In this Schumacher Briefing, Richard Douthwaite argues that just as different insects and animals have different effects on human society and the natural world, money has different effects according to its origins and purposes. Was it created to make profits for a commercial bank, or issued by a government as a form of taxation? Or was it created by its users themselves purely to facilitate their trade? And was it made in the place where it is used, or did local people have to provide goods and services to outsiders to get enough of it to trade among themselves? The Briefing shows that it will be impossible to build a just and sustainable world unless and until money creation is democratized.

Synopsis:
This text explains why money has different effects according to its origins and purposes. Was it created to make profits for a commercial bank or issued by a government as a form of taxation? Or created by its users themselves purely to facilitate their trade? And was it made in the place where it is used, or did local people have to provide goods and services to outsiders to get enough of it to trade among themselves? The book shows that to build a just and sustainable world, money creation must be democratized and the payment of interest on money in circulation scrapped.

About the Author:
Richard Douthwaite studied economics at the University of Essex and the University of the West Indies, Kingston, Jamaica. He set up and managed a boatyard in Jamaica on behalf of the island's fishing co-operatives before spending two years as Government Economist in the British colony of Montserrat. He has lived in Ireland since 1974.

His book, The Growth Illusion: How Economic Growth has Enriched the Few, Impoverished the Many and Endangered the Planet, was published by Green Books in 1992 and an extended and updated second edition appeared in 1999. His other major book, Short Circuit (Green Books, 1996), gives dozens of examples of currency, banking, energy and food production systems which communities can use to make themselves less dependent on an increasingly unstable world economy.

In 1998-9 he was a consultant to an EU-funded project to establish experimental community currencies in Scotland, Ireland, Amsterdam and Madrid. (Amazon.co.uk)

Read The Ecology of Money Online

Full & free. Online HTML edition, or you can download the publication in pdf format.

Paperback: 78 pages
Authors: Richard Douthwaite
Publisher: Green Books (11 Feb 2000)
Language English
ISBN-10: 1870098811
ISBN-13: 978-1870098816

Introduction and Summary:

Most people think that there's only one type of money because one type is all they've ever known. They know about foreign currencies but they see these, quite correctly, as essentially the same sort of money as they use in their own countries. They also know about cheques, credit and debit cards, credit notes, and several of the other forms that money can take but, correctly again, regard these simply as special purpose versions of notes and coins. Money is money, they think, regardless of the form it takes. Only the few who know a little monetary history, or are members of a Local Exchange Trading System (LETS), realise that this is not the case. There are, potentially at least, many different types of money and each type can affect the economy, human society and the natural environment in a different way.

Most economists think that there's only one type of money too. That is when they think about it at all. The profession, to quote two sociologists is: "curiously uninterested [in the topic], restricting itself to discussions of price, scarcity and resource allocation with no specific interest in money as such." David Hume, one of the founding fathers of economics, referred to money as "the oil which renders the motion of the wheels smooth and easy" and this attitude persists to this day. Indeed, Paul Samuelson's well-known economics textbook defines economics as: "the study of how men and society choose, with or without the use of money, [my italics] to employ scarce productive resources".

In other words, economists see money acting as a catalyst that eases and speeds up economic interactions that would have taken place anyway. Naturally, they are interested in the amount of money reaching circulation because that affects the pace at which the economy can run, consequently determining whether national income rises or falls. However, very few seem to have ever considered the possibility that the particular type of monetary catalyst in use might be affecting the outcome of the economic interaction. Or that if other forms of money were used the results might be quite different. The only economists even to glance in this direction are either Marxists or members of the Social Credit movement who, because of the nature of their beliefs, have cause to analyse and question the nature of money more closely than more typical members of their profession. The last big-name economists to concern themselves with different forms of money and their effects were Maynard Keynes, Henry Simons and Irving Fisher in the 1930s, a period in which the money system was quite clearly dysfunctional.  ...

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