Once upon a time, when fact was anchored in reality and there was space for dreams and visions in of the futures of nations and peoples. There was a common measure of national wealth and prosperity.
It wasn’t a sensible measure by any stretch of the imagination but at the very least it had a solidity about it which was undeniable.
You could physically pick it up, place it on a scale and assess it.
You could slice it, dice it, smelt it, hammer it or do any other number of actual real things with it.
You can’t get much more real than an atomic element.
The measure was called the Gold Standard.
“The gold standard is a monetary system where a country’s currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price…
The gold standard is not currently used by any government. Britain stopped using the gold standard in 1931 and the U.S. followed suit in 1933 and abandoned the remnants of the system in 1973.
The gold standard was completely replaced by fiat money, a term to describe currency that is used because of a government’s order, or fiat, that the currency must be accepted as a means of payment…
The term “fiat” is derived from the Latin “fieri,” meaning an arbitrary act or decree.”
When we moved from the Gold Standard we moved to a (completely made up) system whereby banks created the money instead.
The way that banks do this is by issuing debt.
If you get a mortgage from a bank for say £100,000. When that amount is typed into the banks computer and the teller presses enter, instantly that £100,000 gets created from nothing at all and can now enter the monetary system as a real thing.
You as the mortgagee understand this as a debt.
The bank understands it differently. The £100,000 is now available to the bank to borrow upon, spend, and invest as it likes. It doesn’t have a minus in front of the number, it has a big fat plus.
Isn’t it weird?
The bank doesn’t behave like it’s owed £100,000. As a person I think I’d be staying in a lot and eating beans and jacket potatoes until that number got a lot smaller. Plus, none of us in the real world are able to loan anything to anyone unless we’ve actually done something to earn it.
But that’s not the financial and banking sector we all know and love!
It does make you wonder who made it all up. Who sat around a table and concocted a system like that where ordinary people get saddled with debt and banks (and bankers) get richer accordingly with the more money that they loan or as may be nearer to the case — conjure out of thin air?
Anyway, I will have explained all of this terribly. Positive Money have quite a good series of videos on topics like this which explain how our monetary system actually works which is not how we believe it works.
Moving swiftly on, what we have is a debt-based economy.
“As preposterous as this may initially sound, it will be argued that because of the way in which banks create money from nothing and then supply it to the economy as a debt rather than lending money already in circulation, it is logically impossible for us to ever pay off our national debts without reform of the monetary system. Indeed, we will show that because of compound interest and the way in which money flows within our economy, an ever-increasing level of debt is required for our economies to function, hence the term debt-based economy.” — https://www.permanentculturenow.com/the-real-economic-scandal-understanding-the-debt-based-economy/
Fiat Lux — Let There Be Light!
The good thing about understanding that our monetary system is made up and in a good many ways is a fantasy which benefits only a small percentage of the population and is the cause of most of our social and environmental ills is this…
You can make something else up.
Fiat Lux indeed.
There’s no shortage of people trying, as anyone who has paid any attention to the mania of digital currencies will know. Local currencies are also having a renaissance.
Personally, I like a pound. It’s tried, tested, we’ve got existing tech, deep knowledge, lots of experience and expertise.
It has a promise on it which means something. I hope.
And you can use it anywhere… by law, mostly.
It offers the highest level of freedom, choice and flexibility.
For me the issue is that the pound that ends up in my pocket is completely mixed up in the rather nefarious economy that we have.
It would be nice to have a clean honest pound.
And it would be nice to have that clean honest pound in an economy which is pro-social and for the pounds existence to be based on a real store of value which is non-debt based.
So how do you generate a real store of value?
How do you mint a squeaky-clean and green quid?
A Theory of Value
When you start learning about ‘social enterprise’ you very quickly get introduced to the concept of ‘social value’ which is used to help evaluate and measure the social and environmental outcomes related to social enterprises and charities.
For example, a social enterprise in the form of a coffee shop that trains and employs disabled baristas would account for more than just it’s ability to; trade, pay wages, and pay the bills.
The coffee shop would look at; it’s contribution to the lives and wellbeing of the disabled people it is employing and the social outcomes involved in changing the perceptions of disabled people in general society and business.
The company may make purchasing decisions based upon ethical criteria that further; support it’s aims or other social, local economic or environmental concerns.
All of these additional considerations represent forms of ‘social value’.
Social value allows us to look beyond simplistic cost.
A community park may cost £20,000 per year to maintain. That is a cost.
It may generate £250,000 in social and environmental value once all factors are considered. This is the social value which is returned to society in the form of health, wellbeing, cultural, social, and environmental value.
Through measuring and understanding the work of social organisations/enterprises and the social value they generate, it becomes possible to better understand how and where public, social and philanthropic investment can and should be made.
In the instance of the community park, a £100,000 investment in facilities, services and activities could result in a positive social return. The social return being the social value realised by the investment.
In the instance of the coffee shop, a £20,000 grant could result in the generation of £100,000 of related social value.
Social value allows us to begin equating ‘monetary value’ with different forms of ‘value’. In this it can give us a more complete picture of the true cost, complexity and benefits of the work and activities that we and our organisations perform in the world and helps us to decide how we best apply our time, funds and resources.
Social value can, and does already, form part a system of exchange which lies beyond traditional economics, public spending, charity, investing and business.
All Work is Work: Full employment, the end of volunteering as we know it, and the democratisation…
There isn’t any shortage of work.
Social Value, Community Assets and the Environment
Connected to the concept of social value we have assets which are associated with its generation.
A village hall for example provides a place for communities to meet and for people to take part in activities.
It could host; a café, parent and toddler groups, a work club, Tai Chi for adults, exercise and slimming classes.
All of these activities and events generate forms of social value.
Being happy, healthy and connected is good for you.
It took clever people to work all this out.
The mind boggles.
Anyway, there are lots of assets like this; community pubs, your friendly local post office, village greens and parks…
The environment and green assets also contribute to the generation of social value.
In an urban setting easy access to green space contributes to people’s happiness, health and wellbeing.
In more rural settings projects or places that help reduce; flooding, pollution, and CO2 provide a less visible but strategically important function.
The clever people it is worth noting have enabled all of this value to be measurable.
And if it’s measurable we can do something with it.
Setting a Baseline
By using these measurements, it becomes possible to look at places, or assets, or regions or woodlands etc and have a good understanding of their social, environmental and economic value.
This forms a baseline.
With a baseline in place, we can understand the effect of any actions that we might take.
A community park could become adopted by an active community group which starts organising events and activities which contribute to the social wellbeing of local people.
We can have an understanding of these effects and the social value produced.
A local woodland could become home to a number of community-led activities, social enterprises and sustainable businesses.
We can have an understanding of their individual contributions to the generation of social value as well as the environmental assets contribution. We can monitor the health of the entire ecosystem — social, environmental and economic.
A lot of this environmental background and data already exists.
I’m pretty sure it’s Exeter University which has been looking at the environmental value connected to land. There are datasets available for birds and biodiversity. There are new social indices being used within local authorities.
There are people looking at how we replace the EU subsidies provided to farmers and landowners and the generation of social and environmental value could be the key to any fair and future oriented solution.
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Assets and Ownership
When we understand social and environmental value in this way it becomes possible to see how a new form of value store and monetary generation can be created.
We don’t dig it out of the ground or steal it like gold.
We don’t invent it through debt and usury.
We put in the hard work and produce it for ourselves.
While we’re at it we just so happen to make the world a better place to live and benefit nature and local people’s lives in the process.
If it is possible for communities to create a form of value for themselves which is coupled to the pound that sits at the heart of our economy then it should also become possible for them to buy, secure, invest in and create their own assets.
You may not need large scale interventions like a land tax to be enacted by government in order to rectify the existing inequalities.
Instead, you create the ability for value to be generated and for land and assets to be brought fairly and squarely by the public.
You don’t need a new deal.
You just need some honest pounds and a fair deal for everyone.
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Zero Interest: Looking up for inspiration
Reader Caution: I know very little about the economy, money or banking. Please don’t be offended.
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