Towards a monetary commons

Rachel O'Dwyer attempts to define a monetary commons thus:

what we’re talking about isn’t just the implementation of a complementary currency that is held and produced in common, or the widespread re-appropriation of the production of money, but a monetary design that specifically supports forms of social and material reproduction. For example this includes health, education, and care services and from a monetary perspective, a Universal Basic Income and/or access to inexpensive credit.

There are several ideas here which would make fascinating exploration but I would like to offer a more distilled definition based on the widely held understanding that 97% of existing ‘money’ is in fact bank deposits. As we have seen, money feels to its user like property and in that sense it can be held and managed collectively. But with a deeper understanding we can see that to really own our money, we must be able to issue it and control the payments infrastructure.

Creating a global payments infrastructure is however easy with blockchains. But creating an institution which has the right to promise money it doesn’t have, typically requires putting down a deposit of $50m before a single brick has been laid. Small banks may not be commercially viable. Then the right to issue money is highly regulated, and paying to accounts in other banks necessarily involves using other rails. So this approach could produce useful results, if done with the right intentions. The ‘ethical banks’ are small and risk-averse, limited by the amount held on deposit, and they find it hard to lend to the most worthwhile projects.

This paper proposes something much more radical. As long as we believe the story of ‘legal tender’ we will be at the mercy of those who write the law. Legal tender, and promises to pay legal tender are highly regulated. Government give themselves the right to define money on behalf of the people, then they spend, tax, monitor, order debts be discharged in, and surveil that money. Furthermore a bank’s promise to pay legal tender can be used completely interchangeably with legal tender itself, even for payment of taxes, even if the bank is insolvent! Although legal tender is supposed to be a way that a government can issue money from nothing, accountable to parliament according to the needs of the economy, it no longer serves the economy but only the banks. Control over the quantity of money has passed to the banks who now issue 97% of it, and not to serve the economy but to maximise rent income in the form of interest.

It could be that there is no way to reform this system, to make it serve the real economy, to bring it back under democratic control. It could be that if we want a money system that that serves value creators rather than value extractors, unleashes potential rather than enslaving it, and which expresses the collective intention, we will need to start from scratch.