Basic Income and Financial Systems

Sharing Limited Resources And A Change Of Course 

22nd October 2003

James Robertson spoke from the following text in the session on this topic at the XXIX Annual Conference of the Pio Manzu International Research Centre in Rimini, Italy on 18-20 October, 2003. The overall theme of the conference was “THE ECONOMICS OF THE NOBLE PATH: FRATERNAL RIGHTS, THE CONVIVIAL SOCIETY, FAIR SHARES FOR ALL”. The conference was dedicated to the “essential figures of Ernst Schumacher and Ivan Illich, amidst many of their present-day heirs”.

For his “remarkable contribution to the promotion of a new economics grounded in social and spiritual values” James was one of a number of speakers from around the world who were invited to speak at the conference and presented with gold medals.

Further information about the Pio Manzu Centre, the conference and the award winners is in Appendix I immediately after the paper. The text of the Citation for James’ award, which was signed by Mikhail Gorbachev, is at Appendix II. Finally, the Endnotes contain information supporting the paper.

THE ROLE OF MONEY AND FINANCE Changing a Central Part of the Problem into a Central Part of the Solution

1. INTRODUCTION

Thank you for inviting me to this conference. I am honoured, and I am delighted you have dedicated it to E.F. Schumacher and Ivan Illich. I knew both of them personally, and I was one of many people who got great stimulus and support from their work in the 1970s.

Schumacher Circle organisations are now doing valuable work around the world. But we have to recognise that Schumacher’s ideas – and Illich’s insights into the systematically disabling nature of today’s institutions and professions - have hardly begun to influence mainstream agendas. The course of world development is still based on what Illich saw as the erosion of “the conditions necessary for a convivial life” and what Schumacher called the “onward stampede”.

Why is this? Was their thinking lacking in some important respect? Or have we failed to act on it?

Both Illich and Schumacher were criticised for not dealing with political and institutional aspects of change. I remember Illich responding that his task was to explain what was wrong; it was for others to take the necessary action. For him the ideas were pre-eminent. Schumacher’s view that “the task of our generation is one of metaphysical reconstruction” underlined that his priority too was to redefine the meaning of central ideas - like work. It is true – and important – that he set up the Intermediate Technology Development Group, and personally supported the Scott Bader “common ownership” company and the Soil Association. He saw these as “lifeboat institutions” - examples of reconstructed ideas in action in the spheres of technology, business and farming. But for him, like Illich, systematic institutional reconstruction to support metaphysical reconstruction, was not a personal priority.

It doesn’t make much sense to criticise Illich and Schumacher for this. Nobody can do everything. Both men knew themselves well enough to know how best to use their time and energies. We need to ask ourselves:

• why have we, who share their vision of a more people-centred and ecological world, failed to adapt the institutions of society to it? and
• what should we do about that now?

In this paper, taking government and the money system as a case study, I shall try to outline a possible answer to that question.

2. THE INSTITUTIONS OF GOVERNMENT AND MONEY

Established institutions embody dominant ideas, and transmit them as norms of desired behaviour. For example, today’s economic institutions embody the idea that work means a job with an employer and that normal people should work that way. But, as pioneer systems thinkers in the 1970s like Stafford Beer pointed out, institutions are dynamic systems programmed for survival. So they act as barriers to change, obstructing the conversion of new ideas from thinkers like Illich and Schumacher into new norms of behaviour for most people. In that respect established institutions in society correspond to what business consultants used to call the “soggy middle layer” – conservative middle managements obstructing communication between forward-looking leaders who recognise the need for change and bright younger people eager to bring it in.

The money system has a particular significance. The way it works rewards some activities and penalises others - at personal, local, national and global levels, in every sector of economy and society. In a monetised world this is the principal way of allocating resources. Money is the scoring system for the game of economic life, alongside the rules provided by laws and other legal instruments. The nature of any game and how it is played reflects what the scoring system rewards and penalises.

The reconstruction of today’s money system is now urgent. More and more people are experiencing it as perverse - in terms of economic efficiency, social justice, environmental sustainability, and physical and spiritual health. They see it as responsible:

• for the systematic transfer of wealth from poor people and countries to rich ones,
• for the money-must-grow imperative that compels people to make money in socially and environmentally damaging ways,
• for the diversion of economic effort and enterprise towards making money out of money, and away from providing useful goods and services,
• for its systematic bias in favour of the people, organisations and nations who should be managing it on behalf of us all, and
• for eroding the credibility of political democracy after 200 years of progress.

All this fuels opposition to globalisation in its present form.

One constructive response has been the spread of “alternative” and “complementary” monetary and financial innovations. These unofficial initiatives will become more important, as people and businesses look for new ways of using their money. But today I shall concentrate on mainstream money -

• the existing ways in which states handle it on behalf of their peoples,
• the perverse outcomes of those, and
• the changes that are needed.

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