Can we fix the money system? This is the question that the Positive Money campaign believes it can begin to answer. In the Spring/Summer issue of Transition Free Press, Amy Hall looks at their increasing popularity, as well as other perspectives on making money more people friendly.
Tapping into the deep discontent about the financial system, which erupted on to the streets in movements like Occupy and UK Uncut, the Positive Money campaign has put forward radical proposals for monetary reform. Director Ben Dyson says these changes would “democratise money and banking so that it works for society and not against it.”
The creation of money is their biggest focus: they want the state to have more power and the private banks, who currently create 97% of the money supply in the form of loans, to have less. Building on work by economists like Irving Fisher in the 1930s, Positive Money argues that full reserve banking where banks aren’t able to lend more money than they actually have, would help to stabilise the economy.
“Since almost all of our money is ‘on loan’ from banks, someone must pay interest on nearly every pound in the UK,” says Dyson. “This interest redistributes money from the bottom 90% of the population to the top 10%. The money which banks create also pushes up house prices, and inflates bubbles in financial markets – making the very rich even richer.”
Other more conventional voices, such as the former Governor of the Bank of England, Sir Mervyn King and Martin Wolf of the Financial Times , have also started to ask questions about how money works. In February, the former chair of the Financial Services Authority, Lord Adair Turner, said: “Over several decades prior to 2008, private credit grew faster than GDP in most advanced economies and… that was a major cause of the crisis.”
In March 204, Positive Money claimed a victory when the Bank of England released two papers which said that modern money was indeed created by private banks creating debt, “It’s a massive step forward,” says Dyson. “We no longer have to debate how the system works and can move on to talking about how we can change it.”
But there are some within progressive politics who are not convinced by Positive Money’s ideas. Tim Jones of the Jubilee Debt Foundation thinks full reserve banking would make the financial system inflexible. “It could be really problematic in reducing the ability of people and governments to invest in infrastructure and things for the future,” he argues.
Jones thinks that Positive Money’s idea of a ‘Money Creation Committee’ to oversee how money is created is too technocratic. “We don’t need more bureaucrats taking economic decisions away from people,” he says.
Daniel Webb is part of the team at Goodmoney, a new social enterprise aiming to help business to exchange goods and services in the Brighton area. He wants to see more bottom-up reforms, “At the moment, local economies are overly dependent on bank credit,” he says. “Starting with business-to-business transactions, Goodmoney want to match up buyers and sellers to process transactions within a system of local credit.”
What’s clear is that the current system isn’t working and there is a buzz of ideas for improving it. From Positive Money to Goodmoney, from ‘moneyless’ experiments to the local currencies of Lewes, Brixton and Bristol; from credit unions to time banks: these are interesting times. Can money be remade into something more socially useful?
Photo: Fran Boait of Positive Money speaks at the 2014 supporter conference. Still from a Positive Money video.