Financing the Common Good? Yes we can!

Do you know this little Sufi story? It is night; a man is there, on all fours under a street light, scrutinizing every inch of the ground. A passer-by comes to lend him a hand.
- Hey! Friend, can I help you? Did you lose something?
- Yes! My keys!
And here come our two companions busy searching. After about ten minutes, despite their best efforts, the keys are still missing.
- There's something strange here," said the man who had come as a reinforcement. Are you sure this is where you lost them?
- Oh no! Answer the other one; it's not here, but at least we can see clearly!
Absurd, isn't it? Yet, would you believe it, our humanity is seeking solutions to the humanitarian and ecological challenge on which its survival depends in light of the way of thinking that has generated its problems.

An ideological prison

Ecology is only considered on the condition that new profitable markets are created as a result.

Who could deny that we are facing an ecological and humanitarian emergency? Who could deny that apart from a few cosmetic measures nothing is being done? Yet since 1973 the limits of an economy based on growth have been known (Meadows report). And yet, since 1992, the Earth Summit in Rio, the environmental question and the need to espouse a sustainable model of society have been on the agenda of priorities. However, despite the (purely verbal) commitments made at international summits and conferences, there has been a suicidal stagnation.

What is it due to? The ideological belief that the dominant economic model, financial capitalism, can meet the challenge. Doesn't Einstein remind us that a problem cannot be solved by the way of thinking that caused it? The thinking of the political, economic and financial elites, therefore, precludes questioning the current model. It looks for solutions within the framework. This leads us to imagine that it is enough to "green" the economy by favouring solutions such as the electric car, wind power or even photovoltaics... Why? Because these avenues create new juicy markets.

But what about, for example, respect for biodiversity, soil regeneration and the protection of drinking water resources? Here, we're kicking the ball, because that would call into question the agro-business model to which so many direct and indirect interests are linked. Only intensive organic farming, the false nose of peasant agriculture, is making a nest in the landscape because the distribution margins are fat and because it allows to create a nice "responsible" image. In our so-called communication society, only appearances count.

Ecology is therefore considered only on the condition that new financially profitable markets result, but it comes up against a mountain of obstacles, impossibilities or denigration if it entails expenditure or if it risks weakening dominant interests (the ban on the use of glyphosate, for example, which is constantly being pushed back). Imagine for a second that electrification of the car fleet is accompanied by a target of reducing the fleet to 50% within ten years. Because we forget a little quickly that the ecological question must also solve the problem of the scarcity of non-renewable resources! There is no doubt that this second component would then not be as popular as the first! What would it be like for you, moreover, if an environmental measure condemned your job? Would you applaud or would you fight to save your month-end cheque?

A reversed representation of wealth

Another point that is rarely mentioned is that our economic model only considers as WEALTH what is financially profitable. What is not profitable is an EXPENSE and therefore cannot be considered as wealth in our thinking. And that is the tragedy. For it seems that we have reached a point in our history where what generates financial profit is increasingly harmful in terms of working conditions, health and the environment, whereas what would be indispensable to the preservation of life and well-being for all is not by nature intended to be financially profitable.

This situation keeps us in a simple "green washing" which, without resolving the problems, merely gives us a clear conscience by maintaining the illusion that we are on the right track. Humans do not like change, as we know; so the natural tendency is to persuade ourselves that we can maintain the same way of life by simply changing the problem areas.

The future of humanity depends on its ability to move from a way of life regulated by money to a way of life regulated by what the planet can sustain without suffering.

The challenge is therefore to ensure dignified sufficiency for the billions of earthlings by making production and consumption globally compatible with what the planet itself needs to sustain life. This implies moving from a linear economy - produce, transform, distribute, consume, dispose of, to a circular economy - produce, transform, distribute, consume, recycle and/or reuse for further production and/or repair, regenerate, based primarily on responsibly exploited renewable resources.

A considerable adjustment challenge, therefore, which the current measures and guidelines do not really allow or envisage, as if the only problem were the emission of CO2 into the atmosphere. Worse still, one might think that they may, on the contrary, make things worse, since they obey above all accounting criteria and not real socio-environmental relevance. In view of what I have just said, one might conclude that this adjustment is impossible to achieve, as our daily reality tends to demonstrate. However...

The key to change

When money was material and therefore limited in quantity by nature, our ancestors were locked into a logic of a cake to be shared; the collective interest could only be served by taking a share of each person's income to constitute a pool for its financing. It was the importance of this pool that conditioned what could be done. But money is no longer material. It has become a virtual unit of account, created by human will alone. The quantity of money is now elastic. Our reality is, or rather could be if we really wanted it to be:

If a community has a collectively desirable need, the will to satisfy it, the technical and energy means, the available manpower and know-how, and a neutral ecological footprint, then nothing stands in the way of its realization and certainly not the money that can be created to the required level. The challenge could therefore be taken up because there is no shortage of solutions or human resources. It would be enough to replace the limit imposed by access to artificially scarce and oriented money with the limit of what the planet can sustain.

The key's not under the lamppost.

But that's not the case. While nothing justifies it (apart from greed) we remain in the logic of the cake to be shared as in the time when money was material. The QE (quantitative easing) practiced for ten years by central banks in trillions of dollars has allowed public opinion to understand that the issue is less in the limitation of money than in its allocation. The "QE for people" movement, which proposes monetary creation aimed at improving citizens' purchasing power, is one expression among others. Similarly, more and more economists are calling for the use of the power of money creation to finance the ecological transition.

But, uh...

- They do not change the current rules for money creation based on equivalent debt. It is mainly the private banks that create money each time they grant credit to a person, a company, a community, a nation... And even if the financing of the transition were to be entrusted to a public bank, as is often suggested, we would still follow the logic of credit money, even if at zero interest.

- Several studies estimate the financial needs to achieve a sustainable model at the global level at between fifty and one hundred thousand billion dollars, roughly the GDP of all the countries in the world. When we know that humanity is already burdened with private and public debts, is this realistic?

- An international agreement would be needed because if a single State or monetary region were to go down this path, the burden of its debt and the mass of money put into circulation would lead to a significant devaluation of its currency and would considerably weaken its economy. In a world where inequalities are abysmal and competition is a higher value, is a global agreement conceivable in the short or medium term as the urgency of the situation requires?

- In the best case scenario, without major changes to the system, we would continue to consider only those avenues that generate financial profits. The quest for profit and/or the search for a balanced budget at best, would impose itself on the relevance of actions. Is there a desire among the "elites" to question the current model? This will undoubtedly come under pressure from the people, but in the absence of political will, it will take time.

Key's just outside the light.

So how do we quickly break the lock of impossibilities? By not opposing the system in place so that the energy and intelligence deployed is not diluted in an exhausting struggle that is undoubtedly doomed to failure insofar as opposition would diametrically reinforce resistance. For this, it would "suffice" to create a new economic field dedicated to the transition, extended to all that concerns the Common Good, complementary to the field of the market economy, which is no longer dependent on taxes, borrowing or the performance of the market economy.

This is made possible by the fact that money is created at will, provided that it is not marked by debt but by the recognition of true wealth. Example: We want to clean up a river. In the current logic one turns to the public authorities who are asked to finance the work (or not) according to whether their budget, fed by taxation, allows it (or not). It is the access to money that determines what can or cannot be done. And since the purse strings are tightened by the fact that resources are limited by what the tax system allows (a tax that everyone tries to avoid as much as possible, the richest first), we are reduced to arbitrating priorities.

In this new space, on the contrary, the question of access to money no longer arises, because once agreement has been reached on the action to be taken, a public money-issuing body creates a complementary, debt-free currency at the required level. The question that arises, on the other hand, is the relevance of the project and of the means used with regard to the overall objective of adapting our way of life to what is necessary to sustain life. In our example, wealth is clean water, not a financial result. Once we free ourselves from the accounting logic that condemns us to put any expression of real wealth under the pile if it results in an expense, it is the thing that counts and not the price of the thing. Everything then becomes possible. It is no longer a question of gain or loss, it is only a question of societal benefit, in other words what is considered essential to the preservation and development of life in all its forms.

Reconciling private and collective interests

If we really want to create the basis for a sustainable and equitable world, there is no other way than to release the potential of human intelligence from the accounting prison that locks and conditions it. But saying it is not enough to do so. The new space I have just described operates on a logic that is the antithesis of that which governs our societies today. We cannot just snap our fingers and replace one system with another. On the other hand, clearing and planting a new field to complement the existing one opens up vast horizons.

Mankind has explored two paths: Collectivism which, in the name of collective interest, has crushed the individual and capitalism which, in the name of private interest, kills his living space. In both cases the common good and private interest are at odds. Doesn't this observation invite us to explore a new path, one in which individual and collective interests are reconciled by putting them in complementarity?

As long as the collective will remain financed by taxation, and therefore totally dependent on the performance of the private economy and on what it agrees to pay back to it, it will not be able to meet the current challenge. This is what the opening of this new economic field allows. On the one hand, the private interest is served by the market economy, financed by international currencies in the current mode, and on the other hand, the Common Good is treated and financed autonomously by a complementary currency whose collateral is not a debt but the realization of democratically chosen projects. Each space supports the other instead of opposing it.

Two currencies, is that realistic?

Economists will tell you that a two-currency system does not work because Gresham's law states that "bad money drives out good money". This is undoubtedly true when currencies are in competition, but here we are in a new context where they complement each other. However, certain conditions must be respected:

1. The complementary currency of the Common Good is legal tender so that anyone in the territory is obliged to accept it as payment.
2. It is created as projects are adopted and implemented to the required level by a public money issuing body under public mandate and control.
3. It only applies within the national territory. For example, Europe continues to have the euro as its common market currency, Canada has the Canadian dollar, but each country, each province has its own complementary currency allowing it to freely conduct its eco-social policy.
4. It is not convertible (with limited exceptions during a transitional period) and therefore has no effect on the market rate of the currency.
5. It is at purchasing power parity with the market currency: One unit of complementary currency = one unit of the market currency.
6. In order not to affect foreign trade and to meet the ecological challenge, it is oriented towards goods and services produced in an environmentally and socially responsible manner on the territory. This may be perceived as a discriminatory handicap at the outset, but it is essential if this area is to fulfil its mission without forgetting that it will encourage the relocation of certain abandoned production, in satisfactory social and environmental conditions.
7. This currency is in circulation on the national territory through the payment of remunerations to the actors engaged in this space. It circulates freely in all shops, which will only have to organise signposting to make it easier to find what is accessible to the bearers of this currency. All payments can therefore be made in both currencies as they were when the old national currencies and the euro circulated together.
8. Payments are made on a pro rata basis according to the revenues in each currency.
9. It gives rise to a long period of public debate to make its benefits perceptible to all. It must be adopted (or rejected?) by popular referendum and, if accepted, gradually put into operation on a voluntary basis at the outset.
10. It is subject to specific taxation, the aim of which is no longer to constitute a revenue to be redistributed, but to destroy the currency in order to avoid inflation.

In case you haven't yet seen all the benefits of such an orientation, here are the main ones.

The advantages:

1. Contrary to the fact that, as a rule, the implementation of a reform, even a generally positive one, always runs counter to certain interests, here everyone wins. Change does not come at the expense of anyone. There is no declaration of war; there is the planting of a tree which, while offering fruit for the emergency, guarantees a future of well-being for all as it grows.
2. The decision to implement this measure depends on the Nation alone. This avoids an endless renegotiation of international treaties and agreements that would have no chance of success. It goes without saying, however, that this requires a strong political will on the part of the government, which will adopt this principle first, because there is no doubt that it will be considered an unacceptable knife in the rules of the game. But it is not a question of "cheating" in order to gain any competitive advantage. It is about paving the way for a better life for all. The people are not fools; they will soon see the solution for themselves and will force their leaders to follow suit.
3. The recurring question of employment is finally finding its solution because this new economic area potentially offers not a job, but a useful, remunerative and fulfilling activity to all those who no longer feel they belong in the current system or who are excluded or sidelined from it. Indeed, as soon as the financing of the Common Good is no longer taken from the profits and revenues of one another, it is no longer considered as an expense but recognized as wealth. The scope of activities that bring quality of life, which is currently limited, is thus considerably broadened.
4. The full recognition of a space whose purpose is purely qualitative will pull society upwards; it will change attitudes, relationships and demand, so that the market sector itself will be drawn into this virtuous spiral, if only to meet this demand.
5. The real issues of society will no longer be thought of in terms of available budgets or commercial interests, but in terms of what is ideally desired. Imagine for a moment how the debates will evolve if purely economic and financial aspects are excluded from the reflections on, for example, education, health, energy, ecology...
6. By no longer making the quality of life of peoples dependent on the exploitation of their natural resources and trade, nations will be able to achieve a high BIB (Gross Domestic Happiness) index quickly, while respecting their culture and traditions. The problems associated with migratory movements will disappear because, if living conditions become pleasant at home, why would anyone want to leave unless they choose to do so for more glorious reasons than to protect their lives?
7. Globalization and sovereignty will be reconciled. Each people will, in fact, regain the possibility of determining and applying by itself and for itself the recipe for its quality of life. Freed from the sting of necessity and the obligation to bargain, international relations will be pacified, because they will be driven without ulterior motive by the sole common desire to take care of our spaceship, the Earth.
8. Democracy will take a great leap forward because this new space cannot exist without an open and permanent public debate to define societal needs and respond to them in a logic of subsidiarity.
9. The hidden prices linked to the deterioration of today's society, which are reflected in poor health, a significant reduction in life expectancy for many, violence at all levels and in all forms, the "save-the-cow" in drugs, theft, corruption, etc., will naturally be alleviated, as long as everyone, receiving a decent income, can feel integrated and recognised in a society in which they will enjoy taking part in a useful way.

Drawing the line between collective and common interest

The argument often put forward against this measure is that the boundary between the individual and the common is very blurred, making classification impossible. Everything is ambivalent and the two are intertwined. That is true! The very notion of the Common Good is so imprecise that for the ultraliberals it is only the natural consequence of the satisfaction of particular interests.

Let's take an example: employment. In the current context it is at the top of the agenda. Without employment, more income, more consumption, more tax revenues... The system is collapsing. The system is collapsing. So is growth. So our governments are using a lot of public money to support both, even if it generates collateral damage. In the space I call for, employment is being transformed into a fulfilling activity that is socially and ecologically useful. Growth, on the other hand, is no longer necessary, at least quantitative growth is giving way to qualitative growth.

This example highlights how the notion of collective interest shifts according to the economic model adopted and the objectives pursued. The Common Good therefore does not need a generic definition, it is a societal choice that can only be made by examining individual projects in the light of a higher objective. It can then be operated in conscience with, admittedly, a measure of arbitrariness. The good news is that power is thus returned to Politics in the noble sense of the word, in other words, power is returned to the people to determine themselves. Can they be wrong? Yes, but it will always be better than being forced to abandon our future and that of future generations to the dictatorship of privatized finance. As the saying goes: "money is a good servant but a bad master".

At the moment, the main obstacle to this solution is that it is not known and is outside the framework of mainstream thinking. The first step is therefore to agree to question our habits of thought to make room for the imaginary, and then to help the proposal emerge in the public arena so that it can be debated, criticized and enriched. For we are talking about a social project that it is up to us to grasp! Don't you think it's time to look elsewhere than under the lamppost, where we have lost the meaning of Life?

Philippe Derudder

Philippe Derudder is an entrepreneur. "Interpelled" by the contradictions of the system, he chose to leave the business world voluntarily in 1992. Since then, he has oriented his work towards the exploration of alternative paths to contribute to the birth of a new economic model that allows everyone to reach the best possible level of sufficiency while respecting the Living. He shares the fruit of his research and experiences in his books, conferences and workshops. https://lhed.fr/actions-politiques/la-monnaie-du-bien-commun

More about Philippe Derudder : "What a future for mankind - Interview UP' Magazine

To go further :

• A currency at the service of the Common Good by Philippe Derudder - Editions Yves Michel

Première publication dans UP’ Magazine 23 août 2021