“…over the past few months the IMF has been sending warning signals about the state of the global economy. There are a bunch of different macroeconomic developments that signal we could be entering into another crisis or recession in the near future. One of those elements is the yield curve, which shows the difference between short-term and long-term borrowing rates. Investors and financial pundits of all sorts are concerned about this, because since 1950 every time the yield curve has flattened, the economy has tanked shortly thereafter.”-Paul Sliker on Left Out Podcast
Ann Pettifor has a 160 page book that all serious people— organizers and activists, farmers, workers, intellectuals, teachers and students—should read; it’s called The Production of Money: How to Break the Power of the Bankers. At its core, the book’s guiding questions are: How does money currently facilitate a despotic regime of finance and how can it facilitate, as a fiat currency, socially beneficial activity to set us on a better path toward Just Transition and equality?
The Production of Money emerges in a moment where larger movements are taking seriously the concepts of democratizing the economic sphere through initiatives such as public banking, Federal Jobs Guarantees, and the Solidarity Economy. This is a perfect book for the layperson (and latent activist) because it demystifies the currently authoritarian function of central and commercial banks in our world and how they have a stranglehold over our collective ability to address the massive global crises we face. Even more importantly, it presents a winning narrative about how we can begin to tackle financial oligarchy, climate chaos, inequality, and sexism precisely by framing a realistic horizon of dramatically better life conditions for ordinary people.
And such a vision is desperately needed in this moment of geopolitical disintegration and concurrent dystopian ecological collapse. The extended quotation that begins this piece alludes to the fear that ongoing recession experienced by the global majority of workers may worsen into another more abrupt collapse. Pettifor’s book discusses at great length the legacy of the 2008 global economic crisis and directs our thinking forward to the next one. When it comes, the left (and indeed anyone interested in a livable biosphere) must be educated, organized, and ready to strike. Many ideas in this book should be used to galvanize the necessary short-term reforms we need now and the coalitional unity we will need to address the deeper structural oppressions that plague us.
There is a common sense argument employed callously and regularly around climate politics which goes, So and so may be a good idea, but where do you propose we get the money? While this red herring often disappears the instant that the wealthy want to pass a tax cut for themselves or increase military spending, Pettifor argues that it simply doesn’t apply to the type of banking system we actually have. She writes,
“for those who live in societies with sound, developed monetary systems, there need never be insufficient money to tackle, for example, energy insecurity and climate change. There need never be a shortage of money to solve the great scourges of humanity…” (6). This perhaps surprising statement derives from her argument that “it is credit that, when issued by the bank and deposited as new money in a firm’s account, kick-starts activity” (6). Politicians manage to make convincing, if bad faith, arguments about spending because for a struggling family, money does indeed appear to be a scarce resource. Pettifor informs us, however, “money and the rate of interest are both social constructs: social relationships and social arrangements based primarily and ultimately on trust” (18).
We don’t need to blast open mountainsides in order to find the gold to finance our plans (though this unfortunately doesn’t stop US and Canadian companies doing so in the Global South). The system is not based on the gold standard; it is based on credit and faith. This knowledge is frightening under our current system because it is the “private commercial banking system that ‘prints’ 95 percent of broad money (money in any form including bank or other deposits as well as notes and coins) while the central bank issues only about 5 percent or less” (3). Pettifor explains with great clarity how the authoritarian despotism of the bankers “can usurp and cannibalise society’s democratic institutions” (8).
By contextualizing the parasitic role that finance capital plays in our world, Pettifor elucidates how usury in our financial system “exacerbates the destructive extraction of assets from the earth.” What looks insane from an ecological point of view starts to become clear when we understand how the system actually functions. Pettifor shows how monetary misunderstanding and class interest direct the destruction.
Even though The Production of Money weaves in discussion about climate change and transition it doesn’t leave the reader with a list of immediate calls to action. The book, however, is a great resource for the climate movement because it explains the workings of global capitalism, the key driver of the crisis. Moreover, it forms a part of the movement for Just Money or Modern Monetary Theory which dovetails well with other popular progressive movements and offers real promise for enacting the infrastructural change we need.
One key element of this theoretical framework is the role of the state. As stated above, Pettifor spends much of the book explaining exactly how money is a social construct and how, under the right direction, the economy could better encourage “productive” activities, such as a democratic society defines it. Stephanie Kelton, Economic Advisor to the Bernie Sanders presidential campaign and leading intellectual of Modern Monetary Theory, argues that this message is popular with all manner of Americans at speaking engagements she gives throughout the country. If we are serious about saving humanity from climate chaos, we need to center a positive politics about what ordinary people need for a dignified life, rather than a desperately negative politics that focuses only on future (and even current) catastrophic consequences.
One can’t possibly read the warning signals such as the recent ‘Trajectories of the Earth System in the Anthropocene,” observe government policy, or even climate movement demands without a profound sense of incongruity. Trump and his ilk in the fossil fuel industry seem to be channeling a Freudian death-drive against all rationality. Meanwhile policy wonks flounder about searching for market-based solutions like carbon capture which spectacularly ignore, and reproduce, the underlying profit logic driving the crisis. Nevertheless, the vast majority of working people are so constrained by the system that we go about our daily struggles.
We need big, popular solutions that are audaciously brave enough to take on the real issue. We are so paralyzed to act because either free-market ideology blinds us, or the real class interests and infrastructures of global elites constrain us. Ultimately, Pettifor argues that for economic recovery, “(t)he borrower of last resort—the government—has to intervene” (69). Whether we like it or not, this is the nature of the global capitalist system currently devouring us through climate chaos. A progressive state is the only thing powerful enough to address it at this stage. It will not be sufficient to construct new systems of mutual aid, collective administration of the commons, or equality and justice, but it will have to serve as a start. Pettifor states it bluntly: “The fact is that carefully managed and regulated public and private credit will help finance vital de-carbonizing activities” (116).
Ann Pettifor’s book serves a valuable resource for understanding and confronting the system propagating climate chaos. As a movement, we need to rapidly reevaluate and organize alongside other movements to provide a progressive politics based not on fear but on human dignity. In his New York Times Magazine piece, Nathaniel Rich says, “thirty years ago we had a chance to save the planet.” The implication here, intended or not, is that now, we can’t. What we can’t allow, however, are ahistorical narratives such as his to riddle us with fear and pessimism. Saving humanity will require wresting the levers of power from the elite. If we do not, we can be assured that they will be used to extremely violent ends by those same elites as resources dry up and conflict proliferates. Only the People can spark the revolutionary transformation that can save us. The vision that will guide that transformation is an expansive one that has faith in the ability of people to solve our own problems, and one that sets its sights on the tools we need to do so.
