2012-01-05 A proposal for governance: The financial system

This article is a continuation of the ideas begun in A proposal for governance in the post 2011 world

It is justice, not charity, that is wanting in the world. - Mary Wollstonecraft

An overriding concern of most people participating in the 2011 revolution has been the financial system. From the September 17 protests against the financial institutions and the symbolism of Occupy Wall Street to the widespread discussion of alternative currencies, money has received more air time than even human rights and war. Indeed, the current human rights atrocities and endless wars did not cause the revolution – it was the unfairness of the economic systems (starting with the fining of a fruitseller in Tunisia) which have been the driving force behind the 2011 protests.

With all of this attention, it would be easy to assume that financial systems are a very important part of any future society. But are they? Before we discuss alternative systems or how to repair our current system, we need to look at why we need a financial system at all. If we define the function of our financial systems, form should follow easily, be it community currency, barter, p2p digital, resource based or other.

The current system

The current financial system functions as a means to tie the work that is done for corporations to basic essentials such as food and housing in an entirely artificial relationship. Despite an abundance of basic essentials, individuals or entire countries can be deprived of them based on the labour or rights they are providing to corporations. A system where banks, governments, and many other valueless institutions also stand between individuals and basic needs and demand payment completes the creation of true wage slavery where no worker can survive outside the system. By providing a complete disconnect between work required to produce basic essentials and ownership or access to them, this system also assures gross overabundance of resources for people who do no work of value at all.

Wages are commonly described as a motivator to work, we are told that no one would work if they were not paid. This is belied by the amount of people raising their children, cleaning their homes, tending their gardens, volunteering for fire departments and writing open source software and it is belied by cultures in myriad times and places which survived happily without a financial system. Indeed it seems more as if all of the work that benefits society is or could easily be unpaid, while pay is only required for work that is harmful to society. Valuation of work rests with corporations and governments which ensure that workers will engage in pointlessly dangerous and immoral work that they would never do otherwise. Wages were created not to motivate us to work, but to control our work.

The jobs that corporations and governments have chosen to value are almost entirely busywork, pointless jobs that would not exist in another system, jobs including but not limited to everything in sales, finance, management, politics, and more. The end result of corporate work is far too much product and products and services that are detrimental to society and the environment, and poorly distributed. Any attempts to stop this work are met with the cry that to do so would cause job loss, which is promoted as a great evil as under this system jobs equal basic essentials. Jobs are always touted as being in short supply, valuable, and difficult to obtain, especially the ‘good’ jobs that pay the most money. Jobs are, of course, not remotely scarce, any child can find hundreds of valuable things to do at any time, but these valuable jobs have not had an artificial monetary value associated with them.

Any for profit system is not going to have social or environmental goals as its mandate (even if it says it does) and a wage paying system is a for profit system. If profit were removed, all decisions would be made for social goals, prison systems would be trying to rehabilitate prisoners or study to find why they were in violation of the law instead of just warehousing as many as possible, medical research would be trying to improve health instead of selling pharmaceuticals, and agriculture would be devoted to producing the most nutritious food in the most environmentally responsible way. Removing profit would also remove a great deal of the reason for competitiveness, secrecy and spying within organizations, along with a great deal of the redundancy of competing companies providing identical goods and services. Removing wages attached to a specific system would give every individual the freedom to leave any system they did not agree with or that began to malfunction due to core team problems, a better alternative system or other.

On an international level, the financial system serves to artificially control which countries are wealthy and which are not, by manipulating prices for a running shoe so that it is worth extremely little at the point of manufacture in China but people are killing each other for it in the US. At a national level it allows banks, who have no need of housing, to hoard millions of houses while the children that used to live in them sleep in the streets. At an individual level, the equating of life’s essentials with the financial system can control life or death, fulfillment or wasted potential, contentment or misery. All of society’s problems which could be solved by money, were caused by money.

Social Impact

Paid work creates poverty, where anyone not enabling the corporations and doing their work lives in fear of the legal and societal persecution that comes with poverty. Poverty is the hardest work of any available today. It is a very expensive lifestyle, entailing endless fines, charges and fees levied by the corporate and government world. It leaves no time to achieve any fulfillment, is a life threatening health risk, and is extremely damaging to all personal relationships. It is naturally almost universally dreaded.

Poverty is also regarded as a moral failure, as society needs to blame the victim to avoid blaming themselves for the situation the poor find themselves in. In this way, courage, duty, industry, thrift, kindness, loyalty – all of the traditional virtues may be replaced simply by wealth, the ultimate virtue respected in society today. The very word 'unemployed' states idleness, when anyone who has been poor knows how much work is involved, while wealth is used synonymously with success and achievement. Paid work also artificially values one job above another (and subsequently the person doing that job above the other) regardless of individual preference. While menial work might be considered more enjoyable than executive work by most people, providing exercise, social interaction and purpose, the assigned values teach us to value pointless executive work instead.

Paid work occupies all of our time, and when we are outside the financial system poverty is a full time job. This acts to cripple all volunteer work such as community gardens and open source projects that would otherwise be done for free and may undermine the system of wage control over individuals. For those that volunteer anyway, the financial system ensures that their work, such as child rearing or innovative thought, is kept from ever resulting in any kind of independence and encourages those volunteers to collaborate with the corporate system to obtain security. Volunteer work is also subject to the same moral scrutiny as poverty, especially in recent years when a requirement of being poor is frequently the oxymoronic compulsory volunteer work associated with receiving basic essentials. Previously the domain of the rich and idle, therefore commendable, volunteer work has now become tainted with the stench of poverty, further limiting willing participants.

The current financial system is therefore necessary to control our work, to control our time, to create poverty, to create division and to force people to do work which is harmful to society.

A modified system

It is possible, and frequently proposed, that the current financial system be modified to make it accessible for all to earn the basic essentials of life easily. This could be done by having far more types of work valued, by providing various forms of charity, by forcing corporations to follow certain workplace standards and many other tweaks and regulations. All are in the end just modifications to the master slave relationship and none recognize the underlying flaws in the system. Who would be the authority valuing the work, administering the charity and enforcing the standards? Who has control of the wages? Whoever maintains authority over the work of others maintains the hierarchical system and prevents workers from having autonomy, mastery and control over their own work. This infantilization of workers, even in a system with worker's rights, limits innovation, decreases satisfaction, and prevents workers from reaching their full potential.

A currency free system

It is possible to operate a society with no financial system at all. Where surplus exists, it can be given, traded or pooled communally to ensure there is no want of basic essentials. This suggestion is frequently countered with the statement that only primitive societies can operate in such a fashion, our society is too complex, but that statement is never backed by any insurmountable obstacles. Such a system is unlikely to appear soon in its pure form, but could exist to cover at least basic essentials so that a society does not condemn a child to starvation because a parent cannot provide for them. It would then also be possible for people to follow the path that for them provides the greatest satisfaction without being held to corporate slavery.

A great fear associated with abolishing wages or providing anything ‘for free’ is that some people may not work. This fear completely disregards the fact that there have always been people who will not work and under the current system they include the people receiving the highest monetary rewards. Because of the artificial monetary value assigned to some jobs, people who elect to do demanding and valuable work with no associated corporate wage are sneered at as ‘welfare mothers’, etc. and made to believe they are acting as parasites on society while corporate executives who provide no societal value are hailed as great successes. A 2010 study showed that executives, managers, supervisors, and financial professionals account for about 60 percent of the top 0.1 percent of income earners in the US in recent years. In a system where all work was directly tied to the product or service produced, there would be far more societal pressure for people to do something of direct value, and the people contributing nothing would be exposed. With a more open system it would also be far easier for people with current difficulties getting work in the corporate environment to produce something of value.

The internet has always had a strong anti-currency bias. The earliest email spam promotions only served to increase the divide between the corporate world which took over the surface and the underground which remained as before, populated by people derisively referred to as parent’s basement dwellers due to the very real truth that their work seldom brought income. The difference between worlds is nowhere more apparent than between Mark Zuckerberg, the billionaire Facebook creator and prodigy of the corporate world, and moot, founder of the most wildly influential, popular and completely unprofitable financially, website 4chan. With no financial incentives the internet has managed to create collaborative efforts which have pushed the potential of society far beyond what could have been possible before the internet. In the words of Captain Jean-Luc Picard "The acquisition of wealth is no longer the driving force in our lives. We work to better ourselves and the rest of humanity."

While it is doubtful that freeing people to obtain basic essentials outside of corporate bondage would result in more people than usual not working, it is very likely that the increase in art and innovation would be dramatic. It would also change the perception in society of the value of volunteer work if it were open to everyone to participate in it, and the type of work produced would be valued by society, not corporations.

Property Ownership

A system which does not allow property ownership overlooks the fact that property ownership always exists, it has simply transferred ownership, with all of the rights and responsibilities, to a group instead of an individual.

Property ownership causes problems when control of property is held outside of the user group. When a community owns an individual’s home, an individual owns a community’s public space, or a nation state lays claim to an ocean, problems are inevitable. Ownership implies rights and decision making; as with other systems, the rights and decision making for property must lie with the user group of that property to minimize conflict and provide the most effective stewardship. Property ownership will be discussed further in a later article.

It was once considered inconceivable that the world could run without slavery for the exact same reasons people are now putting forward for retaining wages, our modern slavery.


Cooperative Economy in the Great Depression http://jonathanrowe.org/money-cooperative-economy-in-the-great-depression

Image credit MauroB

Money is not the problem. Price is the problem.

In my opinion the problem affecting most people in the long term is not the money itself but the abuse of price setting powers and the lack of political moderation.

A minority of people are able to constantly increase the prices for the necessary goods like food, energy and shelter that are needed by everyone while the majority of people can do little but watching helplessly and trying to cope with the price hikes as good as they can.

This problem has a long tradition. Be it Capitalism or Communism, the individuals in the population are mostly stripped of means and rights to provide for themselves independently. And so they have to play by the rules of the big boys and make their living accordingly.

But the big boys can take back from this living as much as they like by simply increasing the prices and leaving only enough for necessities of life. And they do so as witnessed by the news of record profits, increasing wealth of a few, rising indices of cost of living and rising levels of debt.

Discussion copied from n-1

From ChessyPig

I've been studying the reason behind financial systems recently, so
I'd like to set out a few points in the favour of having _some_ kind
of financial system.

It is very difficult to get any large group of people to agree on what
is 'good'. Is an iPhone good? Is a bottle of wine good? Is a
productive strain of weed good?

The 'proxy for value' we currently use - the way we determine what is
'good' - is 'how much money are people willing to pay for it'. In some
ways this is an excellent proxy for value, in other ways it is a
terrible proxy for value. However, if we are to replace it, we should
understand that we are replacing it and ensure we find something to
replace it with which is at least as good a proxy for value.

The reason we need a proxy for value at all is to simplify trade. If I
produce art and you produce chickens, but you don't like my art (even
though many people do), how am I to get some of your chicken eggs to
eat? I could engage in a long series of swapping one thing for
another, until I eventually end up with eggs; or I could swap my art
for some agreed token of value (money) and then swap the money for
your eggs, and you can go on and use the money to swap for something
you want...

As soon as we have that token we have money; we will want somewhere to
store it, people who store it want to make use of it while they have
it rather than just keeping it in a box, we encourage their behaviour
because they promise us that if we let them lend it out, they will
give us a portion extra from what they make rather than charging us
for the storage costs, and banking starts up again...

And if we want to dismantle that we need something to put in its
place, or people cannot trade easily. If people cannot trade easily,
people cannot specialise easily, and everything becomes much less
efficient, and we cannot maintain the technological base we are all
used to (if we are reading this email).

From NingúnOtro

Yes, banking starts up again.

Hopefully without it being the bankers who decide what to create money for and how much.

Hopefully without bankers abusing our trust lending out for a fee (interest) much more money than they have in their deposits. Fractional reserve banking was a "gentlemen's" agreement among the thugs not to multiply by more than 10 their deposits... because extreme abuse would kill their golden egg chicken for all. But it could not be avoided, because there were sanctions for breaking the letter of the agreement, but not the spirit of it. Securitization (http://en.wikipedia.org/wiki/Securitization) did the trick, and as risks were transferred to the buyer... the sharks accelerated the inevitable outcome by competing for packaging the most junk as it was the only thing they could get in competitive quantities to act swiftly.

- Martin Wolf further wrote in June 2009 that certain financial innovations enabled
firms to circumvent regulations, such as off-balance sheet financing
that affects the leverage or capital cushion reported by major banks,
stating: "...an enormous part of what banks did in the early part of
this decade – the off-balance-sheet vehicles, the derivatives and the
'shadow banking system' itself – was to find a way round regulation."

The problems behind financial systems are not reasons though... they are one kind of symptom, among many, many other, for behavioural patterns that are all rooted in one single problem: survival strategies of the individual.

The problem with financial systems, and other systems like the political, is the fact that there are reasons why it pays to abuse them.

What we need to solve is why abuse is sought by some.

Hi ChessyPig

Thank you ChessyPig for voicing the number one reason given for keeping financial systems. This is also the reason I don't believe the world will completely drop currency quickly, and one of the main reasons I believe it should.

My answer would be that under the current system it is also very unlikely that your art would be valued enough to allow you to buy eggs, and since eggs (or equivalent) are an essential for life, you would end up working at a job that would waste your talent and desire to produce art. In my ideal, eggs would be produced by a group that liked to produce eggs and be offered free for all, removing your worry about having to trade your art for anything and allowing you to provide your art free for all of us.

As a fellow artist I would like to add it would be far more gratifying to me to have people accept my art as a gift rather than scrutinize it for possible monetary value.

From ChessyPig

5 hours ago

I admire your faith in humanity, but I think that in practice there
are at least some humans who would see someone offering resources for
free, take the whole lot and either attempt to resell them now they've
cornered the market or destroy them for the sheer joy of exercising
power / making their mark on the world even though it is a negative

It might be a disease brought on by the constant pressure in the
current society to get ahead and the lack of healthier outlets, but I
suspect there are a few people who would just decide to do this
anyway, and you don't need very many of them to completely wreck an
'everything is free' system.

(Then you start having to have quotas - only N eggs per person - which
causes the rise of bureaucracy / corruption / awkward edge cases - 'if
I give you this large bag of chicken feed, can I get twice as many
eggs so that the rest of my clan don't have to travel out here to pick
them up?' Or you have suspicion of individual behaviour, security
forces etc... 'you can't have any eggs, I don't trust you to be
responsible with them'.)

From Anna

4 hours ago

Hi Chessy,

When eggs are free what would be the point of someone 'cornering the
market' to 'sell' them somewhere else, when everyone can get them for

That is not to say that abuses won't happen. Abuses of the systems happen
in good systems and bad systems. They are not an argument against having a
good system.

Probably there will always be 'lazy' peopIe who prefer not to work. I think
a civilised society like ours should be able to accommodate people who do
not want to 'work', do some unpleasant job, under compulsion. But I think
activities which are voluntary, performed communally, and valued by the
community, often turn out to be enjoyable, when the same activity,
performed in isolation under compulsion, and with no value attached, is
resented and deplored. Real work, ie collective work that connects us to
our real circumstances by acknowledging our connection to the earth's
resources, generally feels natural and good, and contributes to human
dignity, not to human degradation.

I think the arguments put forward here by Heather offer a real basis from
which to view the depradations of the present system.


From ChessyPig

3 hours ago

Even if everyone who produces eggs gives them away, there is still a
limited supply of eggs! This especially holds as transport (and
communication) gets more resource-intensive due to the resources we
currently use for transport (primarily oil) and communication (rare
earths) become more scarce...

So if you acquire _all_ the eggs in the area, you can start charging
for them again, even if everyone producing eggs is still committed to
giving them away for free, because you are the only one with eggs.
(This is even easier to do for once-a-season or once-a-year harvests
where the producers won't have any more for a longer time.)

To stop being all negative all the time, here are some solutions that
might work:

1) Have money, but base it on people, rather than debt. Every human
being, as their inalienable right, gets a certain quantity of tokens
every (week/month/year). They can spend these tokens on whatever they
like. Gradually devalue old tokens to discourage hoarding, and you
suddenly have a more equitable system without having to impose much
structure on it; you'll still need some 'safety net' provision for
people who spend their tokens unwisely or have greater needs, but you
don't have to put quotas and other arbitary controls on most

2) Technocratic / central planning allocation of essential resources.
Mandate that everyone spends a certain amount of their time on
'essential' tasks, or pays in a certain quantity of essential
resources (food etc). The time need not be taken from their whole
lives; maybe everyone has to either spend four years in the labour
corps or give four hours a week; choices can be given. This entitles
them to having their needs met by the state for the rest of their
lives. (If they don't comply, you use the same methods as any kind of
antisocial behaviour - you attempt to educate them, you attempt to
understand and fix any underlying conditions that might be causing it,
and as a last resort you exile them.)

You can probably gradually reduce the amount of mandatory service as
the populace get used to having most of their lives to work on what
they want and naturally start to produce useful things for each other,
and as automation gets better and replaces most essential maintenance

From Anna

2 hours ago

Hi Chessy,

A limited supply of eggs can easily be rectified by producing more. In fact
for basic necessities we have abundance, in spite of fears of
overpopulation. There is a town near where I live called Todmorden which
has started a project called 'Incredible Edible' which grows food in public
spaces that people can help themselves to for free.


The idea has been taken up by many other towns here and abroad. The
difficulty is in persuading people that they can have something for free
rather than someone picking the lot and selling it somewhere else.

A piece of fine art that someone had produced is in limited supply and that
might cause the problems you describe. But if all had basic needs met
perhaps we could work that out without creating a whole system to regulate
it, something to do with generosity, sharing, and gift giving, which is
left out of your systems.


Hi ChessyPig

Hi Chessy,

Perhaps it would be helpful to have a bit of my background and why I believe, in the long run, this system will not only work but is the system that people prefer.

I was raised in Canada's far north, in one of the most isolated towns, where there had only recently been any kind of outside goods brought in and what was there was extremely limited - a Hudson's Bay general store (previously trading post) which sold wool socks, bullets, candy bars and not much else. The economy was almost exactly as I have described. It worked. Yes, of course some people worked harder, as some people in our current system are better at sports and other non-monetary activities - this harder work, plus greater generosity to old people and others incapable of chopping their own wood, packing water, hunting etc., was rewarded with greater prestige as being a greater athlete is rewarded currently in this society.

Yes, eventually people from outside moved in, bringing with them two great changes: 1. they demanded that the government get the services up to the level of the rest of Canada and much more, bringing a culture of permanent discontent where everyone was constantly thinking of potential grants and frustrated if they did not arrive and 2. they stole everything that was not nailed down. The previous culture was of the kind where if someone stopped by you immediately offered them a meal no matter what time of day it was, if you had a cigarette you shared with everyone present and if someone said they liked your coat that was your cue to take it off and give it to them (that is not an exaggeration, no one would say they liked something of yours unless they wanted it, and you pretty much had to offer it at that point). When money came in, people who earned more felt guilty and used gambling to redistribute it, making bets they had no chance of winning with people who hadn't received any money.

The old system was destroyed within a couple years of new people arriving. What remained was kept within racially delineated lines (but frankly little remained). As soon as the young people heard that the government ought to be providing for the seniors, they stopped, etc.

So I do understand your points, I agree that almost certainly the same people shooting and pepper spraying each other for WalMart products will try hoarding eggs, but I also know that my society can work. Societal pressure was intense in the town I was raised in, as it is everywhere - it was just pointed towards different goals. The famous respect for elders was not just as it is popularly presented, because of their wisdom etc., it was instilled so that it was a point of honour to provide for the elders - as it was also a societal necessity. It was also rewarded, though not directly - goods and services were freely given, but the boys that worked hardest for the elders were also given the most beautiful mitts, etc by the elders and others. The pressure that we instill in our children to excel in sports and get good grades could very easily be pointed towards producing something of value and gaining the respect of your peers or gratitude of your community (welcome to github).

As it is now, poor children are told to excel at the three R's, rich children are pushed to the three A's, and all in the west are taught to trample their contemporaries in an isolated, competitive society. Generosity to those more vulnerable is a government responsibility that they do not need to concern themselves with. These teachings do not, I believe, come naturally to children, most would much prefer to work collaboratively and most would feel much more secure and empowered in a society where helping others was an integral aspect. As we need to introduce violent video games at a young age to produce the brutal armies of today, so we need years of intense competitive training and advertising to produce the executive psychopaths of today. We can stop.

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