(Photo: dewo / Flickr)Our money system is ill-equipped to help us solve the pervasive socio-economic and ecological challenges we face. Transformation of our money system is critical because monetary diversity is just as important to human survival as biodiversity is to the fate of the earth.
There is a lot that we can learn from nature, and one important lesson is that diverse systems have greater strength and resilience. When conditions change, various components within a diverse system will step in to pick up where others fail. The weaknesses of monocultures are evident in agricultural systems where crops either flourish or wither each season. We also know that using permaculture, in which multiple types of plants are grown together to fill different functions and aid each other, creates greater abundance.
Less obvious is that these same principles can be applied to monetary systems. The dominant type of money, a fiat currency, essentially a mono-currency based on debt and scarcity, is failing most of us. Inherently, it encourages competition and hoarding, traits that mean some will win, and some will be left out. It is also required to perform functions that are at odds with each other: to both circulate in the economy and to be accumulated for future use. And it requires constant growth to survive, a trait that becomes more maladaptive as we bump into the limits of a finite planet.
Alternatively, new types of money are being developed to complement the dominant currency. Over the past 40 years, the number of complementary currencies has grown from two to many thousands. Time is proving that these new currencies can be designed to fulfill vital functions that the dominant currency cannot and that they actually strengthen the overall monetary system. This is leading to a whole new way of thinking about money.
Money is an agreement between people about how to structure exchanges. It can be used to connect unmet needs with unused resources, however a community decides to define those terms. And money can be designed to shape behavior in ways that are positive for individuals and for society, that encourage cooperation, trust, protecting the environment and sharing prosperity.
The transition to a more diverse monetary system is happening largely outside of governments and large financial institutions. People within communities are working together to solve problems and meet their basic needs. It is possible to create what Jacqui Dunne, coauthor with Bernard Lietaer of Rethinking Money: How New Currencies Turn Scarcity Into Prosperity, calls "sustainable abundance."
And as long as complementary currencies are designed in ways that are transparent, hyper-democratic and restorative, they will avoid the negative forces of the current system that defaults to increased wealth inequality and isolation of individuals. We are in the early phase of a transition, from the industrial age to the information age, from growth at any cost to sustainability and from competition to cooperation. Conditions are ripe to create the kind of world in which we want to live and to fund it using a diverse monetary system.
Debt-based Currency Creates Scarcity, Competition...
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