I was very saddened to hear of the passing away earlier this month of Bernard Lietaer. I never had the privilege of meeting him, but his work has had a profound effect on my thinking over the last year or so. Bernard’s wisdom will be much missed amongst people who are thinking hard about the future of money and attempting to design financial systems that promote sustainability and stability.

As he saw it, capitalism alone is not enough. Our current monoculture of capitalism makes the system volatile and vulnerable. We need a more multicultural approach to money, to build greater resilience into the system.

Further, the values that conventional economics promotes, such as short term thinking and competition, are suitable for some purposes, but not for others. So in those other areas, we can design complementary currencies better designed to motivate the behaviours we want to promote.

The big advantage of these complementary currencies is that they positively encourage certain behaviours in certain domains. The alternative would be increased legislation and central control. Better to have the “pull” dynamic of a complementary currency than the “push” of increased centralisation.

He goes into these points in greater detail in his video message for Bonmont Money. What follows is a paraphrased version of his words, as fast as I could type, and any errors are mine.

 

“I have a unique background, having been part of many situations that are usually mutually exclusive:

  • Central banker
  • Designer of Euro
  • Offshore currency fund manager
  • Academic
  • President of an electronic payments system
  • Worked with some of the largest multinationals on the planet
  • Worked with some of the poorest countries on the planet

These angles have given me the opportunity to see money in a way that wasn’t possible from the other angles.

Climate change is our number one problem. Other problems are: ageing societies; monetary instabilities under the current system; and structural unemployment because we can now have economic growth without jobs growth.

Conventional money is incompatible with sustainability for the following reasons:

  • Short term thinking
  • The way money is created promotes the business cycle (boom and bust)
  • Users are all in competition with each other, which in some environments is healthy, but is not optimal in other environments
  • Social capital is not measured.

Nature does not look for maximum efficiency, it looks for a balance between efficiency and resilience. If you design only for efficiency, you have a fragile system. If you design only for resilience, you have stagnation. And conventional money is extremely efficient, hence very fragile.

None of the above challenges can be addressed within the current paradigm, i.e. with a single form of currency funded through bank debt. But they can all be addressed through complementary currencies. Money is the most powerful leverage point because it changes the motivation system.

A complementary currency is a medium of exchange other than conventional money. Loyalty schemes are the oldest form of complementary currency, e.g. airmiles, which are 40 years old. Shop loyalty schemes use a similar model. But these don’t do anything for society.

I am talking about using this proven technology, characteristic of the information age, and use it to do things that do make a difference, by changing behaviour towards the environment and other people, encouraging people to do things that they wouldn’t do spontaneously.

The alternative to using currency for this function is to create laws requiring or forcing people to do such things. With a currency you create a pull rather than a push, and that is a lot more attractive. You choose your objectives and specifically design your currency to achieve them. And it’s exportable. You can use it anywhere in the world.

A key difference between the past and today is that more people on the planet have mobile phones than bank accounts. You can use mobiles to make global payments. That’s the future both for complimentary currencies, and for conventional money. Complementary currencies can be used on a scale that they have never been used in the past.

I want to pioneer this idea, to encourage experimentation, improvements, and diversity. And we need to also do work on the mainstream economy, and on the relationship between businesses and consumers.

Complementary currencies can create sustainable abundance. There is no reason there should be scarcity. We can have abundance, even for 10 billion people, if we rethink our money systems.

I am not suggesting that complementary currencies are enough to change everything, but changing our money is a necessary condition. Without changing the money system there is no chance of having, in ten to fifteen years, a planet that we want to live on.”

 

Those last words really resonated with me. Rethinking our money system may not be sufficient to secure our human future, but it is certainly necessary.

You may recall some of my earlier blogs reflecting on Bernard’s writings:

Rethinking Money

Money Makes the World Go Round?

Yin, Yang, and Jung

Bernard, I’m sorry you didn’t live long enough to see the transformation of our global economy that you started, but we thank you for being a pioneer and pointing us in a better direction.

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