[HIMC] Great Interview: Bernard Leitaer on Local Currencies & the Great Mother Archetype

[Jon Frederick]

http://www.ratical.org/many_worlds/cc/Lietaer.html

BEYOND GREED & SCARCITY

Few people have worked in and on the money system in as many different
capacities as Bernard Lietaer.  He spent five years at the Central Bank
in Belgium, where his first project was the design and implementation of
the single European currency system.  He was president of Belgium's
Electronic Payment System, and has developed technologies for
multinational corporations to use in managing multiple currency
environments.

He has helped developing countries improve their hard currency earnings
and taught international finance at the University of Louvain, in his
native Belgium.

Bernard Lietaer was also the general manager and currency trader for one
of the largest and most successful offshore currency funds.  He is
currently a fellow at the Center for Sustainable Resources at the
University of California at Berkeley.

YES!  editor Sarah van Gelder talked to Bernard about the possibilities
for a new kind of currency better suited to building community and
sustainability.  He can be reached to discuss this topic via an Internet
conference at: http://www.transaction.net/money/

SARAH: Why do you put so much hope into the development of alternative
currencies?

BERNARD: Money is like an iron ring we've put through our noses.  We've
forgotten that we designed it, and it's now leading us around.  I think
it's time to figure out where we want to go -- in my opinion toward
sustainability and community -- and then design a money system that gets
us there.

SARAH: So you would say that the design of money is actually at the root
of much else that happens, or doesn't happen, in society?

BERNARD: That's right.  While economic textbooks claim that people and
corporations are competing for markets and resources, I claim that in
reality they are competing for money -- using markets and resources to
do so.  So designing new money systems really amounts to redesigning the
target that orients much human effort.

Furthermore, I believe that greed and competition are not a result of
immutable human temperament; I have come to the conclusion that greed
and fear of scarcity are in fact being continuously created and
amplified as a direct result of the kind of money we are using.  For
example, we can produce more than enough food to feed everybody, and
there is definitely enough work for everybody in the world, but there is
clearly not enough money to pay for it all.  The scarcity is in our
national currencies.

In fact, the job of central banks is to create and maintain that
currency scarcity.  The direct consequence is that we have to fight with
each other in order to survive.  Money is created when banks lend it
into existence (see article by Thomas Greco on page 19).  When a bank
provides you with a $100,000 mortgage, it creates only the principal,
which you spend and which then circulates in the economy.  The bank
expects you to pay back $200,000 over the next 20 years, but it doesn't
create the second $100,000 -- the interest.  Instead, the bank sends you
out into the tough world to battle against everybody else to bring back
the second $100,000.

SARAH: So some people have to lose in order for others to win?  Some
have to default on their loan in order for others to get the money
needed to pay off that interest?

BERNARD: That's right.  All the banks are doing the same thing when they
lend money into existence.  That is why the decisions made by central
banks, like the Federal Reserve in the US, are so important -- increased
interest costs automatically determine a larger proportion of necessary
bankruptcies.

So when the bank verifies your "creditworthiness," it is really checking
whether you are capable of competing and winning against other players
-- able to extract the second $100,000 that was never created.  And if
you fail in that game, you lose your house or whatever other collateral
you had to put up.

SARAH: That also influences the unemployment rate.

BERNARD: It's certainly a major factor, but there's more to it.
Information technologies increasingly allow us to attain very good
economic growth without increases in employment.  I believe we're seeing
one of the last job-driven affluent periods in the US right now.  As
Jeremy Rifkin argues in his book, The End of Work, jobs are basically
not going to be there anymore, even in "good times."

A study done by The International Metalworkers Federation in Geneva
predicts that within the next 30 years, 2 or 3 percent of the world's
population will be able to produce everything we need on the planet.
Even if they're off by a factor of 10, we'd still have a question of
what 80 percent of humanity will do.  My forecast is that local
currencies will be a major tool for social design in the 21st century,
if for no other reasons than employment.

I don't claim that these local currencies will or should replace
national currencies; that is why I call them "complementary"
currencies.  The national, competition-generating currencies will still
have a role in the competitive global market.  I believe, however, that
complementary local currencies are a lot better suited to developing
cooperative, local economies.

SARAH: And these local economies will provide a form of employment that
won't be threatened with extinction?

BERNARD: As a first step, that is correct.  For example, in France,
there are now 300 local exchange networks, called Grain de Sel,
literally "Grain of Salt."  These systems -- which arose exactly when
and where the unemployment levels reached about 12 percent -- facilitate
exchanges of everything from rent to organic produce, but they do
something else as well.  Every fortnight in the Ariege, in southwestern
France, there is a big party.  People come to trade not only cheeses,
fruits, and cakes as in the normal market days, but also hours of
plumbing, haircuts, sailing or English lessons.  Only local currencies
accepted!

Local currency creates work, and I make a distinction between work and
jobs.  A job is what you do for a living; work is what you do because
you like to do it.  I expect jobs to increasingly become obsolete, but
there is still an almost infinite amount of fascinating work to be
done.  For example, in France you find people offering guitar lessons
and requesting lessons in German.  Neither would pay in French francs.
What's nice about local currency is that when people create their own
money, they don't need to build in a scarcity factor.  And they don't
need to get currency from elsewhere in order to have a means of making
an exchange with a neighbor.

Edgar Cahn's Time Dollars are a classical example.  As soon as you have
an agreement between two people about a transaction using Time Dollars,
they literally create the necessary "money" in the process; there's no
scarcity of money.  That does not mean there's an infinite amount of
this currency, either; you cannot give me 500,000 hours -- nobody has
500,000 hours to give.  So there's a ceiling on it, yes, but there's no
artificial scarcity.  Instead of pitting people against each other, the
system actually helps them cooperate.

SARAH: So you're suggesting that scarcity needn't be a guiding principle
of our economic system.  But isn't scarcity absolutely fundamental to
economics, especially in a world of limited resources?

BERNARD: My analysis of this question is based on the work of Carl
Gustav Jung because he is the only one with a theoretical framework for
collective psychology, and money is fundamentally a phenomenon of
collective psychology.

A key concept Jung uses is the archetype, which can be described as an
emotional field that mobilizes people, individually or collectively, in
a particular direction.  Jung showed that whenever a particular
archetype is repressed, two types of shadows emerge, which are
polarities of each other.

For example, if my higher self -- corresponding to the archetype of the
King or the Queen -- is repressed, I will behave either as a Tyrant or
as a Weakling.  These two shadows are connected to each other by fear.
A Tyrant is tyrannical because he's afraid of appearing weak; a Weakling
is afraid of being tyrannical.  Only someone with no fear of either one
of these shadows can embody the archetype of the King.

Now let's apply this framework to a well-documented phenomenon -- the
repression of the Great Mother archetype.  The Great Mother archetype
was very important in the Western world from the dawn of prehistory
throughout the pre-Indo-European time periods, as it still is in many
traditional cultures today.  But this archetype has been violently
repressed in the West for at least 5,000 years starting with the
Indo-European invasions -- reinforced by the anti-Goddess view of
Judeo-Christianity, culminating with three centuries of witch hunts --
all the way to the Victorian era.

If there is a repression of an archetype on this scale and for this
length of time, the shadows manifest in a powerful way in society.
After 5,000 years, people will consider the corresponding shadow
behaviors as "normal."  The question I have been asking is very simple:
What are the shadows of the Great Mother archetype?  I'm proposing that
these shadows are greed and fear of scarcity.

So it should come as no surprise that in Victorian times -- at the apex
of the repression of the Great Mother -- a Scottish schoolmaster named
Adam Smith noticed a lot of greed and scarcity around him and assumed
that was how all "civilized" societies worked.  Smith, as you know,
created modern economics, which can be defined as a way of allocating
scarce resources through the mechanism of individual, personal greed.

SARAH: Wow!  So if greed and scarcity are the shadows, what does the
Great Mother archetype herself represent in terms of economics?

BERNARD: Let's first distinguish between the Goddess, who represented
all aspects of the Divine, and the Great Mother, who specifically
symbolizes planet Earth -- fertility, nature, the flow of abundance in
all aspects of life.  Someone who has assimilated the Great Mother
archetype trusts in the abundance of the universe.  It's when you lack
trust that you want a big bank account.

The first guy who accumulated a lot of stuff as protection against
future uncertainty automatically had to start defending his pile against
everybody else's envy and needs.  If a society is afraid of scarcity, it
will actually create an environment in which it manifests well-grounded
reasons to live in fear of scarcity.  It is a self-fulfilling prophecy!

Also, we have been living for a long time under the belief that we need
to create scarcity to create value.  Although that is valid in some
material domains, we extrapolate it to other domains where it may not be
valid.  For example, there's nothing to prevent us from freely
distributing information.  The marginal cost of information today is
practically nil.  Nevertheless, we invent copyrights and patents in an
attempt to keep it scarce.

SARAH: So fear of scarcity creates greed and hoarding, which in turn
creates the scarcity that was feared.  Whereas cultures that embody the
Great Mother are based on abundance and generosity.  Those ideas are
implicit in the way you've defined community, are they not?

BERNARD: Actually it's not my definition, it's etymological.  The origin
of the word "community" comes from the Latin munus, which means the
gift, and cum, which means together, among each other.  So community
literally means to give among each other.  Therefore I define my
community as a group of people who welcome and honor my gifts, and from
whom I can reasonably expect to receive gifts in return.

SARAH: And local currencies can facilitate that exchange of gifts.

BERNARD: The majority of the local currencies I know about have been
started for the purpose of creating employment, but there is a growing
group of people who are starting local currencies specifically to create
community.  For example, I would feel funny calling my neighbor in the
valley and saying, "I notice you have a lot of pears on your tree.  Can
I have them?"  I would feel I needed to offer something in return.  But
if I'm going to offer scarce dollars, I might just as well go to the
supermarket, so we end up not using the pears.

If I have local currency, there's no scarcity in the medium of exchange,
so buying the pears becomes an excuse to interact.  In Takoma Park,
Maryland, Olaf Egeberg started a local currency to facilitate these
kinds of exchanges within his community.  And the participants agree
that is exactly what has been happening.

SARAH: That raises the question of whether local currencies can also be
a means for people to meet their basic needs for food and housing, or
would those sectors remain part of the competitive economy?

BERNARD: There are lots of people who love gardening, but who can't make
a living from it in the competitive world.  If a gardener is unemployed,
and I'm unemployed, in the normal economy we might both starve.  However
with complementary currencies, he can grow my salads, which I pay for in
local currency earned by providing another service to someone else.

In Ithaca, "Hours" are accepted at the farmer's market; the farmers can
use the local currency to hire someone to help with the harvest or to do
some repairs.  Some landlords accept Hours for rent, particularly if
they don't have a mortgage that must be paid in scarce dollars.

When you have local currency, it quickly becomes clear what's local and
what's not.  K-Mart will accept dollars only; their suppliers are in
Hong Kong or Singapore or Kansas City.  But Ithaca's local supermarket
accepts Hours as well as dollars.  By using local currencies, you create
a bias toward local sustainability.

SARAH: Local currencies also provide communities with some buffering
from the ups and downs of the global economy.  You've been in the
business of monitoring, dealing in, and even helping to design the
global finance system.  Why would communities want to be insulated from
it?

BERNARD: First of all, today's official monetary system has almost
nothing to do with the real economy.  Just to give you an idea, 1995
statistics indicate that the volume of currency exchanged on the global
level is $1.3 trillion per day.  This is 30 times more than the daily
gross domestic product (GDP) of all of the developed countries (OECD)
together.

The annual GDP of the United States is turned in the market every three
days!  Of that volume, only 2 or 3 percent has to do with real trade or
investment; the remainder takes place in the speculative global
cyber-casino.  This means that the real economy has become relegated to
a mere frosting on the speculative cake, an exact reversal of how it was
just two decades ago.

SARAH: What are the implications of this?  What does it mean for those
of us who aren't transacting deals across international boundaries?

BERNARD: For one thing, power has shifted irrevocably away from
governments toward the financial markets.  When a government does
something not to the liking of the market -- like the British in '91,
the French in '94 or the Mexicans in '95 -- nobody sits down at the
table and says "you shouldn't do this."  A monetary crisis simply
manifests in that currency.  So a few hundred people, who are not
elected by anybody and have no collective responsibility whatsoever,
decide what your pension fund is worth -- among other things.

SARAH: You've also talked about the possibility of a crash in this
system...

BERNARD: Yes, I see it now as about a 50/50 chance over the next five or
10 years.  Many people say it's 100 percent, and with a much shorter
time horizon.  George Soros, who's made part of his living doing what I
used to do -- speculating in currencies -- concluded, "Instability is
cumulative, so that eventual breakdown of freely floating exchanges is
virtually assured."  Joel Kurtzman, ex-editor at the Harvard Business
Review, entitles his latest book: The Death of Money and forecasts an
imminent collapse due to speculative frenzy.

Just to see how this could happen: all the OECD Central Banks' reserves
together represent about $640 billion.  So in a crisis situation, if all
the Central Banks were to agree to work together (which they never do)
and if they were to use all their reserves (which is another thing that
never happens) they have the funds to control only half the volume of a
normal day of trading.  In a crisis day, that volume could easily double
or triple, and the total Central Bank reserves would last two or three
hours.

SARAH: And the outcome would be?

BERNARD: If that happens, we would suddenly be in a very different
world.  In 1929, the stock market crashed, but the gold standard held.
The monetary system held.  Here, we are dealing with something that's
more fundamental.  The only precedent I know of is the Roman Empire
collapse, which ended Roman currency.  That was, of course, at a time
when it took about a century and a half for the breakdown to spread
through the empire; now it would take a few hours.

SARAH: So local currencies could provide some resilience for a community
that could help it survive a currency melt-down or some other
international breakdown.  You've also mentioned that local currencies
help promote sustainability.  What's the connection?

BERNARD: To understand that, we need to see the relationship between
interest rates and the ways we discount the future.  If I ask, "Do you
want $100 now or $100 a year from now," most people would want the money
now simply because one can deposit money risk-free in a bank account and
get about $110 a year later.  Another way of putting it is that if I
were to offer you $100 a year from now that would be about equal to
offering you $90 today.  This discounting of the future is referred to
as 'discounted cash flow'.

That means that under our current system it makes sense to cut down
trees and put the money in the bank; the money in the bank will grow
faster than trees.  It makes sense to "save" money by building poorly
insulated houses because the discounted cost of the extra energy over
the lifetime of the house is cheaper than insulating.

We can, however, design a monetary system that does the opposite; it
actually creates long-term thinking through what is called a "demurrage
charge."  The demurrage charge is a concept developed by Silvio Gesell
about a century ago.  His idea was that money is a public good -- like
the telephone or bus transport -- and that we should charge a small fee
for using it.  In other words, we create a negative rather than a
positive interest rate.  What would that do?  If I gave you a $100 bill
and told you that a month from now you're going to have to pay $1 to
keep the money valid, what would you do?

SARAH: I suppose I would try to invest it in something else.

BERNARD: You got it.  You know the expression, "Money is like manure;
it's only good when it's spread out."  In the Gesell system, people
would only use money as a medium of exchange, but not as a store for
value.  That would create work, because it would encourage circulation,
and it would invert the short-term incentive system.  Instead of cutting
trees down to put the money in the bank, you would want to invest your
money in living trees or installing insulation in your house.

SARAH: Has this ever been tried?

BERNARD: There are only three periods I have found: classical Egypt;
about three centuries in the European Middle Ages, and a few years in
the 1930s.

In ancient Egypt, when you stored grain, you would receive a token,
which was exchangeable and became a type of currency.  If you returned a
year later with 10 tokens, you would only get nine tokens worth of
grain, because rats and spoilage would have reduced the quantities, and
because the guards at the storage facility had to be paid.  So that
amounted to a demurrage charge.

Egypt was the breadbasket for the ancient world, the gift of the Nile.
Why?  Because instead of keeping value in money, everybody invested in
productive assets that would last forever -- things like land
improvements and irrigation systems.  Proof that the monetary system had
something to do with this wealth is that it all ended abruptly as soon
as the Romans replaced the Egyptian 'grain standard' currency with their
own money system, with positive interest rates.  After that, Egypt
ceased being the grain-basket, and became a "developing country" as it
is called today.

In Europe during the Middle Ages -- the 10th to 13th centuries -- local
currencies were issued by local lords, and then periodically recalled
and reissued with a tax collected in the process.  Again, this was a
form of demurrage that made money undesirable as a store of value.  The
result was the blossoming of culture and widespread well-being,
corresponding exactly to the time period when these local currencies
were used.  Practically all the cathedrals were built during this time
period.  If you think about what is required as investment for a small
town to build a cathedral, it's extraordinary.

SARAH: Because cathedrals take generations to build?

BERNARD: Well, not only that.  Besides the obvious symbolic and
religious roles -- which I don't want to belittle -- one should remember
that cathedrals had an important economic function; they attracted
pilgrims, who, from a business perspective, played a similar role to
tourists today.  These cathedrals were built to last forever and create
a long-term cash flow for the community.  This was a way of creating
abundance for you and your descendants for 13 generations!  The proof is
that it still works today; in Chartres, for instance, the bulk of the
city's businesses still live from the tourists who visit the cathedral
800 years after it was finished!

When the introduction of gunpowder technology enabled the kings to
centralize power in the early 14th century, the first thing they did was
to monopolize the money system.  What happened?  No more cathedrals were
built.  The population was just as devoutly Christian in the 14th or
15th century, but the economic incentive for collective long-term
investments was gone.

I use the cathedral simply as an example.  Accounts from 12th century
estates show that mills and other productive assets were maintained at
an extraordinary level of quality, with parts replaced even before they
wore out.  Recent studies have revealed that the quality of life for the
common laborer in Europe was the highest in the 12th to 13th centuries;
perhaps even higher than today.

When you can't keep savings in the form of money, you invest them in
something that will produce value in the future.  So this form of money
created an extraordinary boom.

SARAH: Yet this was a period when Christianity was supreme in Europe and
so presumably the Great Mother archetype was still being repressed.

BERNARD: Well, actually a very interesting religious symbol became
prevalent during this time: the famous "Black Madonna."  There were
hundreds of these statues during the 10th to 13th centuries, which were
in fact statues of Isis with the child Horus sitting on her lap,
directly imported from Egypt during the first Crusades.  Her special
vertical chair was called the "cathedra" (which is where the word
cathedral comes from) and interestingly this chair was the exact symbol
identifying Isis in ancient Egypt.

The statues of the Black Madonnas were also identified in medieval time
as the "Alma Mater" (literally the "Generous Mother," an expression
still used in America to refer to someone's 'mother university').  The
Black Madonnas were a direct continuity of the Great Mother in one of
her most ancient forms.  She symbolized birth and fertility, the wealth
of the land.  She symbolized spirit incarnate in matter, before the
patriarchal societies separated spirit from matter.

So here we have a direct archetypal linkage between the two
civilizations that spontaneously created money systems with demurrage
charges while creating unusual levels of abundance for the common
people: ancient Egypt and 10th-to-13th century Europe.  These money
systems correspond exactly to the honoring of that archetype.

SARAH: How interesting!  What potential do you see for local currencies
to bring this Great Mother archetype of abundance and generosity into
our economic system today?

BERNARD: The biggest issues that I believe humanity faces today are
sustainability and the inequalities and breakdown in community, which
create tensions that result in violence and wars. We can address both
these issues with the same tool, by consciously creating currency
systems that will enhance community and sustainability.

Significantly, we have witnessed in the past decades a clear
re-awakening of the feminine archetype.  It is reflected not only in the
women's movement, in the dramatic increase in ecological concerns, or in
new epistemologies reintegrating spirit and matter, but also in the
technologies that enable us to replace hierarchies with networks (such
as the Internet).  Add to these trends the fact that for the first time
in human history we have available the production technologies to create
unprecedented abundance.

All this converges into an extraordinary opportunity to combine the
hardware of our technologies of abundance and the software of archetypal
shifts.  Such a combination has never been available at this scale or at
this speed: it enables us to consciously design money to work for us,
instead of us for it.  I propose that we choose to develop money systems
that will enable us to attain sustainability and community healing on a
local and global scale.  These objectives are in our grasp within less
than one generation's time.  Whether we materialize them or not will
depend on our capacity to cooperate with each other to consciously
reinvent our money.











"Neoliberalism is the colonialism department of neoconservatism."
-Doris "Granny D" Haddock-
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