Adventures of the Famous Ten: Part 2

(a possible conclusion by Dermot to Ash's story A debt-based currency illustration)

Summary of Part 1 (by Ash)

Regular Occupiers, Uncutters and Positive Moneyists will remember that the ten shipwrecked artisans had built a reasonable life for themselves on their desert island by all doing what they were good at, and then bartering, swapping or gifting the resulting goods and services according to individual need. The system did, however, seem a little unwieldy. So that when the banker’s private yacht sank nearby and he joined them on the island with his bag of gold coins, it wasn’t difficult for him to persuade the others to use his gold coins and adopt a banking system, with himself as the sole owner of the bank.

Part 2 (by Dermot)

The original ten soon realised that they had been duped. Their quality of life had declined markedly and several of them were completely destitute. So at an arranged time, they descended on the banker in his luxury shack, dragged him to the ablutions lagoon and chained him to a stout post.

A sign at the top of the post read: ‘Bozo.’ This was short for bog zombie, a job title they coined especially for the banker. Toilet cleaning was not seen as demotion (except in the eyes of the banker, of course) for the islanders rated every job as equally necessary. But, he had lost their trust and would have to do long hours in this job for quite a while.

All the gold coins were collected up and used to make some very fetching jewellery.

Then they turned the banking operation into a cooperative of which all newcomers, by birth or shipwreck, would immediately and automatically become members. The jointly owned ‘Cobank’ (isolation was giving rise to a new language) was declared sole owner of all the cowrie shells that lay around on the beaches. These were to be the new currency on the island. They called them ‘credits.’

Hitherto, the cowries had only been used as decoration and they were chosen as credits because there were so many of them that there would never be a shortage. Of course, every individual had to be trusted to only hold and use the credits they had earned, and not go down at night and collect cowrie shells by the bucket-load. But, no civilised society has ever existed that wasn’t based on trust, so this wasn’t judged to be a drawback.

Credits were given to individuals at the rate of one per hour of reasonably diligent work done. It was left to individuals to choose what work they did. This was successful because no one wanted the embarrassment of producing something that didn’t get used or offering a service that no one wanted.

Under the system of Cobank credits, production and consumption of individual daily requirements soon returned to pre-banker levels without any serious disputes. But there was still a problem. Paths and jetties were constantly in need of repair. Several children had already appeared on the island (by the usual method – no shipwrecks or angels were involved) so a crèche was needed. Furthermore, some entrepreneurially-minded individuals were always proposing improvements to the way goods and services were produced.

So, how to pay for work carried out for the general and future good? Credits were needed in the present to pay for infrastructure and investment type work. Yet, the extra credits resulting from higher productivity would not be available until some future date.

This was exactly how the banker had seduced them into the gold coins scam. He told them that the only way to solve the problem was let him have the job of handling the gold. He would decide in what, and in what proportion, to invest.

After the banker had accumulated all the surplus gold, he found that he couldn’t spend it all anyway, even when he lay on a couch and consumed all day long. For the sake of his health (he had become quite obese) he was forced to invest much of his wealth. Furthermore,  he was the only who could afford to invest!

The original ten were going hungry and walking around in rags.

‘Invest? Don’t make me laugh,’ they said.

The islanders decided to not be too hard on the banker though. Clearly, he had somehow persuaded himself that everybody else was too stupid to understand the importance of investment. That only he could be trusted not to consume everything immediately. This had to be some kind of mental weakness on his part. Every five year-old in every society on Earth has, for the past ten thousand years, understood perfectly well that:

‘You don’t eat your seed corn!’

After a year, the banker was unchained and allowed to do other jobs like anyone else.

Still, the good islanders had to make sure that they never allowed anything like this shameful situation to recur. 

It was then that Sam the shell artist (his cowrie collages were superb) pointed out that the cowrie shells were of different colours. Some had green backs and others had brown backs. If everyone was paid with both types of shell, the greenbacks could be spent on immediate consumption and the brownbacks on investment. Individuals would decide how to deploy their brownbacks, effectively democratising investment and preventing any more banker take-overs.

A Cobank sub-committee of eleven, called the MPC (Maximisation of the Proportions of Cowries) could meet annually to decide the best ratio of greenbacks to brownbacks in pay-packets.

One further refinement was necessary. When an infrastructure organiser or entrepreneur had accrued enough investment brownbacks to carry out a particular project, they took a proportion of them to the Cobank and exchanged them for greenbacks to pay to workers who carried out the  work. So there was still an element of centralised, but genuinely democratic, oversight of investment projects.

Oh, I nearly forgot. Bog zombie was a very unpleasant job. How did they get a replacement?

Simple! By agreement, bozos worked fewer hours. Someone was always prepared to do unpleasant work in return for more spare time to do other things. Conversely, popular jobs carried more hours.

And the moral of the story?

Private banks, fractional reserve banking, marketisation, privatisation, competition, inequality, poverty … are claimed by neoliberals as the only way to run society. Actually, the alternatives are endless. The above story shows just one alternative.

So, are we witnessing ‘The end of history?’ Hardly!

Better ask, ‘Has history begun yet?’

Or, ‘Are we stuck in a ghastly, pre-historical, cul-de-sac?’

It seems so.

Dermot

11 December 2012