Introduction
FROM SCARCITY TO PROSPERITY WITHIN A GENERATION

“On the morning after the Depression a man came to work, building a house, and the foreman said to him, ‘Sorry chum, you can’t work today. There ain’t no inches.’ The man said, ‘What do you mean there ain’t no inches? We got lumber, we got metal, we’ve even got tape measures.’ The foreman said, ‘The trouble with you is you don’t understand business. There are no inches. We have been using too many of them and there are not enough to go around.”¹

Like the foreman in this famous allegory about money, everyone is missing the point. Most of us fervently believe that our current financial woes and tribulations are occurring because there simply isn’t enough money to go around. From this limited vantage point, the usual solutions for scarcity are trotted out, such as austerity measures, cutbacks, and privatizations. The rhetoric on all sides of the political divide is stale and has grown cold, turning glacial and unmovable in its stance. Meanwhile, there is real suffering and anguish among ordinary people, and the rainwater in the streets’ gullies turns red with protesters’ blood.

It’s time to rethink money. And that’s what this book is about.

Money is to humans what water is to fish. Humanity exists in an unrelenting flurry of monetary transactions that seem as natural and inscrutable to us as how one might imagine a fish to understand its aqueous environment—it’s taken totally for granted. In the case of money, its dynamics and distinctions are obfuscated or forgotten over time, and further complicated by the fact that the professionals in the field, economists, never actually define what money is; they just describe what it does: how it plays the role of a unit of account, a store of value, a medium of exchange.

At present, our unexamined money system perpetuates scarcity and breeds competition. Are you aware that money is created out of nothing, as bank debt? And how that particular process of creation breeds systematic competition among its users? Did you know that the prevailing money system generates several other harmful consequences, including short-termism, compulsory growth pressure, cyclical recessions, unrelenting concentration of wealth, and erosion of social and physical or natural capital? All these factors together create a wholly unsustainable financial structure that is, indeed, disintegrating.

So, how did we get here?

Modern money, the type we use today, was invented in a very different time with a different worldview and another set of priorities and challenges than we have today. Money is not a product of nature, something that grows on a tree and can be harvested. Rather, modern money is a human construct that was conceived and fashioned back in the 1700s in Europe and then evolved, first in England, to become the engine for the Industrial Revolution. Up until that point, the vast majority of people eked out meager existences, while real wealth was obtained mainly through the spoils of war or colonization, marriage or inheritance.

Through the emergence of modern central banking and its conventions during this time, it was possible to make money out of money. This gave birth to the new merchant and middle classes.

Soon money became the tool empires used in a global dash for assets in a world that didn’t seem to lack for earth, water, air, and natural resources. A contrivance of competition, it pitted one against the other in a fabricated Darwinian contest of survival, reflecting and perpetuating the values and the Zeitgeist of that time.

This epoch produced remarkable advances, thrusting society out of the shackles of superstition and stagnant social order that had preceded it. It brought about the rigor of science founded in that which could be proven, rather than divine dogma. It enabled the individual, no matter how lowly his birth, to scale the heights of his unbridled imagination and keen ambition through learning and labor.

The mercantile miracle over time became codified as a success story. Those who succeed are free to take their share of the profits after taxes, and those who suffer losses have to bear consequences such as humiliation, bankruptcy, and possible litigation. This has brought about unmatched attainment of wealth, facilitated through competitive markets and driven by a competitive financial system, which, in turn, has spurred on even greater striving for more innovation, ingenuity, and originality. This is the underpinning of the great American dream, which has been triumphantly exported to the rest of the world after the fall of the Berlin Wall and rise of the Iron Curtain. Today, for instance, China, India, Brazil, and Poland, with their meteoric growth and the rise of their own meritocracies, are prime examples.

That dream, however, has turned into a nightmare. We now have scientific proof that the monoculture of a single type of currency is a root cause of the repeated monetary and financial instabilities that have manifested throughout modern history. According to the International Monetary Fund, in the four decades between 1970 and 2010, there were no fewer than 145 banking crises, 208 monetary crashes, and 72 sovereign debt crises. This adds up to an astounding total of 425 systemic crises—an average of more than 10 countries in crises each and every year!²

One of the much touted remedies is the Chicago Plan. Essentially this would make bank-debt money illegal and government instead would issue a new currency. While this reform would eliminate the risk of bank crashes and sovereign debt crises, there would still be monetary crises.³

These stark statistics don’t begin to tell the personal and individual stories of struggle and hardship. The extraordinary chasm that has emerged between the superwealthy and the expanding ranks of the working poor is demonstrated by the fact that the combined assets of the family that owns Wal-Mart equal those of America’s bottom 150 million people.⁴

All of this begs the question, “Why do we not examine our money system?” Throughout the history of our world, with all its wars, political upheavals, and periods of civil unrest, and with the emergence of political models including capitalism, socialism, and communism in all their variations and adaptations, still the money system was left unexamined. The portraits on or colors of the paper bills may have changed, but the fundamentals of its core structure have not.

The answer is this: Money is the last great taboo. The topic of sex was opened up in the 1960s and 1970s, and death and dying during the AIDS pandemic and natural disasters of the 1980s and 1990s. But the subject of money is still shrouded in darkness, assumed by many to be untouchable.

An even deeper obstacle to examining our system of money resides in the recesses of our collective psyche: We are motivated both by a fear of scarcity and by greed. Fear of scarcity often carries with it a tendency to avoid facing the reality of our finances, and greed brings an obsessive focus on money. The conflict between these two forces leads to a state of approach-avoidance in relation to money—an inner struggle that further exacerbates the trickiness of the inquiry. Money itself becomes highly emotionally charged.

Ironically, financial markets portray themselves as bastions of cool rationalism. Although economists frequently present their work as neutral, objective, and based on irrefutable science, sometimes crucial underlying epistemological or conceptual orientations and presuppositions remain unstated and are thereby kept shrouded from view.

As we begin to lift the shroud in this book, we will see that it’s not the structure of the economy or the hue of the political solution, per se, that are the real problems. The real problems are money and the monetary system itself, and not in the way one might first suspect. We will see that since money is a human invention, it can be changed. We’ll see that there is not only another way, but a multiplicity of ways, to rethink money. And we’ll learn that already a quiet evolution is underway, in which people and their communities are helping themselves through a new understanding of money.

Currently, in thousands of communities globally, there are networks of businesses that span a country or a continent and groups of netizens who are reassessing and reengineering money with astonishing results. Individuals, entrepreneurs, businesses, communities, and governments in many countries around the world have already created new cooperative money systems that link unmet needs with resources that remain unused by the dominant competitive currency of each country. These new strategies do not replace the conventional monetary systems but rather work in tandem, shifting the predominant features of scarcity and hypercompetitiveness to ones that provide new options and additional resources for everyone.

Regular people have discovered not only that it is possible to create money in sufficiency for their needs but also that it is simultaneously possible to build their societies with greater cooperation, care, and collaboration. In other words, they are proving not only that it is possible to redesign money but also that doing so fosters very different and highly desirable outcomes.

In fact, the past 30 years has seen a tremendous growth of cooperative currencies around the world—from fewer than a handful in 1980 to more than 4,000 today. These cooperative currencies are often called complementary currencies. Examples include community or local currencies such as time dollars in the United States, long-established business-to-business systems like the WIR in Switzerland, and newer currencies like the regio and the terra. There is also a huge potential for more scalable cooperative currencies. In other words, the emergent cooperative currency movement now has behind it enough proven successes to grow up and start tackling the core challenges of the 21st century.

This book provides the road map for this to happen. You will read real-world stories of ordinary people making an extraordinary difference by pulling themselves up by their own boot straps. There are reports of communities going from high unemployment, despair, and high crime rates to self-sufficiency, mutual support, and sustainable abundance. In these pages, businesses, communities, and governments, as well as individual citizens and entrepreneurs, will find actions that they can take right now to create currencies that connect unused resources to unmet needs, moving their participants from scarcity to sufficiency.

This new approach makes possible a potentially radical transubstantiation, a profound shift from a postindustrial era to an Age of Wisdom. Perhaps even a Diamond Age of unprecedented technological breakthroughs may emerge, where the universe becomes malleable in our hands with unparalleled and exceptional advances.

The book is divided into three sections: Part One, Scarcity, comprises the first three chapters. This part unfurls the strands of money’s DNA, explaining how each constituent component impacts everyone in some very surprising, sometimes devastating, ways. These chapters also show how it is now possible to tweak and make changes to the money system that result in a completely different set of outcomes. It is written in lay terms to give the reader a better understanding of what’s really going on with the financial meltdown. This will enable greater discourse and debate and, hopefully, grounded action.

Prosperity, the second part, Chapters 4 through 9, chronicles the pioneers and implementers of cooperative currencies both in the United States and abroad. It reports on their stories of inspiration and transformation under the categories of banking, entrepreneurship, government and NGOs, and we, the citizens.

The third and final part of the book, titled Rethinking Money, projects into an available future and shows how a truly cooperative society would function with both competitive and cooperative currencies working in tandem. It then reaches back into recent history and reveals the lessons learned from modern history and how various missteps can be avoided now. With the vital lessons from the past and a clear vision of a desired future, you and your community, whatever its size or structure, can become empowered and grow prosperous.

This book will take you on a journey into some rather unexpected areas. The value of exploring this uncharted territory, usually not associated with finance and money, is to give you insight, by packing your imaginary knapsack with new monetary tools and additional knowledge. When we get to the end of the journey, like reaching the top of a mountain, you can take in the 360-degree vista and see the financial system though a new understanding. From there, it is possible to realize that there is another way, in fact, thousands of other ways to escape the existing financial morass.

So rather than saying, as in the opening story, that there aren’t enough inches to build the world we want for ourselves and our children, we could, equipped with a new understanding, create new currencies that link unused resources with unmet needs. We could build vibrant communities. Not only can we attain sufficiency but also we can reach the inherent human goals of cooperation, community, and even contentment. New cooperative currencies would stimulate learning and entrepreneurship. New ideas for banking would create cooperative housing loans and financial support for emergent technologies and businesses. These are constructs that support local businesses, creating prosperity in local communities.

So, let’s buckle our safety belts and hang on for an unusual ride.