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In a self-serving attempt to be recognised as a science, orthodox economics treats human input to its economic models as soulless homogeneous stereotyped behaviours and values. In the process it loses an opportunity to relate to the ethical, social and philosophical dimensions of human behaviour and chooses to separate itself from the real world. Input from other ‘professional’ disciplines such as sociology and anthropology is beginning to round out what we call economics, often against orthodox will.

As acceptance of monetary dysfunction gradually finds its way into mainstream intercourse, what ethical considerations might play out in the twin alternative remedial responses of monetary reform and money diversity? And as the 99% become progressively aware of embedded unethical and unfair systemic values, might monetary disengagement become a key part of a trend to separate and distance ourselves from the mainstream – a Great Separation?

The various sources of bank account money

Money finds its way into our bank accounts in a number of ways: as earnings, when we exchange our labour, intellect or produced goods for it; as credit, when we are allocated it in return for promises to pay it back (and more) in future; as gift, when we inherit it, or bail out our children; as cash-in, when we sell a previously owned asset for it; as welfare, via social security payments or pensions; and as rent (or dividend/ interest), from owned assets or investments.

Peer to Peer (P2P) approaches, like mutual credit [1], can mediate exchange of goods and services. Provided they adequately address risk-insurance, they can operate without state or bank support, and do their own bookkeeping.

Apart from the governance issue – because even simple schemes require trust to operate – two challenges crop up quite quickly:
a) the division of labour challenge: individuals generally co-operate to produce a good or service that is saleable and therefore need some form of collective body to host that co-operation, and
b) the temporal challenge, where people need cash liquidity at different times, and therefore have to set aside (or borrow) cash

Division of labour, a major factor since the industrial revolution, has facilitated the efficient development of more and more complex products. Our skills are increasingly specialised. Very few of us are sole-producers. Those that are can (and do) imagine, or part-live, a life of barter or gift exchange, but unless some mega-crisis takes us back to the stone age any model for monetary reform will have to take into account the role of a collective-mediator such as a corporation or co-operative. The governance and ethical values of this organisation then come into focus.

The classic temporal problem is that of the farmer, whose production is concentrated at harvest times but whose consumption is spread out over the year. The standard answer to any mismatch of this sort is to borrow. It is generally argued that for the lender, these transactions only make sense if they create ‘surplus value’, that is if the lender gets back more than he lends. Normally that surplus materialises as interest on the loan.

The orthodox argument for interest is that the lender needs to be reimbursed for his ‘delayed gratification’ in not spending the money immediately. This overlooks some inconvenient truths – that the loan is usually created out of nothing by a privileged private bank – and that if it is not, the lender is frequently cash-rich enough not to need to delay any purchases. In neither case are there grounds for reward for deferment, (other than the prevailing ‘market forces’ argument that if you don’t pay the interest you don’t get the credit). There is no credible ethical / fairness argument.

Some form of credit needs to be taken into account in any new model, though, simply to cater for the temporal problem. This is not to say that vast amounts of credit should be used to kickstart an economy in crisis, especially if much of it is directed into potential bubbles rather than investment in the real economy.

A main concern of inequality-watchers is the accelerated accumulation of wealth by the 1% (and even more so by the 0.1%) [2,3]. A side effect of this is that in future much more of the money in circulation is likely to be as a result of wealth cash-in/ investment by elites. Maybe the profligate son should be our new hero, as he gaily spends-into-use his inheritance. Notwithstanding the recent surge in accumulation, much wealth is passed down generation to generation, often in the form of land. The initial acquisition of this asset is frequently through patronage or violent enclosure of commons [4]. Estimating the proportion of wealth derived from hard work and innovation might make an intriguing PhD thesis. Perhaps the dubious origins of much of this accumulated wealth should be overlooked – as forgiveness of the sins of the past or practically because of the difficulty of attribution. Or perhaps it is a legitimate ethical concern as the asset is used to cement political and economic power.

Money created by the state and spent into circulation as welfare benefit or pension has certain characteristics associated with it (apart from regular severe scrutiny by the Daily Mail). In particular it is more likely to be spent quickly – to contribute to the velocity of circulation of money. In the past some weight has been given to ‘trickle-down’ – the suggestion that wealth accumulated at the top of the pyramid filters down and benefits all. This is now a largely discredited theory, as money-chasing-money becomes the activity of choice for the well off [5]. Welfare recipients and pensioners spend money more quickly because they need to provision for themselves and their families.

Traditionally hated by the left who demonise the ‘rentiers’, rent is a charge for the use of privately owned property. If the property ownership rarely carries any associated merit (a milder way of restating the ‘property is theft’ argument), then income associated with its rental is similarly ethically-challenged.

Democratic Money and the Great Separation

Consider three possible sources of money issue – the state, private organisations and the public.

Historically states issue money to finance ventures which are beyond their immediate resources – often wars – spending it into circulation and then taxing it back. Libertarians are not the only people who feel somewhat uncomfortable trusting the state with this capability. In theory, the state is a proxy for the people and responsible for setting national priorities and looking after their citizens. In practice, and notwithstanding the trend to ‘democratic’ governments, they have abused this power. Sometimes crudely, by issuing excess money before elections to create a feelgood effect; more recently by subcontracting this responsibility to banks as part of an opaque mutual backscratching agreement.

Private currencies issued by individual organisations have a long history, but what we are talking about here is rather different – a sort of institutionalised private issue which can only be described as a pseudo-fascist coalition between the state and corporate finance. The exact nature of this bargain or understanding has never (to my knowledge) been comprehensively articulated (or rationalised). Hayek suggested a regime of competing private currencies in true libertarian fashion. But what we have somehow drifted into is a privately controlled monopoly issue of money as credit. If monopoly is an inexact term then perhaps we should describe it as a orchestrated oligarchy. This arrangement has, over time, relaxed its stated rules creating a near-complete outsourcing of the creation of money to the private sector. It comes as no surprise that the resulting allocation of capital favours the rich over the poor, the financial economy over the real economy, and insiders over outsiders.

The state versus private debate tends to take place in terms of the design of checks and balances and governance arrangements that would make one option or the other workable and fair. Perhaps it is possible to perfect such a design or designs. Money is man-made – it can be re-engineered. The designers of such potential approaches believe in the power of ideas, and certainly do a great job of educating the public about the niceties of money creation [6].

There are those who believe that we cannot expect the system to reinvent itself – that every re-engineering initiative will be an opportunity for re-capture by entrenched vested interests. This should not be seen as a cynical view of selfish human nature – it is more an assessment of the likely systemic response to change that has been described by sociologists and students of corporate culture among others. Systems have a great capacity to absorb change initiatives and re-form around them into their original shape.

If this is the likely outcome of such well-intended reform measures, we are left with just one option – but one option that can take multiple forms – truly democratic money-forms issued by the public. This so-called Money Diversity scenario [7] can be seen as one of the more important responses to the democratic deficit.

Money after all should represent either the fruits of past labours or the promise of future labours, so it is the public, individually and collectively that should guarantee its value.

Like many responses to dissatisfaction with the status quo new money types involve a degree of distancing from the mainstream – sometimes ‘interstitial’ projects that work in the spaces between deprecated establishment activity; sometimes recognising that we have to sup with the devil to some extent (and if that is the only choice we individually have, that we are not ethically compromised[8]); sometimes disrupting established patterns [9].

There are numerous interesting developments which may be the shape of things to come – crypto currencies, digital mutual credit, interest-free banking, prepaid energy-backed currencies, collaborative consumption, timebanking. All can be seen as symptoms of a #GreatSeparation from a deprecated mainstream.


The issue and allocation into first use of money/ credit always has an ethical dimension. While the interest-collection and directing of credit-money benefits private banks, we should expect corporate profit to take precedence over ethics. Repossession of this private money-isssue by the state has its attractions, especially if a good proportion is spent into circulation debt-free on strategic national or planetary priorities, but all flavours of this option have the inherent risk of being re-captured by for-profit concerns.

A new raft of money-types is emerging, many of which have democratic potential. Some can be used with little or no mediation, but to achieve scale they will need to address the need for collective production (and therefore have to address ethical governance); and the need for credit to address the temporal problem (and therefore the issue of ethical risk-management and insurance).

These new monies design-in varying degrees of separation from the mainstream. Abuse of the money-issue privilege has created the will to separate and to engineer new vehicles and mechanisms of trust. Modern technologies and social networks have created the means to accelerate development of new monies and their spread.

Whether a progressive heterogeneous reclamation of money-issue by the public can help to bring ownership of the means of production closer to the people and turn the tide of commons-enclosure that threatens spaceship earth remains to be seen. We may perhaps hope for that, and work with that in mind.

Featured image: Detail from The Winnower (1846-7). Author: Jean-François Millet. Source:


[3]: excellent infographics on the US
[6]: Ben Dyson at
[7]: Bernard Lietaer at
[8]: Patrick Noble at