The great money delusion

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“Money – or the lack of it – lies close to the root of most evils plaguing us as a species … [yet] it exists only in our minds — as a universally shared delusion, reinforced by daily individual and collective usage,” says Canadian writer Dick Racey, who also explains how humanity can snap out of its money fixation — and solve many of the ills sickening our society.

RE-THINKING MONEY: Exploring the Foundation of a New Economy

“All great truths begin as blasphemies.”
~ George Bernard Shaw

Here we are again, recovering slowly – and uncertainly – from one global meltdown — and many say we're probably headed for another. The remedial “stimulus” packages of today are essentially a repeat of Franklin D. Roosevelt’s Keynesian spending approach, which was an attempt to inject new life into the severely depressed economy of the “dirty thirties.”

But this approach remained only minimally successful; it took Adolf Hitler and the bloodbath of WWII to lift the economy out of a decade of economic blight and human misery. However massaged by stimulus spending, consumer demand wasn’t enough to lift the economy out of its moribund state; it took the demand for tanks, ships and planes, as well as for millions of soldiers, sailors and airmen to effect an improvement, however temporary, in the financial affairs of mankind.

Today’s economic blight is different. Unlike the years following WW II, when there was a growing population with a pent-up demand for autos, houses, education, roads, and so on, now that pent-up demand has largely been satisfied and declining school enrolments presage even less demand down the road. Meanwhile, government and business have been preaching the gospel of “Higher Productivity” for decades. Now, to the extent that their exhortations have been successful, fewer and fewer workers are now needed to supply the needs of the many. Today, millions of young workers can't find their first jobs — even with advanced education. General Motors, now thought to be in a process of renewed viability, had to rely upon vast infusions of government money – and had to shed the output of many automotive assembly plants as well as thousands of its workers –  in order to survive in an extremely competitive world, in a veritable sea of corporate bankruptcies and mortgage foreclosures.

As if today’s economic problems weren’t bad enough, tomorrow’s problems may turn out to be far, far worse. Central banks and the International Monetary Fund seem to be having little effect upon the world's economic malaise. When capitalism goes awry, it's the poor and the powerless who pay the price, while multimillionaire bank CEOs continue to collect multimillion salaries and bonuses. 99 per cent of the population are fed up. They've had enough.

The main ingredient of the currently proposed cure for today's economic blight is the “stimulus approach” is, as ever, money. But what is this mysterious stuff called money? And how did it get such an upper hand over our individual and collective lives?

The relatively recent rise of "money"

The underlying nature of money is something like that of the Law of Gravity. Outside of school, we don't think about it very much if at all. Nonetheless, the Law of Gravity exerts a profound, unceasing limitation upon us, and effectively keeps us from leaping tall buildings like Superman. In a similar way, we seldom if ever think about money, but rather with it — using it as an unquestioned, integral part of our thinking processes, making essentially mathematical calculations involving spending, saving, investing, or worrying about. Whereas the Law of Gravity limits us physically, we tend to forget that money, or the lack of it, exerts profound, unceasing limitations upon us psychologically. Throughout the western world, no physical barriers prevent us from grappling successfully with chronic shortfalls in health care, education, housing, defence, employment, et al because … the deployment of human effort is not limited by its inherent energy, its skills, or willingness to work, nor is it limited by any shortage of socially, economically, or environmentally worthwhile objectives to which it might be directed; it is limited, by and large, by the funds made available to compensate it. In the absence of such funds, in either public or private hands, human activity is immobilized and grinds to a halt.

As if we didn’t know. But was it always thus? Were we always enslaved by the concept and universal usage of money — or are we the victims of an aberration, long hidden in the underbrush of history?

Why money – or the lack of it – has tyrannized us as individuals and societies is that we have become conditioned to it in much the same way that circus seals are conditioned to fish in the hands of their trainer. Remove the seal from its natural environment, where the necessities of life are directly available, and make it utterly dependent upon the fishy rewards proffered by the animal trainer, and you have an approximation of the historical processes undergone by millions of human beings over the past half-millennium. Most saliently, the process through which we became like trained circus seals, individually and collectively, was in the aftermath of an historical process called The Enclosure Movement.

In Britain, the Enclosure Movement, beginning about the 15th century and continuing throughout the Industrial Revolution, is a salient example of such an historical process at work. While it lasted, hundreds of thousands of British peasants were thrown off the land and out of the security of village life. Why? Initially, to make room for sheep pastures. Wool commanded a very high price, far more than tenant farmers could ever pay in rent. By whatever means were possible, they were forced off the land by the landowning classes of the day. Karl Polanyi describes the process in his classic work, The Great Transformation (1944):

....Enclosures have appropriately been called a revolution of the rich against the poor. The lords and nobles were upsetting the social order, breaking down ancient law and custom, sometimes by means of violence, often by pressure and intimidation. They were literally robbing the poor of their share in the common, tearing down the houses which by the hitherto unbreakable force of custom, the poor had long regarded as theirs and their heirs'. The fabric of society was being disrupted; desolate villages and the ruins of human dwellings testified to the fierceness with which the revolution raged, endangering the defences of the country, wasting its towns, decimating its population, turning its over-burdened soil into dust, harassing its people and turning them from decent husbandmen into a mob of beggars and thieves...

Within the space of a few generations, people were forced from their villages, from the soil and pasture lands that had been their livelihood since time immemorial, and, much more than that—from the reciprocal relationship with their neighbours on which they depended daily. That relationship embodied an implicit economic right, one taken entirely for granted, namely, the right to initiate a call upon the services of one’s neighbours on the implicit, but nonetheless recognized, obligation to reciprocate in kind when required at some time in the future. It was an economic right, moreover, that was never contingent upon an individual’s prior contribution to a manufacturing or exchange activity controlled by someone else. Again, since time immemorial, each individual had an informal, but universally recognized dependency upon his fellow villagers. The loss of this relationship as a result of Enclosure was enormously profound and far-reaching, and continues to lie at the very heart of today’s recurring economic turmoil and the havoc played in the lives of millions by unemployment.

Enclosures led in time to the herding of villagers by the hundreds of thousands into the squalor of cities of the Industrial Revolution. In this new life, they became subject to a momentous change in their circumstances: they became completely reliant upon money – and therefore upon the investment community – in order to secure the basic essentials of life. For investors, the welfare and well-being of the descendants of the dispossessed villagers was never a determining consideration, but at best a distant second. Profit was really all that really mattered. The necessary adjustment to this new condition of life for most people amounted to, and remains, a deeply-rooted aberration in human values. What's more, we're not born infected with that aberration — we learn it, starting in early childhood.

Through their dependence upon money flowing from the hands of strangers, they – and we – have become completely dependent upon the processes of production and trade completely beyond our control. The failure of a General Motors, as well as its ripple effects throughout the economy, became a social and economic disaster of a kind unknown in earlier times.

Concurrently, there was a profound and lasting change in the nature of money. In a purely physical sense, money became more and more abstract — from gold stored by goldsmiths, the early bankers, to circulating receipts issued on the strength of that gold, through ever more liberal stages of fractional reserve banking to today's creation of money as “now you see it, now you don't” money in the form of loans payable to banks.

However abstract it has become, money has lost none of its coercive grip on the human psyche. The monetary system was developed by those who had money and wealth to begin with. Their main concern was with preservation of money's value and as a tool for their further enrichment. Money, accordingly, was not meant as an exchange device of benefit to society as a whole — much less to its more poverty-stricken members.

Starting with Enclosure and processes similar in effect to the present day, most of mankind has lost its dependence upon the face-to-face relationships of village life. Instead, through its dependence upon money flowing from the hands of strangers, it has become almost completely dependent upon processes of production and trade completely beyond its control. For much the same reason that a dead fish in a circus trainer’s hand develops almost magical powers of persuasion to a seal forcibly removed from its native habitat, money has become a powerful instrument of human control and manipulation in a population of dispossessed villagers. Without this control in the hands of early capitalists, the Industrial Revolution, and all that followed for better or for worse, could not have taken place.

Polanyi’s central thesis is well known among sociologists and economic historians: namely, that capitalism is an historical anomaly because while previous economic arrangements were “embedded” in social relations, in capitalism the situations were reversed — social relations were defined by economic relations. In Polanyi’s view, in the broad historical sweep on human history, rules of reciprocity, redistribution and kinship obligations were far more common than market relations. However, not only did the emergence of capitalism make the latter preponderant, its ascendancy effectively destroyed reciprocity as a determining force in society. The “Great Transformation” of the Industrial Revolution was to effectively replace all former modes of economic interaction with “market realities” based on money and price.

Russian writer Leo Tolstoy, writing around the turn of the 20th century, had a much better handle on the manipulative nature of money than any present-day economist. He wrote,

 “Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal — that there is no human relation between master and slave.”

The same utter dependence upon money remains with us today — together with the deep, largely unconscious, conditioning that has become a psychological characteristic of individuals who belong to monetized societies. Say, for purposes of illustration, you're walking your dog and you encounter a couple of scraps of coloured paper on the sidewalk, one a $100 bill, and the other a crumpled cover page from TIME or Maclean's Magazine, which are you going to pick up? Let's not be silly. If you're like me you'll go for the $100 bill. We're both conditioned to money in that sense — but that conditioning is relative. A primitive hunter-gatherer might pick up the Maclean's or TIME cover instead if it promised better kindling for his campfire. By the same token, he probably wouldn't panic if he lost it on his way back to his camp. Compare that with the likely reaction of a worker who discovers that a pickpocket has just made off with his wallet and his payday cash — when the rent is due and the fridge is empty.

Buffeted by forces beyond our control

As a further result a complete and utter dependence upon money – and therefore upon investors and their willingness to invest – in order to live, many of us are buffeted almost daily by economic forces beyond our control if not our comprehension. Our economic well-being, as individuals, is often sacrificed on the abstract altar of the “Balanced Budget.” The prospect of a plant closure or a layoff can fill many of us with dread and foreboding. Whether we realize it or not, we are manipulated by money in the same way circus seals are manipulated by dead fish. We resemble stage puppets, manipulated by strings disappearing into the clouds above, forced to dance to the spasmodic rhythms of an invisible puppeteer gone berserk. When profits slide or disappear, investors panic, stock prices tumble, the crazy music stops, the money stops flowing, the strings go slack, and we all collapse in a heap — with a growing propensity to riot in the streets.

In an exercise of wholesale human manipulation, central bankers raise or lower interest rates, in an often futile attempt to adjust the tempo of the music, which either excites or slakes the greed of investors. These are every bit as manipulated by money as are workers, but in a different way. The prospect of increased dividends or share prices excites them in much the same way a whiff of fresh hamburger excites the salivary glands of bloodhounds. Their current state of glee or gloom is instantly reflected in the rise or fall in stock market prices

Such is the state of society, in which real power is exercised less and less by sovereign states, and more and more by the investment of powerful corporations bent on their own further enrichment. The nature of the power they exercise, as well as the riches to which they aspire, are based on money. The social and environmental impact of their activities is largely ignored, provided their shareholders are reasonably content.

“What’s good for General Motors is good for the country”, pretty well sums up their social and economic philosophy.

The coming collapse

Many thinking people sense that "something is terribly wrong somewhere," but can’t put their finger on it. Unable to focus on any fundamental change their efforts might bring about, they abandon any thoughts of reform in favour of a quiet resignation to the status quo and making the best of it. In the days of the Roman Empire, when "all roads led to Rome," most people would have felt just as helpless. Moreover, nobody thought the Roman Empire would ever collapse. Yet, collapse it did — as much from the unsustainable over-extension of its resources as from any external threat. It needed no enemies to bring about its own destruction. In a like manner, the distant future may come to view Capitalism as an historical aberration of which mankind was eventually well rid.

The poor and powerless, its most frequent victims when capitalism goes awry, have nevertheless begun to make their voices heard in today’s world. However, the "anti-IMF-World Bank-globalization" demonstrations in Seattle, Washington, Prague, Quebec, Toronto, and many other places have been ineffectual in inducing change. Whether or not the Occupation of Wall Street and other financial centres will remain just as ineffectual seems likely.

The world's institutions of business and finance, while paying lip service to the egregious state of poverty gripping the world’s disenfranchised, continue to tower above the affairs of mankind, not a whit impeded by the noisy and sometimes violent protests at their ramparts.

But sooner or later, the towers must topple — their foundations harbour the seeds of their own destruction. As inconceivable as it may seem to many, the mighty structures must one day collapse or implode – through internal rot and corruption, the gross inequities between the complacent rich and the angry poor, high unemployment, as well as through the depletion of the world’s energy resources – not to mention the towering mountains of public debt to be shouldered by our descendants. Eventual failure is not a question of “if,” but rather of “when”—if not necessarily within the lifespan of anyone reading this. Capitalism, the dominant form of monetarily manipulated society, will follow into oblivion the Greek, Roman and feudal societies which preceded it. The process of self-destruction may happen suddenly and catastrophically, or, more probably, piecemeal over several decades. The early warning signs are already there – in the stresses and strains of over-stated assets, high taxes, corporate corruption, mortgage foreclosures, bank failures and the unmistakable signs of dwindling fossil energy reserves – not to mention the visceral rage of the countless millions of economically disenfranchised.

What we often forget is that the history of monetarily manipulated society has been very brief. Three or four hundred years are just an eye blink in the history of the human species, but for most economists it's as if the world didn't exist before then. For most of our long history, we got along very nicely without money or banks. Despite their central role in today’s economy, banks are for the most part privately-owned corporations effectively committed to the often obscene profit for the few. Except for a little lip service now and then, they remain largely oblivious to the well-being of the many or to the ecological state of the habitat. Since almost all of today's money is created out of thin air in the form of loans payable to banks, these institutions are primary beneficiaries of our monetary system. If individuals, businesses, or governments don't have enough money to do what they want to or need to accomplish, they go to the banks who are only too happy to create some for them, often on very questionable security. In many instances, the choice is between borrowing from banks, domestic or foreign, or allowing everything to grind to a halt. The limitation to the deployment of human effort indicated in the opening paragraphs of this essay becomes painfully obvious. As Irish playwright George Bernard Shaw once put it,

“The lack of money is the root of all evil.”

This raises pertinent questions: Are banks part of the solution to the social and economic problems of mankind? Or are they really an integral part of the problems? As unimaginable as it may seem to many it is quite possible to do without banks once again — to replace them with institutions of exchange that do a far better job of addressing individual and collective need, and of mobilizing human talent and effort to objectives of benefit to all as well as to the preservation of the environment. Money, as we now know and practise it, can one day become obsolete as it is supplanted by far more viable, and far less divisive, instruments of human exchange. Both the technical means and the "Precedents in Principle" already exist.

For starters: a familiar example

Most Canadians are familiar with Canadian Tire "money." Whenever you make a cash purchase at a branch of Canadian Tire – even more ubiquitous in Canada than branches of Walmart – the store refunds a small percentage of the purchase in its own "money" as a cash discount. You can use this "money" as a substitute for, or in combination with, bank notes the next time you buy merchandise or service from any branch of Canadian Tire. The "money" is printed on high-quality paper – almost like regular bank notes – and the cashier accepts it without question.

In the context of a Canadian Tire store, both types of currency are equally "good" and perform the same function at the checkout counter. One dollar of Canadian Tire Money will buy exactly same amount of merchandise—or service—as will a “loonie” (the Canadian $1 dollar coin).

There are, however, very significant differences between Canadian Tire money and bank money. Bank Money enters circulation as a debt to a chartered bank. Canadian Tire money enters circulation as a self-imposed obligation to the public at large. Bank Money starts exacting interest the moment it is issued. Canadian Tire money enters circulation interest-free.

The most important difference between the two currencies, however, is the most subtle.

When Canadian Tire sells merchandise for bank notes, it delivers the goods and services in anticipation of reward. When you lay down a $20 bill at the checkout counter, it's an action analogous, in principle, to that of an animal trainer flipping a fish to a trained seal as a reward. When Canadian Tire accepts its own notes for goods and services, it delivers the goods and services for an entirely different, but just as compelling, reason:


This type of motivation is deeply ingrained in human nature. Earlier non-monetized societies were held together by the reciprocal nature of every day dealings between individuals:

"You help me plough my field today, and I'll help you thatch your roof when you're ready to do it."

My reputation among my fellow villagers or tribesmen hinged upon full delivery on my implicit commitment. If I didn't deliver, nobody would come to my assistance when I needed it. The same general principle would be resurrected – in institutionalized form – were the principles underlying Canadian Tire “money” applied universally throughout the economy. The literature of Economic Anthropology on the subject of reciprocal exchange, i.e., of obligation and fulfilment, is quite vast. Individuals honoured their implicit obligations not for any complicated contractual obligations — but, quite simply, because it was expected of them.

Canadian Tire money is a prominent application of money based upon the more general principle of Pledged Value. This principle embodies incredible potential for lifting us out of our global debt-ridden morass. Introduced, pioneered, and developed by a nation, backed by the appropriate legislation, it would give individuals comprising society the tools they need to do for themselves, for each other, and for their country what business or government won't or can't.

Re-Defining Money

If a national government has the authority to empower chartered banks to create money in the form of loans made payable to themselves, then it also has the power to license individual citizens to issue currency on the strength of their skills, labour or goods in much the same way that Canadian Tire issues money on the strength of the goods on its shelves or the technical labour in its service bays.

The technical and administrative means to put a Pledged Value System into action already exist. An institution similar in scope – but different in function – to a central bank could, for example, administer a Citizen Pledged Value system, and run it much like commercial banks run their credit card operations—except that it couldn’t and wouldn't charge interest, but merely keep track of "obligations and fulfilments." The individual citizen's "currency creation rating" would grow in accordance with the individual’s record for redeeming the obligations underlying his/her issue of money. The individual could write cheques on his/her account or pay the rent or pay for groceries using the system. With today’s photo ID and developments such as iris recognition, fraud would be minimal – and would serve as a check on every individual’s record for redeeming obligations.

Credits, or “units of redemption,” would take one of three forms:

(a) money created by other individuals – which would serve to redeem one’s obligations to society;

(b) "state redemptions" – essentially bookkeeping credits for work done in the public sector (federal, provincial, or municipal), or

(c) "entitlements" for the elderly, seriously ill, or disabled.

The system would charge no interest; nor would individuals earn any in the system. Taxes, in the conventional sense, might become an obsolete concept, found only in history books.

Pledged Value currency would not enter circulation until actually spent into existence; it could not be saved like conventional money; and it would disappear from circulation once its underlying obligation was honoured by any recognized means.

Redemption rights might be earned in advance; but, something like credit limits, these would not in themselves be expendable until converted into currency in the act of spending.

Simple? Yes. Simplistic? Not at all — if you think about the immense social and economic upheaval that would inevitably follow its universal introduction. It would probably be best to introduce and develop the concept as a pilot project in a small, defined area of great need. The technical means to implement the system already exist and should present few problems. However, the achievement of the necessary revolution of understanding, thought, and practice might be a different story. A mindset a few centuries in the making could not be changed overnight. As well, howls of protest might be anticipated from banks and the investment community, as individual citizens were empowered to create units of currency equal in value to those created out of thin air in today’s fractional reserve banking system.

It might take a couple of generations for the upheaval in thought and practice to percolate widely through the population — unless hastened by social or economic catastrophe of one kind or another. There is already a very dark cloud over the economy, with the collapse and “rescue” of giant financial and manufacturing institutions. Economic hardship would probably hasten the acceptance of the concept, embodying, as it does, the empowerment of individuals in all circumstances—and in which the fear of layoffs or industrial slowdowns would have vanished.

Other possibilities would in time beckon:

Unrestricted Deployment of Labour

The fiscal limitations on the deployment of labour would evaporate. No longer would it be necessary to ask 'Where's the money coming from?’

Instead, when contemplating any task before it, a federal, provincial, or municipal government would instead be free to ask, "Do we have the committed labour, talent, and manpower to do the job?" These would be the limiting factors—not any lack of tax dollars, especially from a proportionately declining working population.

Like individual ants or beavers, citizens would contribute their talents and energies when and where needed — on a continuing or sporadic basis as required. The staffing of hospitals, schools, Universities, day-care facilities, spousal abuse shelters, libraries or municipal snow-removal departments, for example, would all become "economically feasible." There would be no limits to environmental clean-up projects — even down to the digging out of cigarette butts in the sands of our beaches.

Whereas in our present economy, there can be and often is a widespread shortage of “paying” jobs, but in a Pledged Value economy, there would never be a shortage of useful work. By the same token, an occasional period of idleness might be viewed as a bit of a holiday instead of an economic disaster.

The Metamorphosis of Motivation

Most importantly, perhaps, a profound change in work motivation might be expected — quite possibly through a psychological reversion to an ancient, deeply ingrained and quite arguably genetic predisposition to the “reciprocal impulse” of earlier societies and social organization. A sense of obligation to reciprocate for a favour or assistance is an almost universal human characteristic. The survival and progress of mankind, after all, has depended far longer on reciprocity and co-operation among its constituent individuals than it has on competition between them.

Because of a change in the nature of the psychological pressures acting upon the individual, behaviour governed by financial incentive would in time be supplanted by that governed by societal expectation and self-imposed obligation. When contemplating a new task, instead of, "how much does the job pay?" the average citizen might now ask, "where, when, and how can I contribute—to reduce my commitment, to ‘hold up my end of the bargain?’" Or, quite simply, “Where am I needed?” An individual’s personal satisfaction, reputation, as well as economic security would ultimately depend upon how well his/her obligations were habitually discharged.

Conversely, if the individual did not hold up his or her end of the bargain, his or her "credit," i.e., the power to issue money, would be curtailed or cut off completely. By no means would it or should it ever be allowed to become an unworkable "something for nothing" concept. If the concept developed an Achilles Heel, it would certainly be the existence of excessive numbers of “freeloaders,” those who “took,” but never “gave.”

Strict accounting would be an integral and necessary feature of the system.

Economic Stability

A steady flow of purchasing power into the economy, stemming from an economically empowered citizenry would tend to soften any disruption in economic activity. A slowdown or prolonged inactivity in any industry would not spread to others owing to a reduction in the purchasing power of those now “unoccupied.” A slowdown in an industry might result in some idleness — but not the misery of unemployment that is now the rule. Labour could be re-directed to other socially or environmentally useful pursuits free of budgetary restriction — and the average worker might even welcome the change instead of being terrified by it.

By the same token, the capitalist compulsion to produce, produce, and produce yet more efficiently would probably disappear. No longer would it be necessary for industry to stuff warehouses with unsold products and fill wide fields with acre after acre of unsold vehicles — followed inevitably by cutbacks and layoffs. To produce only as necessary to meet current needs could become the prevailing practice.

Individual Independence: An individual's economic well-being would no longer be dependent upon a job with a single employer, or upon a single industry. That individual would no longer feel compelled by economic circumstance to fight for the right to denude forested slopes indiscriminately or to harvest fish to the brink of extinction.

The individual would enjoy the economic independence to divert his or her labour to environmentally productive pursuits. Obligations to society might be honoured just as easily by helping rejuvenate the environment or repairing decaying infrastructures as by accelerating environmental destruction. This could spell an end to our vested interest in our own destruction and that of the planet.

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“Private” vs.” Public” Spending

The "Private" and "Public” Sectors, and the dividing line separating the two, have their origins in early economic thought. One of the most enduring of economic thinkers is Adam Smith, who wrote The Wealth of Nations in 1776. This is how he perceived the deployment of human labour:

The labour of some of the most respectable orders in the society is, like that of the menial servants, unproductive of any value, and does not fix or realize itself in any permanent subject, or vendible commodity, which endures after that labour is past, and for which an equal quantity of labour could afterwards be procured. The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers. They are the servants of the public, and are maintained by a part of the annual produce of the industry of other people. Their service, how honourable, how useful, of how necessary soever, produces nothing for which an equal quantity of service can afterwards be procured. The protection, security, and defence of the commonwealth, the effect of their labour this year, will not purchase its protection, security, and defence for the year to come. In the same class must be ranked, some of the gravest and most important, some of the most frivolous professions: churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, etc. The labour of the meanest of these has a certain value, regulated by the very same principles which regulate that of every other sort of labour; and that of the noblest and most useful, produces nothing which could afterwards purchase or procure an equal quantity of labour. Like the declamation of the actor, the harangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of its production.

In today’s society, thanks in part to the influence of Adam Smith and present-day economists, we have been brainwashed into accepting as inevitable the dividing line between human effort expended in the "private sector" and that expended in the "public." No such dividing line existed before money and the monetized society came along. Individuals simply did what was expected of them, as individuals or as members of a community, and a monetary recompense for their services never entered their heads. As a further aftermath of the Enclosure Movement, and the fact that no work now gets done unless the individual gets paid for his effort, a “public sector” has emerged, and an elaborate taxation system has evolved in order to support it.

A Self-Supporting “Public” Sector

The dividing line between the "private" and "public sectors" that attended the early development of capitalism, could disappear. Functions now assigned to the "public" sector would become self -supporting. It would become entirely unnecessary for governments to borrow or levy taxes because the deployment of labour would no longer be dependent upon the funds made available to compensate it. Human effort would no longer have to be set in motion by the reward value of money, but by the same – or more – effort expended in fulfilment of recorded obligation. "Investment," either "private" or "public," in their traditional senses, could become hollow, obsolete concepts.

Widened Range of Employment Choices

Freed of budgetary constraint, the range of possible employments would be vastly expanded –particularly in fields of social and environmental value – which the more rabid right-wing market-worshipping mentality deeply resents if it compromises corporate profit. Child care, care for the elderly, abused women's shelters, environmental clean-up and rejuvenation, the updating of city sewage and water treatment facilities, the repair of collapsing bridges, and other essential services, all become viable as avenues of "obligation fulfilment." Again, there may be no “paying jobs” – in the conventional sense – but never a shortage of useful work.

Severed Strings

The manipulative character of money would evaporate. No longer would entire populations be subject to the whims and erratic rhythms of "a puppeteer gone berserk". No longer would the labour of human beings be reduced to that of a "market commodity", subject to the "law of Supply and Demand" — like potatoes or broiler chickens. International corporations would lose their coercive power to influence events, to corrupt Third World governments, and to recruit workers to environmentally destructive pursuits — and then to toss them into economic destitution when they no longer needed them.

A New Wellspring of Economic Activity

"Capital," i.e., those accumulations of money invested with the objective of accumulating yet more money, would cease to be the main wellspring of economic activity. Labour, both physical and intellectual, committed and honoured cooperatively could serve much the same purpose as conventional capital does now — and directed toward objectives far removed from “return on investment”. An enterprise whose main assets were "intellectual", might well mobilize the commitments of its prospective workforce for "start-up capital." The corporation, as a legal entity, might be supplanted by more cooperative institutions, and corporations that have gone bankrupt in the present economy might well be taken over by their employees — no longer driven by the necessity to make a profit.

“Money” Supply

The "money supply," i.e., "aggregate commitment" (some new terminology would be needed) in circulation at any given moment, might be quite stable in comparison with current experience. Individuals might develop substantial "commitment limits," but these, like unused credit card limits in today’s economy, would not become part of the money supply until they were actually spent. "Aggregate commitment" would be reduced as the commitments were honoured by individuals, as purchasing power was created and "extinguished" in a continuous process.

An important factor would be that “money” would be a by-product of trade—not a prerequisite as at present. Since purchasing power would be created on the spot by individuals – instead of by banks – there would be no need for a “chat with the bank manager”. Viable exchanges and economic development, even in the poorest regions, would not be frustrated by a lack of money, completely subject to self-interested decisions made elsewhere.


The motivation underlying most crime is virtually identical with that underlying the pursuit of corporate profit. If the profit motive disappeared from the human landscape, fraud would disappear along with it—as would the excessive remuneration of top-level corporate executives in the form of salaries and bonuses. In addition, the type of crime that economic deprivation nurtures would wane. In some quarters, it would no longer be easier to acquire a handgun than to find a suitable outlet for one’s energy and talents.

Economic Security

If citizens were empowered to create currency at will and as necessary, then their sense of security would become more and more vested in their continued right to do so. In other words, their economic security would hinge upon their track record for redeeming their commitments. Since it could be created at will, Pledged Value currency would no longer serve as a traditional "storehouse of value". Saving for a child’s education, a “rainy day,” or old age would become unnecessary, and accumulation for these eventualities not in the least compelling.

A Frontal Assault on Poverty

Left to the beneficent attention of the market society with its immensely powerful institutions devoted to profit, capital accumulation, and the interests of shareholders, the poor will always be at a disadvantage. A capitalist economy, almost by definition, cannot function at all unless the rich get richer and the poor get poorer.

A watershed change in society will begin to develop the moment a system is introduced that permits the translation of human need directly into purchasing power, without any dependence upon investment in public or private hands — a dependence that is a direct consequence of the invention of money in its present form centuries ago. Give individual members of society the right to create money and the responsibilities that would go with that right, and abject poverty would be on the run.

We, the Manipulated

We are held captive, have internalized, and are manipulated by an exchange device that has been handed down to us, and which we've never really questioned: money — as well as by the institutions of vast size and power that have been erected with money as their central, intrinsic “reality.” Its pernicious tentacles have gone far beyond the requirements of human exchange, and have enveloped our minds and spirits in an opaque fog of unquestioned economic theory — making us players in a game in which the accumulation of money has become the main “measure of success.” We have created a situation in which the lack of money frustrates the expression of our energies and talents, and places a giant roadblock in the addressing of genuine human need and of environmental degradation. The pursuit of money binds us to the most absurd alternatives: we must ravage the environment competitively in order to "survive and prosper" — making us part and parcel of a global vested interest in our own destruction and that of the planet. Money has made of us a thoroughly dysfunctional society.

The next time one hears about about another budget cut or industrial layoff, kids going to school hungry, patients lying unattended in hospital corridors, the numbers of homeless growing each year, bridges and overpasses collapsing, about young people who can't find jobs, tall mountains of public debt – with banks all the while raking in obscene profits and with youth mired in hopelessness only to explode in violent riot – it’s worth asking:

"Does it really have to be this way?"

It’s a long overdue question.

Money – or the lack of it – lies close to the root of most evils plaguing us as a species.

Let’s not forget that it is, after all, a man-made institution which we have the power to change. Money doesn’t exist in bank accounts or as gold stored in subterranean bank vaults. It exists only in our minds — as a universally shared delusion, reinforced by daily individual and collective usage. If some pestilence suddenly wiped the human race off the face of the planet, the gold stored in the bank vaults might remain undisturbed, but money would cease to exist; its nebulous existence in our minds would disappear with us.

Looking at it another way, if money as we know it were to disappear through a process of deliberate and universal disavowal, not a single brick would fall out of place, nor would the sun fall out of the sky. Once we recovered from the resulting sense of loss and confusion, however, we might then start to work developing thoroughly benign human exchange mechanisms to supplant those effectively controlled by commercial banks. In the process we could transform our relations with one another while laying the foundations of a new, more humane, and more sustainable world for our children and the generations to follow. It would be a world in which the absurd ethos of conventional economic thought, with its constant, unremitting obeisance to the notion of the “market,” perpetual “growth,” and profit as virtually the only “measure of success” – together with the “trickle-down” theory of wealth redistribution – would be decisively and completely debunked, and seen for the unsustainable sham that it really is.


Needless to say, such a wide-ranging concept couldn’t possibly be implemented all at once or with a single bold stroke — especially in view of the ironclad grip the “conventional wisdom” has upon the human mind and upon the thought of economic pundits and legislators. More realistically, pilot projects embodying the Pledged Value principle could be initiated within small areas of great need, and the inevitable “bugs” worked out as they transpired. The basic premise of the concept on any scale is that true economic power should be vested in the individuals comprising the larger community, not indefinitely usurped by inherently unstable institutions beyond their control, by institutions of business and finance responsible only to their own self-interest, in an economy in which the interests and welfare of individual citizens and their families are merely incidental rather than essential concerns.

Given such a re-distributed economic power and responsibility, individuals, acting singly or in concert, could engender spontaneously all required economic activity and address much urgent human need. Local governments could initiate needed projects and services they couldn’t possibly support through conventional taxes — especially in severely depressed areas.

Successful development of the concept could in time spell an end to widespread misery of unemployment, conventional taxation, concern over deficits, sovereign indebtedness, followed by the “Balanced Budget” — the latter an abstract tyranny administered by governments upon their citizens.

In the days of Karl Marx, the rallying cry was “Appropriate the Means of Production!”

Communism didn't work out. But today, the rallying cry, “Re-Appropriate the Means of Exchange!” might bring about worthwhile, lasting change for the better, and free us to do everything we need to, to survive happily on the planet.


One of the most damaging effects of the invention of money in its present form has been and continues to be the alienation of the individual’s primitive, prehistoric economic power to a force beyond his or her control, namely, to impersonal capital in the hands of investors interested only in further wealth accumulation. This has resulted in an aberration: the dependency of western industrial societies on private – or public – investment in order to satisfy the every-day needs for food and shelter of the vast majority of their citizens.

The following entreaty might illustrate our plight:


Hail, Oh Spirit of the Investor,
In thy domain
High above the clouds
Of Acid Rain.
Shine thy munificent spirit upon us,
Helpless we mortals be without thee,
Upon our silent factories rest thy gaze,
Upon our vacant storefronts,
Our unemployed, restive and in want,
Our deficit ballooning,
Our tax base disappearing.
Oh Great Spirit, hear our prayer,
Sow not thy billions elsewhere
Tax concessions we offer thee,
Capital Grants, pray accept,
Thy fondest wish shall be our command,
For, cast forever from our thoughts,
Like evil purged, sin repented,
Capital Gains shall be thine
Never more by tax molested
For Thine is the Kingdom,
The Power, the Profits.

~ Dick Racey

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