A Foundation Story for a Wellbeing Economy : to change the economy, the narrative must be re-written.
By David Murray
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The Tale of the Shadow of Doom
There appears to be a shadow of doom over the UK economy. This is reinforced by media, academia and politicians, the main institutions society should turn to when some self-correction is required. Instead of leaping into action with innovation and creativity, there is only stagnation and inertia, the ‘no alternative’ tale that people are tired of hearing.
It tells of a population who are self-interested, competing for scarce resources in a finite world. That government is inefficient and should take a back seat to allow the markets to perform their magic freely. Light touch regulation and low taxes allow the rich to invest in productivity for consumers to enjoy, and entrepreneurial activity to take humanity forward.
If fate deals a bad hand and there are impediments to one’s ability to succeed, that is unfortunate but do not expect any distributive compensation. It is not the duty of the successful to suffer for other’s misfortune. Should the great people deign to offer some charity one should be grateful.
The markets are all knowing. With a free rein, they will set price, unemployment rate, interest rate and the economy will run like clockwork.
The Tale of the Origin of Money
To help justify this tale, there is a specific origin story for money.
Money, it is said, rose from trade/barter and the need for an intermediary unit of account to mitigate the double coincidence of wants. This could have been any commodity, seashells, coloured or precious stones, but eventually gold and silver were generally accepted as the best options. These precious metals have ideal characteristics for the job, as they are malleable, portable, scarce and valuable.
Carrying these money tokens around was insecure, so to avoid robbery, the gold/silver was deposited with goldsmiths. These artisans were experienced in storing large quantities of precious metal securely. In return, they would provide the depositor with a written receipt.
These receipts were found to act as abstract representations of the metal and to be convenient to transfer, and thus, banking and paper money were born.
It is a great story, and very plausible, however, there is no historic record of this ever having been the origin of our modern money. Anthropologist, David Graeber, wrote, “Many have sought this fabled land of barter – none with success.”
Instead, this story is the bulwark on which the UK economy has been based for over half a century. It is very difficult to justify a wellbeing economy, or to provide a workable framework for such a system from this tale of individualism.
Instead, a narrative based around mutual self-interest would exemplify the real social benefits of the wellbeing money story. It can also highlight the true formation and purpose of government in society. So….
Let’s Change the Story. Are you sitting comfortably….? Then we’ll begin.
Imagine a Scottish coastal village, centuries ago. The citizens live a hard life, gathered in a community for security in numbers. The people live a subsistence existence, hand to mouth, gathering food, water, and fuel, daily, their only purpose is survival. This is true rugged individualism. Each person carries out chores in the same way their family has done for generations. In an individualist culture, advancement is difficult and incremental, due partly to the conservative desire for tradition and aversion to change.
The people gather in evenings and discuss ideas. They realise that infrastructure improvements could improve their lives but understand they lack organisation. A decision is taken to attempt a community project, the construction of a harbour. Everyone in the village would like a harbour, they will all benefit from the harbour and they are all willing to put the work in to make it happen. A start date is set. However, the citizens have forgotten one crucial factor.
As a result nobody turns up for work at the agreed time.
This is because subsistence living is a full-time job. Not only that, it is a matter of life and death for a citizen and their family. The harbour project, desired as it is by everyone, is a nice to have luxury in comparison to family survival.
This is the origin of this money story. An imposed tax, with life changing punishment for non-payment, and the creation of a currency to pay the liability, raises the value of collective work to a level equal with individual daily provisioning. In many cultures over millennia this has been enacted through force by authority or colonial settlement. In this story, however, although a nominal threat exists, it is never realised. The people recognise the collective benefit accrued by the tax obligation.
To continue our tale…
Through the discussions, it became apparent who held specific skills or knowledge on different aspects of the project. These became the elected authority for the harbour construction.
These leaders call a meeting and place a pot of inscribed slate chips on the table at the front. They announce the tokens are required to pay the new hut tax. Every household must produce ten tokens at the full moon at the end of the month or their hut will be burnt down. For each day that a citizen works on the harbour project or any future collective scheme, they will receive a token.
Next morning there is a queue of willing workers waiting to be allocated jobs. The work gets underway. The entire community is involved. Those that are not working on the harbour project now have to work harder to collect more than before. It is easy to envisage how this could lead to innovation through necessity to increase production. Even in areas previously deemed traditional and unchanging.
The workers and their families desire insurance against illness or inability to work so a natural propensity to save arises. People work to earn more than is required to pay the tax liability. This allows a deficit to build in the economy, the tokens paid out by the authority but not received back in tax. This deficit allows private sector transactions between the people.
The point of the tax is to incentivise work that everyone desired. The construction of the harbour would be an exponential advancement in living standards for the community. The currency has value because of the tax, and the fact it is collected back by the authority (the revenue) means that the people are incentivized to turn out for collective work next month. The tax is not required to pay for anything, the authority can create any number of the slate tokens.
The government (synonymous with the people) needed to incentivise people to value working for the collective as highly as they valued working for their own survival. The tax, with the attached threat, achieved that. This is obscured in modern society, but the threat of jail for tax avoidance is well recognised.
It is also important to recognise that the public and private sector are not really in competition, despite what the established narrative may tell. Both are employed in creating output to raise living standards.
This is the foundation of our wellbeing economy and the true nature of government. To be truly democratic, power must be held at the local level, thus allowing citizens to elect peers, they know very well, on merit.
Our wellbeing society builds from the bottom, up.
David Murray is a guest contributor to our blog.
About himself David says: Born and raised in Kilmarnock, I now live and work in West Lothian. I always felt a bond with nature, which guided me towards studying horticulture. This led to a career, close to the soil. In recent years, my attention has been drawn to the economy and politics. There appeared to be obvious contradictions between narratives spun during the Financial crisis to those of the Independence Referendum. Modern technology has created time for study as I work. I also write for ByLines Scotland.
- Some of David Graeber’s ideas about barter and coinage are described here: On Debt and the Myth of Barter
- Interested in economic ideas? have a look at our Economics & Currency Playlist
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