Housing Entitlement Day

Shelter's annual affordability index, published earlier this month, shows how disastrous the house price increases have been for most people in the UK. It indicates that the price of a first home has risen from £52,674 to £159,494 over the past ten years, with house price to income ratios rising from 1.72 to 3.4. Mortgage repayments now represent 21 per cent of household income compared with 12 per cent a decade ago. This cash is returned as interest payments to wealthier home-owners and bank shareholders - another redistribution of wealth from poor to rich.


Many years ago, Spencer Fitzgibbon, a former external communications supremo for the Green Party who has now retired to write novels, came up with a brilliant policy which he called 'housing entitlement'. The idea was they we chose a day and made it law that, wherever people were living on that day became theirs.

This was a brilliant stroke - a thought experiment that requires you to question what home ownership means, and whether something as fundamental as the need for a roof over your head should ever be subject to the vagaries of the market.

So what would it mean for different groups in society? Those with mortgages would lose them instantly - no need for the stress of working to pay for housing. Those who were renting would suddenly gain home security and an asset to allow them onto an equal footing with the more prosperous members of society. These would be the winners.

And what about the losers? Mutual building societies would no longer own assets and would have to begin again by taking deposits from savers before they could lend. Private banks would also lose their assets - which would impact severely on the indirect absentee landlords who make up their shareholders. Landlords and landladies would also lose assets - the more they owned the more they would lose.

The great thing about this thought experiment is that your reaction depends entirely on where you find yourself in the present housing hierarchy, but the reality is that the majority of this people would, on average, find their well-being improved by such a policy. The overall losers would be quite a small number of very rich people.

Every now and then the government could name a new housing entitlement day. It could be about every 40 years or so - like biblical jubilees - about the amount of time it takes the greedy and unscrupulous to distort the ownership system enough for goodly citizens to really be suffering. Tweet

Thomas Atwood Award 2008

On Tuesday Austin Mitchell received the 2008 Thomas Atwood Award for his services to monetary reform in putting forward EDMs about public credit. I was able to say a few words in support of the award and reproduce them here.

The ceremony took place at the Palace of Westminster in a committee room. While we waited the Chancellor and other cabinet ministers passed by. We felt right at the heart of power, yet it is astonishing how the ideas we were talking about, which are the key ideas of our age, are marginalised from political debate.

So here is what I had to say:

For those of us who have spent our lives awaiting the collapse of capitalism these are interesting times. I work in a Management School and have lived for many years with the slogan that a threat is also an opportunity—suddenly that banal aphorism has taken on an exciting new life!

Capitalism is an economic system that focuses around money. It is a twisted game where the power to control money allows a minority to extract the energy (usually in the form of work) of the majority and of the planet itself for their own exclusive benefit. If the money system fails the game falls apart. Suddenly we are all equal—we become limited only by our own expectations.

To remake the world along just and equitable lines we need two things: a plan and the courage to execute it. It is because Austin Mitchell has demonstrated the wisdom to choose the right plan and the courage to publicly stand by this choice that he is being given the 2008 Thomas Atwood Award.

Courage is a personal matter—a matter of the heart. If we believe in something better we must overcome censorship, embarrassment and fear and stand up for that belief. But the plan is always changing as we learn more and our ideas develop: open minds are invited to engage. I will spend the rest of these few words discussing the outline of plans to change the way our money system operates at three levels: personal, national and global.

First, at the personal level, what should we do about our need to have a bank account and a credit card? There is an easy solution here, since the Co-operative Bank offers both, and other mutuals such as the Nationwide also provide bank accounts. The same applies to other financial services such as insurance and mortages, which can be switched to CIS and the mutual building societies. It is no coincidence that they are not facing the same instability and are rather having to close their doors to new business because of rising demand. Co-operative businesses do not exist to maximize profits but to provide services, and their financial services are more reliable and more ethical than those of their private-sector competitors.

At the national level, we need to be arguing for the reclaiming of the system of money creation so that it is democratized, rather than left to the vagaries of the market and the profiteering of the private sector. Banking also needs to be decentralized, so that local banks can profit from the creation of money to be invested in their local economies, as they did in Atwood’s day. To build resilience in our local communities governments should encourage the flourishing of local currencies through exempting them from tax—at least in the initial phase. And government should take on the major role for the creation of money, as Austin Mitchell’s various EDMs have argued.

Finally, at the global system, we need to go back to the drawing-board, or rather the Bretton Woods conference table. We need to renegotiate an international financial system that uses a neutral currency, as Keynes argued in 1944, and that links to a balanced international trade system. We can go further than this, and by linking the currency to carbon dioxide emissions, use it as a means to tackle climate change as well as global poverty.

We know that the money system we have is flawed, that it is breaking down. Even in its heyday it created massive inequalities and pressurized the planet; now it is failing even in its own terms. What I am proposing here is a massive, radical change and it is easy to lose heart. But the manifest failings of the existing system should give us the courage to believe that we are right.

I would be happy to work with others—especially those with political power—to discuss and develop these ideas. Together we have to decide on the model for money that we want: they we have to just do it. Tweet

Our national bank lies in ruins

The Bank of England is actually misnamed. This name suggests a bank that works for the benefit of the citizens of England. This is not its role; rather it works to support the interests of global capital. The creation of money, a fundamental requirement of a complex economy, is not under political control.

Leaving aside the fact that only England's interests are named - an anachronism that should surely be changed as part of a plan for the Bank's future - what would we propose as a new structure for an institution that has so clearly failed to protect the interests of the majority of our people?

In evidence that this is the case I offer the fact that the Bank has lowered interest rates without requiring the banks it lends money to to pass those lower rates on to customers. Instead retail and corporate bankers alike are charging higher rates on money they lend, and using the difference to inflate profits.

This is obviously greedy and immoral - but it will also prevent the positive impact of cheaper money from easing the operation of the real economy. Shareholders will continue to extract maximum value, but businesses which cannot afford credit will fold, and jobs will be lost.

We have private banks, being supported by a privatised national bank, working in the private interest. When times were good banks made the profits; now times are bad the public is expected to bear the loss. Vast sums are being added to the national debt - our children will be working to pay back money created to be put into the pockets of present-day shareholders.

When the Bank of England accepts worthless assets in return for government bonds this is the consequence. We might support such a policy to prevent the collapse of our banks, but only if we take ownership and control of the banks as part of the deal. The high-street megaliths could be broken up into a series of regional, mutual banks with members of the community sitting on the boards and all surpluses reinvested in community projects.

The current crisis is the consequence of allowing banks to operate outside political control. The global financial system is crumbling, our national bank is in ruins: it is time we proposed a nationalisation of the whole money-creation system. Tweet

Can advertisers sell us less?

Many years ago advertisers used the slogan 'Less is more' to sell us unnecessary items, a famous example being the Apple Powerbook laptop series in 2004. As the reality of ecological limits begins to bite into the confidence of late capitalism we are going to see this sort of double-think with increasing regularity.

I recently noticed an offer that Oxfam are running in conjunction with Marks & Spencer where you can take the clothes you were persuaded to buy as a result of the latter's advertising into the charity shop. They will sell your 'unwanted goods' with the proceeds going to the poor world - and in return M&S will give you a £5 voucher to buy more unnecessary items.

Since you cannot buy any clothes - probably not even knickers these days - for a fiver this is M&S giving you a small amount of money in order to receive more back. They presumably gain kudos from being associated with a development charity, but I wonder if they are also seeking 'green sheen'? Could this be sophisticated market positioning to back up M&S's dubious claims of carbon neutrality?

Perhaps the argument is something like: 'we know that you are going to engage in retail therapy and be persuaded to buy clothes that don't suit you and that you will never wear. Don't change this attitude, just make sure that rather than sending those clothes to landfill you donate them so that somebody benefits!'

Since ethical awareness removed M&S as a possible source of high-quality knickers, regular readers of this blog will know about my quest for the source of this elusive item. I recently found a card advertising a site that may have been invented just for me - Green Knickers. Apparently they sell 'pants that don't cost the Earth!' and they do come in other colours too. Tweet

Poetry vs. Greed

Shelley wrote extensively on a very modern theme: the way scientific and technological advances are used not to create the earthly paradise for all but to generate profits for the few:

The cultivation of those sciences which have enlarged the limits of the empire of man over the external world, has, for want of the poetical faculty, proportionally circumscribed those of the internal world; and man, having enslaved the elements, remains himself a slave. To what but a cultivation of the mechanical arts in a degree disproportioned to the presence of the creative faculty, which is the basis of all knowledge, is to be attributed the abuse of all invention for abridging and combining labour, to the exasperation of the inequality of mankind? From what other cause has it arisen that the discoveries which should have lightened, have added a weight to the curse imposed on Adam? Poetry, and the principle of Self, of which money is the visible incarnation, are the God and Mammon of the world.

If we substitute a word like ‘imagination’ for what Shelley called ‘the poetical faculty’ this quotation has immediate relevance to our political project.


Shelley was not alone in his revolutionary interests. Other poets of the so-called the Cockney School, including John Keats, shared his anti-capitalist views. Robert Southey, who later joined the establishment and became poet laureate, wrote a poem in praise of Wat Tyler in 1817. Coleridge and later Wordsworth joined Southey in brainstorming ideas about an ideal form of just and egaliatarian government they called ‘pantisocracy’. The aim of all these poets, now termed romantic but more accurately revolutionary, was to rekindle the energy that had led to the French Revolution around the time of their births. The group revolved around Leigh Hunt and bears his name:

The Hunt Circle believed that one could subvert power by undermining the intellectual, emotional, ideological grounds for its appeal. If one could not literally assault the Bank of England, one could raise questions about the use of paper currency and ultimately the economic system it underwrote.

This revival was successful, resulting in political unrest in the UK leading to the Peterloo Massacre, the Chartist movement and the Great Reform Bill of 1832. Several of the revolutionary poets had already predicted that an extension of franchise would be granted rather than a reversal of the economic changes which had led to wage slavery and were their real target. Rather than this message being heard the poets have been sidelined into nature-lovers and creators of beauty. The message from their verse with the greatest staying power ‘A thing of beauty is a job forever’ (written by Keats in 1817) has been transmuted into an appeal for consumption rather than the rallying call of a movement bent on restoring mankind to its natural paradise on earth, as it was intended. Tweet

Stand-up economist

Here is a guy that makes economics look as farcical as it really is:

http://www.youtube.com/watch?v=VVp8UGjECt4

What a horror story that we are still teaching this stuff to our impressionable young students. Tweet