Bernard Lietaer (blietaer@earthlink.net)
Dr. Robert Ulanowicz (ulan@cbl.umces.edu)
Dr. Sally Goerner (sgoerner@mindspring.com)
Executive Summary:
The ongoing financial crisis results not from a cyclical or managerial failure, but from a structural one. Part of the evidence for this assertion is that there have already been more than 96 other major banking crises over the past 20 years and that such crashes have happened even under very different regulatory systems as well as at different stages of economic development.
We urgently need to find better solutions because the last time we faced a breakdown of this scope, the Great Depression of the 1930s, ended up in a wave of fascism, and World War II.
However, so far the conventional solutions being applied -- nationalization of the problem assets (as in the original Paulson bailout) or nationalization of the banks (as in Europe) -- only deal with the symptoms, not the systemic cause of today's banking crisis. Similarly, the financial reregulation that will be on everybody's political agenda will, at best, reduce the frequency of such crises, but not avoid their reoccurrence.
The good news is that a systemic understanding and technical solution are now available that would ensure that such crashes become a phenomenon of the past. A recent conceptual breakthrough that takes its evidence from balanced, structurally sound, and highly functioning ecosystems now proves that all complex systems, including our monetary and financial ones, become structurally unstable whenever efficiency is overemphasized at the expense of diversity, interconnectivity, and the crucial resilience they provide. The surprising systemic "a-ha" insight is that sustainable vitality involves diversifying our types of currencies and institutions and introducing new ones that are designed specifically to increase the availability of money in its prime function as a medium of exchange, rather than for savings or speculation. Additionally, these currencies are expressly designed to link what would remain otherwise unused resources with unmet needs within a community, region, or country. These currencies are known as "complementary" because they do not replace the conventional national money, but rather operate in parallel with it.
The most effective way for governments to support such a strategy of a more diverse and sustainable monetary ecology would be to accept a well-selected, robust complementary currency in partial payment of taxes during the period when banks will not be in position to fully finance the real economy. The choice of which complementary currency to accept reflects both a technical issue (robustness and resilience against fraud) and a political one (what type of activities are desirable to support). We recommend as first candidate for this role a professionally run business-to-business (B2B) complementary currency on the model of the WIR system, which has been successfully operational for 75 years in Switzerland, involving a quarter of all the businesses in that country. This system has been credited by an American econometric analysis as a significant countercyclical stabilizing factor that explains the proverbial stability of the Swiss economy.
© B. Lietaer, October 2008
For additional information:
http://www.lietaer.com/crisis2008.html
http://www.ithacahours.org/
http://www.wir.ch/
###
PRODUCTS