A Speculation about Monetary Systems (2001)

CPDS Home Contact  

"Unless precautions are taken, there is at least a 50-50 chance that the next five to ten years will see a dollar crisis that would amount to a global meltdown." according to Bernard Lietaer, an ex-senior executive of the central bank of Belgium, from his book, The Future of Money.  Lietaer's argues that social and environmental breakdown are directly associated with how currencies are designed. Most of us never consider the "design" of money because we think of money as something that just exists in the environment like air and water. But for Lietaer, who was on the team that designed the Euro, and has devoted considerable thought and research to the design of money systems, money is designed with features that affect how societies and communities function and their relationship to the environment. See Lietaer's website: http://www.transaction.net. He notes, "... the historian Arnold Toynbee concluded that only two common causes explain the collapse of 21 past civilizations: extreme concentration of wealth and inflexibility in the face of changing conditions." The cause: the design of their money.

Here are some design features of modern money worldwide.

These design features lead to:

People concerned with social issues and the environment would do well to note the last four items. Each carries severe consequences. For a single example, the need for continuous economic growth, carried to its logical conclusion, means that environmental and social devastation will continue unchecked until the earth, in its entirety, looks like New York City... at which time we presume the system will collapse for any number of reasons. Says Lietaer, "The world's 200 largest corporations now control 28 percent of the global economy, yet need to employ only 0.3 percent of its population to achieve that" How is that possible? The design of the money system actively promotes it. In chapter six Lietaer describes how community breakdown is cause by a single major factor : "... both the cause of the problem and its solution can be found in money systems." Of course. Money systems of yesteryear were designed with features that served the creators. The new development on the horizon, Community Currencies, were designed by people interested in their local communities. As regards money being the tool of nation states, Lietaer observes, "... the US dollar has become the global currency. This arrangement has serious negative consequences for all participants, including the US." The recent collapse of the currencies of Asia, Mexico, Brazil, Argentina, Turkey and Russia are a direct result of dollar hegemony and the ecological and social devastation are clear. These multiple crashes -- unknown in the history of the world -- are "signs of systemic dislocations of the official monetary system."


The resolution Lietaer suggests is to be found in these "new monetary experiments" that have been cropping up all over the world: Community Currencies. They deserve the support of the state. "My view is that these innovations offer realistic possibilities for gradually correcting the excesses and imbalances of the current system without revolutions or violence."

[[CPDS Comment: Lietaer is almost certainly correct that the design of monetary systems has important consequences, and that present systems are becoming unstable.  However finding a useful alternative is almost certainly more difficult than typically considered by those who experiment with Community Currencies]]