Dr Molly Scott Cato is Green Party Economics speaker. She spoke to Al-Ahram Weekly about Green theories of money, Third World debt, and the party's opposition to the Euro The existing monetary system is a total scam. People always talk about 'a licence to print money': well, that's exactly what banks have. The banks create money by lending. Where do they create that money out of? Out of nowhere! But once this money is out there, it has massive value, because people believe in it. It's their confidence which give the money its power. They don't realise that the money itself has no real value. And they can't quite believe that the banks have this power: that's why monetary reform is always a contentious issue. We need to stop the banks making the money, and start the people making the money. If we the people made our own money, then we could decide exactly how much money we wanted to have. We could fund the Tube properly, we could fund hospitals properly. We could be making money on the basis of how much money we needed to make the economy work as it should, rather than on the basis of how much we could persuade people to borrow. Of course, we would need to determine what economic activities were actually useful. So we wouldn't be making half the plastic rubbish that's being made at present. The present system, in which money is always created for debt, is wildly unstable. You can see the consequences everywhere. How can something called Argentina be bankrupt? This is an insanity, generated by our money system. Here's a huge country, which generates 10 times as much food as its people eat every year, it has all these clever educated useful people, and loads of resources and land, and yet it can be bankrupt. So something's gone wrong. If they were given a share of a currency which represented what they're actually worth, there's no way they would be bankrupt! Or take the case of South Korea. In 1999, they had loans from the IMF and commercial banks worth $56 billion (bn). Their total external debt was $154bn, and the total value of their exports was $133bn. That gave them an apparent trade surplus of $39bn. But that surplus is only apparent! The debt is owed by the government, but the profits are earned by the companies. Many of the companies are multinationals, so much of that income is simply appropriated overseas. Even if they were all domestic earnings, the government could only use the tax revenue it gets to repay foreign debts. And this is a 'successful' economy! Imagine what is happening in sub-Saharan Africa. So on the one hand, that debt will never be repaid. But on the other, if it was repaid, the money which the debt had created would cease to exist, and the whole world would be cash- strapped. We are using these debts to buy solvency for our own currencies and economies. And the cost of that is all the poverty and deaths we see in the South. Through my involvement in the monetary reform agenda, I've met people from the British Islamic Party, and from the mosques. What Islam has to say about trade and money seems very close to what Greens are saying. For example, the objection to interest, which of course is there in Christianity as well, it's just that over the years it's been forgotten. If you lend people money, and they have to pay back that money with interest, then you've created a little bit of extra money value, so you have to create the economic value to match that. That is why we always have to have economic growth: to support the money system. We don't like capitalism very much, and the Muslims I've met seem to be getting to the heart of what is wrong with capitalism. For them, business isn't about: got to get bigger! Got to expand! It's about earning a living, not making a profit. That's a distinction which Green economics makes as well. We'd like to see lots of different currencies for different purposes, not one single imperial currency. International trade could be conducted in a currency that represents the true costs of trade -- something like Richard Douthwaite's Environmentally Backed Currency Units. National economies would still be run in their own particular currency, and if you had a depressed local economy, you could set up a currency there to encourage a local economic activity. This kind of thing has been done in the past, and it works. The basic purpose of the Euro is to allow Europe to retain its place in the world trade system, which would otherwise be completely dominated by the dollar. The result will not be a new financial system, but just a continuation of the old financial system -- the system which has created all this debt. As far as Greens are concerned, the Euro is just an encouragement for European businesses to get more involved in free trade, at the expense of people and the planet. EU businesses want to buy up their share of the world, and the dollar is stopping them from doing that. Reducing the volume of world trade won't necessarily mean mass unemployment, or a global recession. Instead, you'd have more self- provisioning, more doing stuff for yourself, more local exchange. Now you buy your food made by the market, you get your child care from the market, you get your clothes made by the market. We'd like to see a movement back to doing more for yourself, and getting people locally to do more for you. True, we would have to give things up. But they're things which I would count of very little value. When you live in a market economy, you lose a lot of things which you had before, in terms of your identity, your place in the community, your sense of purpose. Because you're essentially just selling your labour in return for money, which you then use to buy a load of rubbish, the latest gadgets and other plastic crap, so as to reinforce your sense that you are getting somewhere. This is the only sense of value and meaning and identity which you have. What we're offering in return is a genuine useful place in the community, doing something valuable. I think that people in the South are much smarter than we are, because they haven't lived with all this capitalist propaganda. So they tend to see through the smoke screens a lot better; they're much better grounded. The movements against GM and the local farmers' movements in India are absolutely aware of what's going on, for example. In the North, we've learned to be stupid, because of all the propaganda we've been given. It takes a long time to think your way out of it. From Boston to Babylon New Labour, new empire?
