Review of Healthy Money Healthy Planet: Developing sustainability through new money systems

Reviewed by Robin Johnson. Dr Johnson is an economist and retired civil servant.

This book is a fairly serious critique of orthodox economic writing and attempts to set out an alternative interpretation of the role of money in society. In particular, it attacks the creation of credit by the banking system and the lack of controls over the money supply. The viewpoint is international as well as domestic and hence includes world monetary influences as well as those of particular countries. In summary, the author deplores the concentration of wealth and power in a small percentage of the population, the undue influence of multinational corporations, the lack of regard for natural resources, and the baleful influence of international specialisation (world trade reform) on local economies.

The author presents a case for reform of the monetary system consistent with a view of society that is self-reliant, environmentally friendly and helpful to all sections of society. The book reviews what are called complementary economic and monetary systems which might mitigate some of the worst features of the international monetary system identified by the author. Complementary currencies are currencies established at a local level so that the issuing power of money comes under the control of people at local levels of organisation. These have been developed in a number of countries, including New Zealand, and their implementation could overcome foreign or bank control of the money supply. If implemented, they would require the introduction of community banking and local participation, the encouragement of commercial barter and exchange, enhanced local currency circulation and alternative means of exchange like voucher schemes in parallel with national and international systems.

For an economist this is a serious challenge and I will endeavour to set out below why these proposals are unlikely to be workable. However, for the non-economist, the book provides an informative read about everyday aspects of the economy particularly regarding the workings of the monetary system and the interpretation the author places upon it. I will try and summarise the author's basic position before commenting on it.

The title of the book comes through in the author's metaphor of an organic model of a healthy economy; thinking of the economy as a living system (p.108-10). In a healthy global economy there would be no essential conflict between what is good for the local region and what is good for the planet. And in a national economy, its parts, while competing for attention by demonstrating their uniqueness, should all cooperate and help each other at optimal capacity. The author speaks of managed borders. In a human cell, if the cell membrane was removed the contents of the cell would leak out and pathogens would enter the cell. While goods, services, energy, money are all allowed to circulate freely within the economy, the borders should be managed to allow vital materials, energy and information to pass through. In an organic, hierarchic model, each economy; supranational, national, regional, local and neighbourhood; would be a complete unit. To retain inegrity, each would have its own currency, while also using the national and international currencies for trade within each larger unit.

The author follows other writers in this area in setting out (pp.110-11) operational characteristics of a healthy holarchic¹ system. These characteristics are based on the following ecological propositions:

These propositions can be used to re-create economic institutions to the service of 'life'. Thus:

'Human economies can and should function as self-organising systems in which each individual, family, community or nation is able to exercise its freedom of choice, mindful of the needs of the whole, and no entity has the power to dominate any other'.

'Human economies can and should be organised to contribute to life?s abundance through frugal use, equitable sharing, and continuous recycling of the available energy and resources to meet the material, social and spiritual needs of all their members'.

'Human economies can and should be built around inclusive, place-based communities, adapted to the conditions of their physical space, adept at the collection and conservation of energy and recycling of materials to function as largely self-reliant entities, and organised to provide each of their members with a sustainable means of livelihood'.

'Human economies can and should acknowledge and reward cooperative behaviour toward the efficient use of energy and resources in providing adequate livelihoods for all and enhancing the productive capacities of a shared pool of living capital'.

'Human economies can and should have managed borders at each level of organisation, from households and community to region and nation, which allow them to maintain the integrity, coherence and resource efficiency of their internal productive processes and to protect themselves from predators and pathogens while cooperating to enhance the potentials of the larger whole'.

'Human economies can and should nurture cultural, social and economic creativity and diversity and share information within and between place-based economies. These conditions are the keys to system resilience and creative transcendence'.

Now it seems to me that these institutions of society are largely built around the Christian ethic and the efficient use of resources and would be acceptable to economists and non-economists alike. Modern legislation also provides for the control of excessive monopolies and unfair competition, and international agreements are in place for sharing energy resources, preventing unfair trade and the control of bugs and disease ('predators and pathogens'). Where the two approaches seem to part is in the degree of control of local, national and international autonomy that is sanctioned by society. The author would prefer more local control over events, more self-sufficiency at the household and regional level, and less trade with other entities at all levels.

The political analyst is bound to point out that such an organisational change is well within the powers of democratic voting systems if sufficient people would opt for it. The economic analyst would also have to point out that many social reforms of the kind prescribed can only be achieved by some loss of efficiency in the productive system. If there is a loss of efficiency in moving to such a system, there is less wealth to share among the unfortunate and the less advantaged. The very efficiencies gained from specialisation in trade at regional, national and international levels would be largely lost.

In the end it comes down to what kind of society we really want. There is a need to weigh the advantages and disadvantages of the various alternatives. Most of us would vote for a caring, decent-incomed, self-governing form of organisation if the benefits are that clear. It could be that the information we have available is insufficient to make a constructive choice - a point suggested in the last of the above forms of organisation. Perhaps the most positive aspect of this book is that it exposes a lot of new information and views on a subject that concerns everybody and a reading of its contents might influence future ways society might move.

1) This term is stated to derive from Arthur Koestler. Each living part of an organism is whole in itself but depends on other cells around it. The group of such cells is called a holarchy and is a term not found in the OED (1982).

Healthy Money Healthy Planet: Developing sustainability through new money systems,