18 September 2008

Money, money everywhere

I had another horrendous train journey yesterday - I was facing the prospect of a two-and-a-half hour delay on a two-hour journey when I took direct action and cadged a lift. The explanation was 'incidents in tunnels' which has made me think about 'leaves on the line' and, more relevantly, 'the wrong kind of snow'.

Perhaps this is what Marx meant by the contradictions of capitalism? During the floods, which were our local learning experience of last year, we found ourselves deluged and yet short of water. This year our economy is short of cash because of an excess of credit. The recession that we are jointly embarking on has been the result of the uncontrolled creation of the wrong kind of money: debt money.

The link between rail disasters and monetary disasters is that we should not allow control of the most fundamental structures in our economy to be in the hands of privateers. Railtrack, at least, is now back in public hands; the money creation system should follow. This is not to argue for the abolition of private banks, just to suggest, as James Robertson and Joseph Huber do in their excellent book Creating New Money, that they should perform a standard retail function rather than being allowed absolute power over the extent of credit in our economies.

Such a system would not only stabilise the money system, it would have the added benefit that the value of the money created would be in public, rather than private, hands. It would be available to be invested in public projects or used to pay off the national debt and generate tax cuts, depending on the preferences of the government in power.

The debate is now focusing on whether or not the carnage we see around us representss capitalism working or failing. All I can say is that if this is a system working, it just isn't a very good system.

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