Managing Money as a Human Right

Part One of a Two-Part Series

There are two main problems with existing monetary theory. The first is serious, the second is mainly a technical administrative issue.

The first and most serious problem with monetary theory, which is seldom directly addressed, is the fact that money supply is nearly always controlled by a super-rich and powerful minority and, more to the point, is nearly always controlled in such a way that suits the personal interests of the super-rich and powerful – not the interests of society as a whole.

For the purpose of this essay I’ll use a convention that’s quite well known for describing these two distinct groups, who generally have two distinct interests – the 1% and the 99%. Although not strictly accurate, it gives a sense of the point I’m trying to make. The super-rich and powerful (the 1%), control money supply in a way that serves their interests and their interests alone. All the rest of us, the 99%, effectively have no say in the matter.

The second problem I mentioned, the technical administrative one, concerns the physical control of total money volume. It’s a standard argument of the 1% and their supporters that if too much money is in circulation it produces a scary thing called hyper-inflation. Although this is invariably a vastly exaggerated argument, it nevertheless has some basis in fact and needs to be taken into consideration.

The First Problem

Management of the economy in general, and money supply in particular, is a contentious subject. Socialists argue that the state should be in control. Capitalists argue that “the market” should. But what we actually have today is neither one thing nor the other. Although capitalists say “the market” should be in charge, the most powerful of the capitalists wholly rely on governments arranging things so that “the market” works to the advantage of those powerful capitalists. In other words, it isn’t really “the market” they want to have in control, it’s themselves.

For example, we have a system where “lobbyists” are a routine and wholly accepted feature of our political system. These are people who are paid vast sums of money by powerful banks and corporations in order that powerful banks and corporations can directly influence the decisions that governments make, and the legislation that governments pass (often actually writing the legislation themselves). Needless to say, such laws favour the banks and corporations that create them.

On an international scale, the same problem applies, but on a much bigger scale, with international economic bodies (such as the World Bank, International Monetary Fund and World Trade Organisation) being similarly influenced by powerful banks and trans-national corporations. There are highly secretive and very powerful organisations, such as the Bilderberg Group, Trilateral Commission and Council for Foreign Relations, which comprise leaders of governments and big business. These people don’t meet up for social reasons, or official government business.  They meet in secret to make sure the world’s economy works the way they want it to. That’s what they really mean by “market forces”.

The most extreme expression of the economic influence these people can and do exert is the imposition of trade sanctions through the puppet governments they control, sanctions which are often simply a first step towards military invasion and conquest. In a world where “market forces” were really allowed to operate, trade sanctions couldn’t exist. But they do, and they wreak absolute devastation. Consider Iraq for just one example of many.

So this is the most serious problem to overcome before real economic reform could ever be achieved – freeing the stranglehold exerted by the 1% around the throats of the 99%. General and widespread knowledge of its existence, and effects, is the place to start.

The Second Problem

Money is central to any modern economy. It acts like oil lubricating an engine, or catalysts in chemical reactions. Although some engines can work without oil, and chemical reactions can occur without catalysts, most engines work considerably better with oil, and many chemical reactions are considerably faster with catalysts. Therefore it’s quite easy to see that whoever controls money supply controls the economy. The western world has allowed the private banking system to have almost absolute control – due to the existence of the first problem, described above.

Consider the purely technical issue of the volume of money in an economy. If there’s too little money circulating, the economy seizes up like an engine without oil. If there’s too much, there can be significant problems fixing the prices of goods, and therefore fixing the value of money.

Most new money is continually being created by the private banking system (not governments), whenever a bank makes a loan. When the loan is repaid that money is destroyed by the bank. This system regulates most of the volume of money in circulation.

Most western governments use this model too, for financing their own activities. In other words, governments effectively borrow money from the private banking system. However, because governments use their money for providing public services that don’t usually earn enough to pay for themselves, they have to obtain money to repay the banks in another way – taxation.

So money enters circulation whenever banks make loans – to individuals, business and governments alike. And money is taken out of circulation when the loans are repaid. Therefore it’s fairly easy to see that the private banking system, not government, is in complete control of money supply.

Although this method obviously works, because it’s been in operation for a very long time, it has one very significant drawback: it has no morality.

The Moral Dimension

Economists like to see themselves as real scientists, specialists in a subject that obeys immutable laws of the universe in much the same way as physicists, for example, work with the unchanging laws of gravity, say. But economics is not a pure science, and some well-known economists, such as Keynes and Galbraith, have admitted as much. Economics is first and foremost a philosophy.

One of the earliest names to give shape to what we now call economics was Adam Smith. Smith was a professor at Glasgow University, not of economics, but of moral philosophy; and much of his best-known work, “Wealth of Nations”, clearly expresses a withering contempt for the super-rich. It was Smith who wrote, for example:

All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.1

Given the abysmal conditions of hundreds of millions of people struggling today on the brink of existence just to have enough to eat, at the same time as some tiny handfuls of individuals have more personal wealth than entire countries, shows that very little has really changed since Smith’s day – except to make the problem even worse. Although technology has leapt forward at mind-bending speed, the gross economic and social injustices of Smith’s day are still everywhere to be seen. This is not because of immutable laws of the universe.  It’s because the super-rich like it that way.

In other words, economic policies of governments are political choices, not economic necessities. Today, those choices are based on the personal preferences of the rich and powerful who control all western governments. Unsurprisingly, the economic choices they make always seem to provide for ever-increasing wealth for themselves and those they rely on to keep them in power – together the 1%. As millions of starving people easily prove, the welfare of the rest of the planet is irrelevant to these controllers.

The vast majority of us, the 99%, would almost certainly choose to make different economic choices – were we able to do so. However, the 1% have created an economic propaganda model that is so powerful and effective that most people think it impossible to have anything different to what our controllers provide – a model they call capitalism. Evidence of the fact that our controllers will not admit anything different to capitalism was clearly spelled out by Margaret Thatcher who claimed “There is no alternative” to capitalism – a refrain repeated years later by David Cameron. It is, of course, a lie. There are alternatives, and very good ones at that.

So the moral question that lies at the root of economic philosophy is: who should benefit most from a government’s economic policies? A tiny number of elite super-rich, or the general population? For most of us, the 99%, the general population in question, the answer is pretty obvious – especially given the fact that whatever real wealth a country produces is almost entirely the product of the labour of the 99%.

So capitalism, the economic philosophy obviously favoured by the super-rich and powerful (obvious because that’s the one we have) is clearly not in the best interests of the 99%. So what are the alternatives that Thatcher denied the existence of?

The most well-known one is, of course, socialism – an economic theory that not only works perfectly well (if given a chance) but which also serves the interests of the 99% infinitely more than capitalism.

My preferred alternative, however, is a model of my own making, that I call EnMo economics. EnMo is short for Enough and More. I’ve described it in detail elsewhere. Basically it’s a theory that distinguishes between the functions of the state and the private sector in the economy, recognising that both should be properly provided for. The role of the state is to ensure that society has Enough of all essential goods and services, and the role of the private sector is to provide More in terms of whatever non-essential goods and services society doesn’t need, but often enjoys – and the people, the 99%, get to define the meanings of Enough and More. It’s a more detailed variation of the “bread and roses” concept of early socialists.

The purpose of this essay is to examine in a little more detail a vitally important component of EnMo, upon which the success of the model is entirely dependent.

EnMo Banking

Banking is the machinery of money supply. In capitalism the private sector basically controls banking. Unsurprisingly, therefore, the banking system operates in favour of the private sector, at the expense of the public sector. If the private sector truly operated according to “market forces”, as it frequently claims, this could be a workable model. But it doesn’t. The private sector is wholly dominated by trans-national corporations of one kind or another, entities which, as shown by Joel Bakan’s superb analysis of corporations, display psychopathic qualities. Therefore the private sector cannot be allowed to control a service as important as banking. This isn’t to say there’s no role for the private sector in banking, simply that it cannot be allowed to control it.

In EnMo, the state is able to produce all the money it needs in order to pay for goods and services it deems are essential. The private sector may manage different monetary systems – pretty much as it does now – but like any other business, it would be properly regulated by the state. Proper regulation of financial services, effectively unknown in western society, would be considerably easier to achieve where governments are not wholly dependent on private sector banks for the money they need for public services.

Taxation and Savings

In our existing monetary system taxation serves two purposes: it provides a source of money for governments to spend into the economy, and it withdraws money from circulation, thus helping to control the total volume of money in the economy.

Savings are stored wealth, the means by which people can store money they don’t need for immediate purposes. Savings also effectively withdraw money from circulation, because if it’s being saved it obviously isn’t being used. Although many people think that banks use deposited savings to lend into the economy this isn’t, in fact, how bank lending actually works. Banks don’t use saved money in this way; whenever they make a loan they create brand new money. So savings are effectively dead money, useful only to the people the savings belong to. This is not a bad thing for many people, providing them with some financial reassurance and security. However, for the growing number of super-rich, people who can measure their savings in billions, and who are seldom troubled by tax demands, this represents a vast quantity of money which is effectively removed from the economy, serving no purpose whatsoever, frozen until such time as the super-rich choose to use some. Whilst millions of people are literally starving to death.

In our capitalist world, good public services are deemed to be anathema. Governments all around the world are forced to scrap their public services as a condition for receiving loans from the capitalist banking system – loans which, as further conditions for receiving them, must often be spent paying for first world goods and services from first world trans-national corporations.

In EnMo economics the stranglehold the private banking system has around the throat of government disappears, through the simple expedient of allowing governments to produce and manage whatever money they need to provide essential goods and services. Although people could still have savings if they wanted, the need would not be the same as now, because the state would always provide essential goods and services whether people had money or not – which is obviously not what we have today.

  1. Wealth of Nations by Adam Smith – p. 525. []

John Andrews is a writer and political activist based in England. Check out John’s books: Fiction: The Road to Emily Bay;

Non Fiction: The School of Kindness;
The People’s Constitution.

Read other articles by John.