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Mary Mellor: Money as a Commons
1. Money as a Commons
Professor Mary Mellor
Northumbria University UK
Helsinki University 16.05.13
2. Modern Money is not a Commons
⢠Modern money has been privatised
⢠The main source of money issue is through
the banking system
⢠This money is only issued as debt through
bank accounts
⢠However people think of this as ârealâ i.e.
public money (national currency)
4. Privatised Money Supply
⢠Most money is now issued as debt (97% in UK)
⢠States have lost control of money supply
⢠Enhanced by use of electronic money
⢠Enabled the growth of a âmoney marketâ
where both money (currencies) and debt
(securitisation) are traded as commodities
using debt funding (leverage)
10. Bank money creation
⢠âthe process by which banks create money is
so simple that the mind is repelledâ (John
Kenneth Galbraith, 1975 Money: Whence it came and Where
it went Penguin, London p. 29)
⢠âThe essence of the contemporary monetary
system is the creation of money, out of
nothing, by private banksâ often foolish
lendingâ (Martin Wolf Financial Times 9.11.10)
11.
12.
13.
14. Privatised Money
⢠Economic policy controlled by profit-driven
private interests
⢠Financial sector controls money supply
⢠Instability of money supply (boom and crunch)
⢠State reliant on taxing private sector
⢠State has to rescue financial sector using
âborrowedâ money
⢠State is then âpunishedâ through austerity
15. Marshall Plan
Louisiana Purchase
Moon race
S&L crisis
Korean War
New Deal
Iraq War
Vietnam War
NASA
World War II
Banking bailout
⢠Jim Bianco, of Bianco Research:
http://www.ritholtz.com/blog/2008/11/big-bailouts-bigger-bucks/
16. Neoliberal Ideology â Handbag
Economics
⢠All money and wealth is created in the private
sector
⢠States must limit expenditure to avoid
overtaxing the private sector
⢠States must not create their own money
⢠State as household dependent on borrowing
from the âmoney marketâ (Maastricht Rules
3% deficit 60% National Debt)
19. What is Money?
⢠Where does it come from?
⢠Who owns and controls it?
⢠How is it issued and circulated?
⢠It doesnât just appear in society âfloating from
the treesâŚâŚ
20.
21. Economic Myths
⢠Money emerged through trade
⢠Money is only a medium of exchange
⢠Money originally had intrinsic value
(gold/silver)
⢠Banks loans link savers to borrowers
⢠States cannot create money or wealth
24. MONEY CAN LOOK LIKE THIS
With permission: tab2space on flickr
25. MONEY CAN LOOK LIKE THIS
With permission joep de graaff flickr
26.
27. Varieties of Money
⢠Money can take many forms: clay tablets,
written records, sticks, stones, coins, paper
⢠Social : used for injury payments, tithes,
dowries, local exchange
⢠Public: issued and used by rulers, states or
monetary authorities
⢠Commercial: issued as debt by banks
designated in national currency
30. The Problem with Debt Money
⢠More money is reclaimed than is issued
⢠Ponzi system â old debt is paid by new debt
⢠Drives constant growth and profit-seeking
⢠Crisis if unregulated (2007-8, Finland 1990âs)
⢠Private benefit - public responsibility
⢠Ignores the need for deficit/debt free money
in money systems
31. The Necessity of Deficit
⢠Deficit: The allocation, spending or lending of
more money than is reclaimed (taxation rates
never 100% - banks demand 100%+)
⢠Handbag economicsâ deficit hysteria is totally
mistaken. More money must always be issued
than is reclaimed â otherwise there will be no
debt free money to circulate
⢠Bank deficit occurs as default on loans
32. Money systems need deficits not debts
⢠âI cannot find an example of a country that has
come through a banking crisis and returned to
economic growth without the creation of a
state development bank⌠the whole point of
a state development bank is that it loses
moneyâ (a senior investment banker quoted in
Sunday Times 05.08.12)
33.
34.
35. The Money Divide
Economic âManâ
Market value
Personal wealth
Able-bodied workers
Labour, intellect
Exploitable resources
Knowledge (IPR)
Womenâs work
Subsistence
Social reciprocity
Sick, needy, old, young
Body
Ecosystems, wild nature
Feelings, emotions,
wisdom
36. What to Do?
⢠Get rid of money â not very practical in
urbanised societies, also money in various
forms has a long history
⢠Spread current money access (debt) â
problems of micro-finance/sub-prime
⢠Create Local Money â useful - but does not
usually cover wider economic needs
37. Money as a Commons
⢠Money should be seen as a âcommonsâ social
resource like air or water is a natural resource
⢠Its issue should not be privatised or its
accumulation be a primary aim
⢠Currently no basis for âenoughâ : bread/money
price
⢠Money as a public resource would create the
possibility of a sufficiency economy with
enough for all not cornucopia for some
38. Money as a Commons
⢠Money access as democratic right (citizen
income, right to meaningful work)
⢠Use of socially issued money to prioritise
economic activities (social need, public
services)
⢠Any residual market system would be
regulated and serve the demands of a
sufficiency and socially just economy
40. Democratising Money
⢠Control of money supply needs to be taken
back from the banks
⢠All new money should be issued free of debt
on the basis of democratic priorities
⢠Monetary management through issue and
taxation (linking fiscal and monetary strategy)
⢠Private investment should be based on a real
transfer of money (as the text books say)
41. Peopleâs Money for Sufficiency
⢠Democratic priorities
⢠Needs-led expenditure
⢠Public infrastructure
⢠Community/Specialist banks
⢠Not for profit services/production
⢠Basic income
⢠Income for âcommonsâ resources â land, water
42. Publications
⢠Mary Mellor (2010) The Future of Money:
From financial crisis to public resource (Pluto)
⢠Mary Mellor (2010) Could the money system
be the basis of a sufficiency economy? real-
world economic review 54 www.paecon-
net/PAEReview/issue54/Mellor54.pdf
⢠Frances Hutchinson, Mary Mellor, Wendy
Olsen (2002) The Politics of Money (Pluto)
43. Web Lectures
⢠Bringing Economic Down To Earth
http://www.youtube.com/watch?v=9F-
DuD6T_i0
⢠Just Banking
http://www.youtube.com/watch?v=uAhxDsm
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