Abstract
As explained in some more detail in Chap. 3 of this book, neoliberalism basically holds that the free market system forms the only approach perceivable of establishing a democratic socio-economic order, implying that, at least on a socio-economic level, there are no alternatives for the free market.
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- 1.
- 2.
Compare Vivekananda (1989), p. 30 a.f.
- 3.
As mentioned before, this theme has already been explored in some of my earlier books; see especially Byttebier (2015a, 2017).
Indeed, as has also been readdressed in more detail in Sect. 2.1 of this book, capitalism basically emerged out of medieval bank practices that still lie at the roots of the present-day monetary system, and, through this, of the present-day prevailing socio-economic order. Consequently, if humanity ever wants a way out of capitalism, it will have to start by reinventing its core foundation or, put otherwise, it will have to replace the capitalistic monetary system that is based upon the power to create new money left in the hands of private banks by an alternative approach.
- 4.
Where in the prevailing economic systems on Earth, the power of private commercial banks to create money concerns so-called “scriptural money” (hence money that only virtually exists through bookings on financial accounts), the power of central banks to create money concerns so-called “bank notes” (and/or coin money), hence money that still knows a certain physical existence, as it is printed on paper (or made of metal).
These central banks may, furthermore, have a “public”, “mixed” or even entirely “private” nature, implying that there exist central banks who completely resort under public authority, next to central banks that are partly in private hands, and partly resorting under public authority, albeit that there are also central banks that have a full private nature themselves. It is in this regards noteworthy that the US Federal Reserve is privately owned (which implies that the USD is entirely privately created money). Purportedly established to serve the public interest (see Board of Governors of the Federal Reserve System (2016), p. 2), the Federal Reserve is, more precisely, to a large extent controlled by private commercial banks (see furthermore Board of Governors of the Federal Reserve System (2016), p. 6 a.f.).
- 5.
See especially Galbraith (1990).
- 6.
Byttebier (2017).
- 7.
Byttebier (2015a).
- 8.
Similarly Dare (2016):
Nations like Greece are forced into austerity and unnecessary hardship by private banks, it is becoming ever more clear to the people of the world that debt-based currency is being used to conquer nations and enslave free people. The fiat money scheme is so absurd, so detrimental to human progress, that any sane person has to wonder why the global debt cannot just be written off with a few key strokes, allowing the world’s economy to again thrive.
- 9.
See at https://www.imf.org/external/ (last consulted on March 5 2019).
- 10.
See Bollen (2004).
- 11.
- 12.
It is in this regard, obviously, possible to draw important lessons from the experiences with the prevailing capitalist monetary system, such as the fact that it inherently leads to a too great concentration of riches and power in the hands of a select group of people (especially bank shareholders), next to the fact that it condemns humanity to an ongoing model of economic growth (with all its detrimental consequences). (See furthermore Sect. 5.4.3).
- 13.
A further, more economical question is how long the reserves of certain crudities (such as oil, gas…) will still last at their present rate of consumption.
- 14.
- 15.
Reference is made to all types of government imposed contributions to systems of public care other than taxes in the strict sense of the word, with as a typical example (mandatory) social security contributions.
- 16.
See especially Oxfam (2014).
- 17.
- 18.
It could hereby even be held that the monetary system is based on, or embedded in, a so-called “social contract” through means of several types of mechanisms and procedures, such as (international) law, including treaties establishing a monetary order and/or the free movement of money and capital; state organization itself; all types of conventional systems between financial institutions and other market players … (See Byttebier (2015a), p. 31, no 29 and pp. 33–34, no 39–42; see also under Point 2.2.3 of Byttebier (2017), pp. 20–21).
The major characteristics of these mechanisms and procedures have been dealt with in detail (and also illustrated) in the Chapter I of my book “Nu het gouden kalf verdronken is” and in the Chapter 2 of my book “Towards a New International Monetary Order”, whereby it has also been indicated that the inherently “conventional” nature of money also implies that it is intrinsically subject to changes. Indeed, the history (of the financial and monetary system) has effectively witnessed several such changes, even to the extent that money, as we know it today, could be basically considered as the result of a continuous (fine)tuning during a long evolutionary process. (See Byttebier (2015a), p. 31, n° 32; Byttebier (2017), pp. 16–18).
- 19.
This obviously also implies that the need for a more just and more altruistic global monetary system at the same time implies the construction a more democratic system of money creation and distribution than the prevailing capitalist monetary and financial system, which itself may be indicated as being of a highly undemocratic nature.
Ann Pettifor has phrased this as the necessity for a willingness:
[to] move on beyond Adam Smith towards a fuller understanding of the public good that is credit.
(Pettifor (2014).)
- 20.
- 21.
Compare Van Steelandt (2014), p. 20.
- 22.
Byttebier (2017), p. 443.
- 23.
Byttebier (2017), p. 444.
- 24.
The latter could even imply that state borders would become of less importance when attributing representative seats within the organs of the NMWI. On the contrary, one could, for instance, also work with a more “regional” or “community” approach, which could imply that, as regards representation within the organs of the NMWI, bigger countries would end up being divided into several regions each obtaining the right to send a given number of representatives to the NMWI, while smaller countries could end up being grouped in order to ensure that they will also be sufficiently represented.
- 25.
This “five pillars based” new monetary system has already been dealt with in some more detail in the earlier quoted books “Nu het gouden kalf verdronken is” (see Byttebier (2015a)) and “Towards a New International Monetary Order” (see Byttebier (2017)).
More precisely, the Chapters III and IV of said book “Nu het gouden kalf verdronken is” (Byttebier (2015a)) and the Chapters 4 and 5 of said book “Towards a New International Monetary Order” (Byttebier (2017)) contain a detailed attempt of describing how an “altruistic” monetary (and financial) system could look like, as opposed to the global monetary system presently prevailing in accordance with the doctrine(s) of (neo)liberalism.
- 26.
In case mankind would ever be willing to consider implementing the ideas brought forward in the present Chap. 5 of this book (as to some extent based on the Chapters III and IV of Byttebier (2015a), and on the Chapters 4 and 5 of Byttebier (2017)), it will obviously be necessary to work out said ideas in more detail, for instance in the treaty (ies) and other rules and regulations dealing with the to-be-established NMWO.
- 27.
- 28.
The “ius cudendae monetae” is considered as one of the fundamental attributes of state sovereignty which enables a State to issue money in defined units of accounts and to regulate its use as currency within its (own) territory, and in particular the conditions, including (exchange) rates, of its exchange for foreign currencies (see for instance Shuster (1973), pp. 1–3).
Furthermore, the monetary sovereignty principle also applies to money as a (generally accepted) payment instrument, as a value indicator, and as a savings and credit instrument (see also further, in Chapter II of Byttebier (2015a) and in Chapter 3 of Byttebier (2017)). Each state can in this regard freely set and apply rules (including, if so desired, restrictions), in order to regulate these (classical) functions of money.
In most of the countries, a chosen “national” currency fulfills the aforementioned traditional functions of money, although there are countries that have chosen another system (such as, for instance, the countries participating in the so-called “Eurozone” where the euro is used as one common currency).
- 29.
For some further critical reflections on the “national character” of money, see Pdoa-Schioppa (2011), pp. 51–73.
- 30.
On the interaction between the national state model and (social and economic) globalization, see especially Stiglitz (2006), p. 19.
In the recent past, this insight has even led to the questioning of the national state model itself (for instance in the works of John Breuilly of the “London School of Economics”).
- 31.
Probably the most extensive convention-based mechanism in the field of monetary law and economics, is the so-called “monetary union”, which (in general terms) could be described as the convention-based agreed upon system whereby, within a certain geographical area—in general a group of countries—, one common currency is (at least) functioning as a generally accepted means of payment (in addition to fulfilling the other classical functions of money). Countries constituting such a monetary union are hereby setting aside their own national currency and join a (monetary) system in which one single currency is used instead. (See Umbach and Wessels (2008), pp. 54–68).
A similar result as reached by means of a monetary union may be obtained when a country starts using the currency of another country.
The IMF qualifies both systems as so-called “exchange arrangements with no separate legal tender”. (See International Monetary Fund (1999), p. 164. See furthermore Healey and Levine (1993), p. 372).
The most remarkable example of such a monetary union is, without any doubt, the already mentioned EMU. (See Bertaut and Iyigun (1999), pp. 655–666; Louis (1993), pp. 285–299; Bonneau (1996), p. 16, n° 26).
- 32.
- 33.
Compare Stiglitz (2006), p. 21, and this author’s further arguments about the problematic nature of acquiring monetary reserves (at pp. 148–149 of the quoted book).
- 34.
On the disastrous effects of an economy which is too much based on competition, see also Oxfam (2016), p. 16.
- 35.
Financial institutions are among the most important players on the (international) exchange markets often practicing so-called “proprietary trading” (for their own account) (see Loizou (2012), p. 165).
- 36.
Loizou (2012), p. 161 a.f., pointing out that at the time when he wrote his book, the daily trade of currencies, on average, amounted to 4 trillion USD.
- 37.
Albeit, of course, any other similar denomination could be thought off.
- 38.
For the sake of completeness, it needs to be remarked that, in the more or less recent past, similar voices advocating the introduction of a new world-wide monetary system have already been heard.
One of the advocates of such a new global monetary order has, for instance, been economics professor Robert Mundell (Columbia) who, in a speech dating from 2005 entitled “The case for a world currency”, has pleaded for a similar world-wide monetary system (referred to by Newman (2010)):
My approach is rather to start out with arrangements for stabilizing exchange rates, and move from there to a global currency. It would start off from the situation as it is at present and gradually move it toward the desired solution. We could start off with the three big currencies in the world, the dollar, euro, and yen, and with specified weights, make a basket of them into a unit that could be called the DEY, (…) The DEY could then become the platform on which to build a global currency, which I shall call the INTOR.
[“DEY” hereby stands for “dollar-euro-yen”; the term “INTOR” is formed by a contraction of the words “international” and “or”, the latter itself being the French word for “gold”.]
See also Mundell (1996), pp. 74–81; Mundell (2000), pp. 57–84; Pdoa-Schioppa (2011), p. 61.
In his research of the 1990s, Mundell himself mentioned as further advantages of a global monetary union mainly the favorable effect such a monetary system would have on price setting and price transparency, which would furthermore smoothen international trade (and thus would, ultimately, contribute to higher economic growth and prosperity).
In the past, some central bankers have defended similar statements. (See Newman (2010); see also Stevenson (2009)).
Similarly, (also) within the IMF, the position has been taken that SDRs should be developed into a fully-fledged world currency (see Byttebier (2015a), pp. 280–281, no 512; Byttebier (2017), p. 393, no 62–63).
- 39.
See also Pettifor (2014).
- 40.
For a detailed overview, see Byttebier (2015a), under Chapter II and Byttebier (2017), under Chapter 3.
To, for instance, use one of the basic metaphors of “Christianity”, the question becomes if mankind wants the preservation of the globally ever more prevailing neoliberal society where the selfish behavior of the Levite and the priest from the parable of the “Good Samaritan” (see Luke 10: pp. 25–37) who, driven by self-interest, both chose to leave a seriously injured fellow man to his fate, is seen as “normal”, and even as “virtuous” (see, for instance, explicitly the approach defended by Ayn Rand), or rather to grow towards a society in which the expectation will increasingly prevail that people will behave as the “Good Samaritan” from the same biblical story who, while neglecting any personal interest, above all recognizes the suffering of his fellow man and wants to try to help him in his hour of need. Even so in terms derived from the Gospels, said policy choice is basically the one between serving the “Kingdom of God”, namely at the very least establishing a society in which love for one’s neighbor prevails above anything else (see Mark, 12:31) and certainly above one’s own selfish needs, or serving the “mammon” (namely the “money devil”) as is the expectancy under the capitalist or free market driven economic system.
In terms of “Buddhism”, the question similarly becomes if mankind wants the preservation of a neoliberal world (monetary order) where everyone increasingly continues to surrender to the so-called “armies of Mara” in other words, chooses for a life that is solely aimed at pursuing, at any cost, the immediate satisfaction (in the modern world: often pre-financed with consumer credits which mainly help to get the rich of the planet ever more richer) of any thinkable physical or other need, i.e. a life serving “evil” (= “samsara”).
Compare furthermore these insights of Christianity and Buddhism to the findings of Tim Kasser, in his book “The high price of materialism”. (See Kasser (2002)).
- 41.
Through this approach, the choice for the guiding principle within society in general and within economics more specifically (among which its monetary system) indeed could be reduced to the classical choice between “altruism” (as historically defended by philosophical and religious leading figures such as Plato, Buddha, Aristotle, Jesus Christ,…) or “selfishness” (as has, especially within economic thinking, already early in history been defended by thinkers still calling themselves “Christian”, such as Luther and Calvin, and later by economists such as Adam Smith and his successors, currently mainly the neoliberal economists).
In this classical metaphysical approach, the choice whether or not to aspire for a New Monetary Order based upon altruism, ultimately becomes a choice between what is basically “good” (“altruism” and “solidarity”) and what is (basically) “evil” (“egoism”, “selfishness and ”greed”), whereby these concepts are to be comprehended in accordance with the mentioned classic philosophical and religious doctrines, and whereby it needs to be noted that (the new religion of) economic (neo-)liberalism itself has clearly attempted to turn around this most classical value scale by—in some cases even literally (see for instance in the works of Ayn Rand) – arguing that “evil” (selfishness) is good and “good” (altruism) is evil. (See especially Rand (1992)).
- 42.
Such a global New Monetary Order will, obviously, also imply free trade and free capital and free payment traffic.
- 43.
Johnson (2014), pp. 79–103.
- 44.
Johnson (2014), p. 87.
- 45.
Johnson (2014), p. 87.
- 46.
- 47.
- 48.
Per definition: to accumulate the largest possible receivable position towards the flow of goods and services produced by the world economy.
- 49.
- 50.
One should also take into consideration the possible impact of a complete economic and financial failure in case mankind would continue to adhere to the opposite choice as has especially been made since the seventeenth century, namely the choice for an unbridled selfishness as the guiding principle of economy, which has also increasingly determined the operation of the current IMF over the past decades (albeit egoism, selfishness and greed had already earlier on in history determined economic choices, a fact against which prominent philosophers and religious leaders like Plato, Aristotle and Jesus Christ, had strongly protested).
See furthermore Krugman (2004), p. 454; Stiglitz (2003), p. 196; Harvey (2010), p. 55.
Stiglitz has described the policy choices of the IMF as follows:
We have an obvious problem: a public institution created to address certain failures in the market but currently run by economists who have both a high level of confidence in markets and little confidence in public institutions.
(Stiglitz (2003), p. 196).
- 51.
- 52.
- 53.
Whereby the cash reserves retained by the market players that are authorized to create private money, mainly private banks, normally are not taken into account when calculating the total amount of “chartal” or “cash” money that circulates within a given economy.
- 54.
Referring to the total of claims on private banks, regardless of the fact that such claims are generated either as a counterclaim for an original cash deposit or for a scriptural payment transaction, or as the result of a commitment from a private bank to grant a credit.
- 55.
In some countries: also coins, albeit in other countries/monetary systems, coinage is still performed by other public authorities.
- 56.
In very general terms, this “lender of last resort”-task implies that, as private banks are obliged to pay out their scriptural obligations when the holder of a banking account (and hence of a claim towards the bank such an account represents, which, from a contract law point of view, forms the counterpart of the scriptural obligation of the bank itself) requires so, they need to have a sufficient amount of “chartal” or “cash” money at their disposal in order to fulfill such payment requests of the account holders, for which they are ultimately dependent on the intervention of the central bank (which in theory has access to an unlimited supply of “chartal” or cash money, as it may legally and literally “produce” it). This process is in practice controlled by the central monetary institution through different monetary mechanisms, such as several methods of credit lending (against interest charging) by the central bank to the private (deposit) banks which are using its services. (See e.g. De Grauwe (2014), p. 190).
It should be pointed out that in classical economic writings, money forms have been further classified dependent on their long or short term convertibility into cash (“chartal”) money. However, in a more legal approach, the basic distinction remains the one between “chartal” money (i.e. the cash money created by a central bank or similar (governmental) institution) and “scriptural” money (i.e. money created by a private bank or similar financial institution when it grants a private credit).
- 57.
For instance Galbraith has referred to the processes of scriptural money creation by the private banking sector as to “cycles of euphoria and panic” (Galbraith (1975), p. 21).
- 58.
See also the figures of debt mentioned in Sect. 4.2.
- 59.
Galbraith (1990).
- 60.
See one of the main objectives of the IMF laid down in article I. (ii) of the Articles of Agreement: “to facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy”, (https://www.imf.org/external/pubs/ft/aa/#art1; last consulted on March 5 2019).
- 61.
Whomever still would doubt this is recommended to read Luyendijk (2015).
- 62.
See esp. Galbraith (1990).
- 63.
And moreover based upon an ideology (namely “economic neoliberalism”) which opposes any kind of support to the benefit of the poor and the deprived, under the argument that such support would stimulate laziness.
- 64.
Amongst others by buying bank shares or by (simultaneously) buying, guaranteeing or insuring toxic banks assets; see Skidelsky (2010), p. 17.
- 65.
- 66.
- 67.
The proposal that is made here, however radical, is nevertheless, at least partially, in line with positions which earlier on in history were taken by prominent policy makers, in addition to certain renowned economists, as well as with certain, more recent concerns expressed by certain (central) bankers themselves.
We can suffice here to refer to the quotes in Byttebier (2017), pp. 371–373, to the sayings of some leading thinkers and statesmen like Karl Marx, Thomas Jefferson (1743–1826), James Madison (1751–1836), Abraham Lincoln (1809–1865), Theodore Roosevelt (1858–1919) and Woodrow Wilson (1856–1924), all having taken stand against a monetary system in which the power to create money is left in the hands of private commercial banks. (See furthermore Byttebier (2018), p. 372 a.f.)
It is somehow bewildering to observe that all these prominent thinkers and statesmen, in some cases already centuries ago, reached the (correct) conclusion that money (and money creation) need(s) to be a public good and that it should not be controlled by a private sector (namely the private banking sector), but that, nevertheless, up till today (and, under the impulse of “economic neoliberalism”, at present even more than ever), the processes of money creation continue to be left in the hands of the private banking sector, and hence delivered to its unbridled pursuit of ever more profits (the detrimental consequences of which the world has been suffering from for a long time already, as once more in history has been demonstrated by the events of and since the huge financial crisis of 2008). This is undoubtedly one of the most clear illustrations of the inability of democracies to resist the powers of capitalism (referred to, inter alia, by Stiglitz as an expression of the failure of democracy).
Furthermore, also renowned twentieth century economists, such as John Maynard Keynes and John Kenneth Galbraith, have kept on indicating that, because of the special nature of (bank) credit lending leading to (private) money creation, the (cost) price hereof mainly consisting of (bank) interests, is totally different from the cost price of any other product, or any other service within the economy. (Compare Pettifor (2014)). The price setting for newly created money should, hence, not be left to the (invisible hand of the) law of supply and demand (as is currently to a too large extent the case under the prevailing capitalist money creation systems). On the contrary, in accordance with these viewpoints, money creation and its price setting mechanisms should be dealt with as a “social construct”. (See also Gore (2013), p. 37).
In this approach (relating to Keynes himself), the thought clearly arises that money is “a public good”, or at least needs to be become such a public good again. It should, in this regard, be further noted that Keynes himself, in his role as one of the notorious architects of the IMF-treaty, has effectively advocated the introduction of a global system of public money creation (as an alternative for the systems of monetary aids between IMF countries), which however was eventually not adopted in the IMF treaty of 1944–1945 itself, but which, in 1969, would lead to the introduction of the so-called “SDRs” (as a less extreme variant for a system of effective international money creation by a supra-national organization itself).
The fact that, up till this present day, nevertheless, no serious attempts have been made to introduce a global monetary system which would completely be based on public money creation (and that even no true dialogue on the subject has been attempted) is, furthermore, a striking illustration of the power of big enterprises in general (the so-called “corporatocracy”), and of private banks more specifically (one could even speak of a “bankocracy”).
- 68.
The elimination of private banks as participants in the money creation process will, obviously, imply a re-orientation of their role within the economy. (For further ideas on this, see Byttebier (2017), p. 479 a.f).
Indeed, a monetary model where there will no longer be room for private money creation by private banks will also need to be based on the principle that some forms of credit lending can no longer be left to the private banking sector.
- 69.
- 70.
As has been elaborated upon further in detail in said books “Nu het gouden kalf verdronken is” and “Towards a New International Monetary Order” (see Byttebier (2015a), under Point V.C. of Chapter III; also Byttebier (2017), under Point 4.7 of Chapter 4), some of these credits should, in the future, moreover be provided in light of policy considerations of general well-being (instead of, as is the case under the prevailing banking system, for the sake of the individual pursuit of profits by banks and other credit lenders, mainly to the benefit of their rich shareholders).
- 71.
Compare Boccara et al. (2011), p. 218.
- 72.
One of the (many) great merits of the renowned economist John Kenneth Galbraith has been that he has pointed out the important difference between credit which is taken up for personal needs (essentially aimed at living, or surviving, in a humane way), and credit which implies a production cost for enterprises (which, in essence, is aimed at ensuring that the profits generated by an enterprise as much as possible flow to the company shareholders). (See Galbraith (1987), p. 12).
- 73.
As will be elaborated upon further in this text, this second level of money creation would itself consist of the following sub-levels:
-
Credit lending to/money creation for the benefit of private individuals and households for basic needs of life;
-
Credit lending to/money creation for the benefit of private individuals to enter into professional life;
-
Credit lending to/money creation for the benefit of the nonprofit-sector (as long as this sector will still be in place);
-
(Other) Credit lending to/money creation for the benefit of established businesses (and similar private entities).
-
- 74.
- 75.
As said, one could even think of credits against negative interests (i.e. basically credits which would not be reimbursable in full). This could, for instance, be the case for student loans, credits to the (very) poor, etc.
- 76.
See Galbraith (1992), p. 93, who has pointed that (high) interest charging has been devastating for the modal man.
- 77.
- 78.
As has been explained in the earlier quoted books Byttebier (2015a), p. 194 a.f., under its marg. 342 a.f., and Byttebier (2017), under Point 4.7.2.1 of Chapter 4, next to in Sects. 2.3 and 4.3 of the present book itself, this (these) prevailing system(s) of government financing has (have) many disadvantages including, amongst others:
-
1.
the prevailing method of government financing through taxes and similar charges is not “efficient” (anymore); on the contrary, it has in many countries mainly become an obstacle for a solid operation of the economy which has attributed to the fact that many countries, over the past decades, had to resort to an unbridled debt financing to overcome shortcomings, with all known problematic consequences;
-
2.
the prevailing method is inherently “unjust” due to the fact that taxation mainly affects the poor and middle classes and leaves the rich classes (and their big enterprises) largely unhindered; because of this, the prevailing methods of government financing do not contribute to the general well-being of the global world population, let alone to a more just distribution of the world’s riches;
-
3.
the prevailing method does not encourage a practice of healthy “budgetary discipline”, as governments that are confronted with budgetary shortages tend to either impose more taxes, or to borrow more money on the financial markets, rather than cutting into unnecessary expenses;
-
4.
the prevailing method has contributed to an inherent “unhealthy competition” between countries (of which the business sector eagerly takes advantage by enforcing upon national governments all types of fiscal systems serving their interests through all sorts of lobby mechanisms and even through blackmail, but, for instance, also by enforcing subsidies financed with public money, while (implicitly) threatening to relocate elsewhere in case similar demands are not met, which on a global scale has been detrimental for an optimal allocation of production resources).
In this way, economic policy bears witness of a remarkable “paradox”: governments that accumulate their financial means mainly through taxing the lower and middle classes, decide to use these means to reward the rich classes by subsidizing big enterprises (owned by these rich classes). As a result, it is made possible for such big enterprises to make even more profits (which are hardly taxed themselves), while, at the same time, the big enterprises threaten the subsidizing governments that in case the latter would not be willing to grant or maintain such subsidies, they will re-allocate to another country, thus harming the local economy of the country they thus would abandon even more.
Stiglitz has in this regard pointed out that the future of Europe and the euro depends on whether the Eurozone’s political leaders will be able combine a modicum of economic understanding with a visionary sense of, and concern for, European solidarity (based upon, amongst others, a “unitarized” tax model) (see Stiglitz (2015));
-
5.
the problem of the increasing debt burden of many countries has created a real problem of “intergenerational” injustice, even endangering the general prosperity of next generations (who, in a system of debt financing by governments to be paid back through income out of taxation, have to increasingly pay the bills for debts which have been accumulated in the past to pay for the luxuries of previous generations).
-
1.
- 79.
As regards the countries that would be willing to participate to the NMWO, said (radical) proposal would, for instance, imply a definitive abolition of most systems of taxes and similar charges in the broad sense of the word, on both income which is generated through labor – hence not only actual income taxes, but also, for instance, succession taxes, and regardless of the fact whether such labor is performed as an employee or on an independent basis—, as on income derived from other sources, such as capital, in as far as such income would fall under certain (to be determined) parameters. (Compare Galbraith (1979), p. 93). Income from labor (as well as other “low“ incomes, regardless of their source) would in this way be exempted from all kinds of government skimming and would consequently, for the first time in (recent) history, remain entirely for the benefit of the person who has provided the labor. (In Byttebier (2015a), it has been mentioned in more detail how such a new tax system could concretely look like; see under Point V.B.3.ii. of the Chapter III. of said book; see also Byttebier (2017), under Point 4.7.2.3.2 of Chapter 4).
In the same sense, all types of (common) consumer taxes (including taxes charged in the context of transactions of goods and services which are meant to enable the average person to lead a humane life, such as the purchase of food and other daily consumables, in addition to the purchase or decoration of a living house, of a vehicle, etc.) should be even so abandoned. Indeed, it appears from research undertaken by Oxfam that such types of indirect (consumer) taxes (including, for instance, the notorious VAT-systems) are to a great extent contributing to the increasing economic inequality which is currently world-wide prevailing (see Oxfam (2014), p. 83).
To illustrate this, reference can be made to the situation in Japan, where in 2014 a persistent recession was caused by Japan’s VAT-system which was reported to undermine too much the purchasing power of the general population (and because of this: the demand within economy). (See Ujikane and Fujioka (2014)).
We shall come back to the issue of how the NMWO could go hand in hand with a new taxation in the next Chap. 6 of this book (see especially Sect. 6.3).
- 80.
For further reasons why this system is here proposed, see Kousari (2006), pp. 35–46.
- 81.
For the sake of completeness, it needs to be mentioned that in the past, within the IMF itself, the introduction of a global monetary system in which the current SDRs would be converted into a fully-fledged world currency, has even so been advocated (albeit to a less far reaching extent than is proposed here).
In a paper by the “Strategy, Policy, and Review Department” of the IMF, entitled “Enhancing International Monetary Stability—A Role for the SDR?” and dating from January 7th 2011, several proposals have been brought forward to significantly expand the current (limited) role of the SDR’s, including the proposal to use them in the private sector. (See also Hu (2011), pp. 143–158).
Through a declaration of (at the time) Governor Zhou, the People’s Bank of China has in this regard even worked out a “road map” of how the reform of the SDR-system could look like. (See Camdessus (2011), pp. 39–40).
Elements of this proposed “road map” consist of:
-
broadening the present basket of currencies which determine the value of the SDR, at the time the USD, the euro, the yen and the pound) to some further major currencies, such as the yuan, but also the Indian and Brazilian currencies (in addition to others);
-
working towards an expanded use of the SDR (beyond the present official holders);
-
transforming the SDR into a real currency that can also be used as a payment instrument for current (international) transactions;
-
working towards the use of the SDR as a payment instrument on the private markets;
-
encouraging the renewed creation of financial assets denominated in SDR’s;
-
facilitating the determination of the value of the SDR.
-
- 82.
A possible risk of such a system could be that public authorities would be inclined to create too much money on their own behalf (which could result in a depreciation of the New World Currency, and even undermine its acceptance by the general public). Although one may wonder whether the risk of excess money creation is not even higher under the prevailing capitalist money creation systems, this aforementioned risk will probably be easily avoided given the fact that the proposed allocations of new money for the benefit of participating governments would obviously not be decided upon by the national authorities themselves for their own individual behalf, but rather will be carried out by a newly established monetary institution (referred to before as the NMWI) which, under the auspices of its (ultimate) “organizing authority”, namely the world community, will be able to (and will need to) advocate a fair global balance among the participating countries. Moreover, the decision making processes in this regard could be enhanced by organizationally ensured “checks and balances” (which have been dealt with in more detail in the said books “Nu het gouden kalf verdronken is” and “Towards a New International Monetary Order). (See Byttebier (2015a), p. 293, n° 541; Byttebier (2017), p. 396, no 76).
Although the proposals mentioned before may indeed appear to be revolutionary, they nevertheless are not completely original. On the contrary, a similar system of enhancing public money creation already forms an embryonic part of the current IMF, whereby, obviously, the possibility of the IMF to grant to its Member States so-called “Special Drawing Rights” comes to mind. (For further reading, see Skidelsky (2003), pp. 125–151. See also Tew (1977), p. 101 a.f.; James (1996)).
- 83.
See already the works of Galbraith advocating a sufficiently large understanding of the notion “public interest”. (See e.g. Galbraith (1964)).
- 84.
In recent times, it has become unclear what countries may still be considered “rich” and what countries “poor”. For instance, it appears that especially some of the traditional “rich” countries have in recent times become extremely burdened with debt, which economically speaking may be considered as a factor that decreases the countries’ wealth status. One should also consider how either prosperous or poor the general population of any given country is, where it appears that some of the countries with huge public debt (which hence could be considered as countries that are getting poorer) still have (very) prosperous inhabitants, although one may wonder for what time still.
It is somewhat surprising how little economic research is available on these topics (a notorious exception being Piketty (2014)), which forms yet again an indication that the adherents of the doctrines of neoliberalism prefer to remain silent on this topic and simply leave the whole thing to the workings of the free market. The fact that nobody still sees (or: wants to see (?)) clear in this puzzle may also be a further indication of how fundamentally unjust the whole organization of the socio-economic order has become, raising the further suspicion that the powers that be deem it in their own interest to leave the whole thing as untouched as possible.
- 85.
- 86.
As mentioned before, in each of the countries partaking to the NMWO, systems of providing public services, among which social care, will also have to be established (see furthermore Chap. 6 of this book) and be funded through the allocations periodically handed out to each of these countries. Needless to say that these public service mechanisms will have to be narrowly coordinated with the mechanism of private credits to meet basic needs of life. A central question hereby will, obviously, be what fundamental needs will have to be met through the systems of public services (including social care), and what (other) needs will be left over to the system of reimbursable credits in order to cover for one’s basic life needs.
- 87.
- 88.
Albeit that, obviously, objective local factors, such as factors of a cultural nature, could be taken into account.
- 89.
See esp. Kruithof (2000), p. 60.
- 90.
- 91.
Thus: not only access to the abovementioned absolutely vital elements, but, inter alia, also access to elements of basic comfort, such as transportation, communication, recreation …
- 92.
This topic will be readdressed in some more detail in the next Chap. 6 of this book.
- 93.
See also Ferguson (2009), p. 15, arguing that poverty is mainly the result of a lack of access to newly created money:
Only when borrowers have access to efficient credit networks can they escape from the clutches of loan sharks, and only when savers can deposit their money in reliable banks can it be channeled from the idle to the industrious or from the rich to the poor.
- 94.
- 95.
Galbraith (1996), p. 61.
- 96.
On the contrary, it is often said and even written (mainly by fervent supporters of neoliberal thinking) that one should not question such inequalities as everyone in the world does get equal chances in life, a statement which cannot be taken seriously at all as it is obviously completely contradicted by all objective observations.
- 97.
Galbraith (1996), p. 61.
- 98.
- 99.
In the more recent past, one can, for instance (and again), refer to John Kenneth Galbraith who in his book “The Good Society—The Humane Agenda” has pointed out that:
the good society, however, achievement may not be limited by factors that are remediable. There must be economic opportunity for all (…). And in preparation for life, the young must have the physical care, the discipline, let no one doubt, and especially the education that will allow them to seize and exploit that opportunity. No one, from accident of birth or economic circumstance, may be denied these things; if they are not available from parent or family, society must provide effective forms of care and guidance.
(See Galbraith (1996), p. 65.)
- 100.
- 101.
Including so-called “NGO’s” or “Non-governmental organizations”.
- 102.
- 103.
De Ekstermolengroep (2000), p. 32. a.f.
- 104.
Needless to say that the answer to this question will need a thorough study of the most cost-efficient solution (also in relation to the capacity of the planet).
- 105.
For this reason, there will also be a need for a unified policy on such outsourcing of tasks of general interest to the private non-profit sector in all countries participating in the NMWO.
- 106.
- 107.
See earlier in the history of Christianity the ideas of Saint Paul on the importance of “socio-economic self-reliance” which under the NMWO should become a possibility for every human being (see in Byttebier (2017), under Point 3.3.2.2.2 of Chapter 3).
- 108.
As Galbraith has phrased it:
The market has only one message for the business firm. That is the promise of more money. (…) It must try to make money and, as a practical matter, it must try to make as much as possible. Others do. To fail to conform is to invite loss, failure and extrusion. Certainly a decision to subordinate interest in earnings to an interest in a more contented life for workers, cows or customers would, in the absence of exceptional supplementary income, mean financial disaster. Given this need to maximize revenue, the firm is thus fully subject to the authority of the market.
(See Galbraith (1967), p. 109.)
See furthermore Galbraith (1992), p. 55; Bakan (2005), p. 256; Simonet (1970), p. 47.
- 109.
The in the Sect. 6.3 proposed new fiscal logic which should characterize the functioning of the NMWO, should play an important role in contributing to these new business ethics. For instance, a fiscal skimming policy could come into play which would help to keep the level of business profits within reasonable boundaries in order to serve several other policy goals, such as preventing a market player from becoming too strong or from abusing his economic power, encouraging a reasonable price setting for products and services offered (as a surplus of profits made would be taxed away anyhow), paying a truly fair compensation to staff and (smaller) suppliers, etc. Furthermore, a policy of fiscal skimming of dividends paid to shareholders could prevent that their income would exceed certain thresholds.
- 110.
This will, henceforth, even need to be based on almost opposite principles to those of the now prevailing company law systems in as far as these, in most Western (and Western inspired) countries, are mainly aimed at maximizing shareholders profits. (See Galbraith (1992), p. 54; see also Byttebier and François (2015), pp. 221–250).
- 111.
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Byttebier, K. (2019). Some Thoughts on a Monetary Way Out. In: The Tools of Law that Shape Capitalism. Economic and Financial Law & Policy – Shifting Insights & Values, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-030-24182-7_5
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