesthetic, intrapersonal, interpersonal, and pattern recognition—is likely to end up being considered as mediocre and become an educational failure.

  Different forms of intelligence are, however, only part of the story. What has also been pretty much ignored are the different ways in which we process information and learn.

  In their first book, Right Brain Children in a Left Brain World, authors Jeffrey Freed and Laurie Parsons-Cantillo, point out that the two halves of our brain each process information, but in different ways. A significant and growing percentage of our population are not internally “wired” to learn by traditional left-brain teaching methods such as passive listening and memorizing facts.260 As educator and pyshologist Linda Kreger Silverman explains: “The left hemisphere is analytical, sequential, and time-oriented. The right hemisphere perceives the whole, synthesizes, and apprehends movement in space.”261 More students today respond to right-brain dominant methods that are more experiential, kinesthetic, and emphasize an explorative dialogue among students and with teachers.

  According to Freed:

  Why are we facing such a crisis in education? I would argue that our left-brained schools have rarely placed an emphasis on creative, critical thinking. Our schools have historically churned out graduates who, while strong on regurgitating information, lack problem-solving skills. Children are taught to conform rather than challenge authority; the result is they often lack the ability to make connections and think in fresh, inventive ways. The traditional American school, with its emphasis on order, drill, and repetition, probably did a respectable job educating children at a time when kids were left-brained, less hyperactive, and not so stimulated. The problem is that students today are fundamentally different. Our classrooms are being flooded by a new generation of right-brained, visual kids. While our school system plods along using the same teaching methods that were in vogue decades ago, students are finding it more and more difficult to learn that way. As our culture becomes more visual and brain dominance shifts to the right, the chasm widens between teacher and pupil. Our schools are no longer congruent with the way many children think.262

  In their second book, Right Brain Children in a RIGHT Brain World (Qiterra Press, 2012), Freed and Parsons-Cantillo report on the magnitude of the shift that is taking place, with more than half of tod
ay’s school age children believed to be right brain learners. Dr. Silverman estimates that one third of today’s student population are strongly right-brained; another 30 percent rely on both hemispheres but tend to favor the right.263 This is a substantial increase from 1997, at which time approximately 40 percent of children were right brain learners. This shift in how we access information is in no small measure related to technological advancements in recent decades, including the internet, calculators, smart phones, video gamming, and other forms of interactive media.

  Freed and Parsons-Cantillo see in the Saber not only an economic instrument to enhance educational opportunities, but also as a means to help develop collaborative skills among students, to cater to the individual forms of intelligence of each child, and to enhance learning among right-brainers.

  Saber and Demurrage

  Demurrage can be used to help manage the balance between the numbers of students wanting university seats each year and availability. A demurrage fee would be applied to encourage students to use Sabers in accord with the year printed on the Saber. If they were not used to pay for tuition before or during that year, they could be exchanged for Sabers of the following year but with a penalty of, say, 20 percent, when a new expiration date is stamped on the paper currency. This gives a strong incentive to use the Sabers on or before the deadline.