The Green American interviews Dr. Bernard Lietaer
"Bernard Lietaer is the author of the forthcoming Of Human Wealth and The Future of Money (London: Random House, 2001), and has been studying monetary systems for over 25 years. While at the Central Bank in Belgium, he co-designed and implemented the convergence mechanism to the Euro, the European single currency system.
He is the co-founder and chair of the ACCESS Foundation, http://www.accessfoundation.org an educational nonprofit that educates the public about best practices in the domain of complementary currencies. He is currently a Fellow at the Center for Sustainable Resource Development at UC-Berkeley.
This interview, conducted by Green America Editor Tracy Fernandez Rysavy, complements "Re-examining the Structure of Money," a piece that appears in the Spring 2009 issue of the Green American, From Greed to Green."
TRACY FERNANDEZ RYSAVY: Green America’s executive director Alisa Gravitz told me that you long ago predicted our current economic downturn and have been saying it’s going to last at least ten years.
BERNARD LIETAER: I’m not the only one saying that now. There have been a handful of people in the States who were predicting this. Paul Volcker was one. Nouriel Rubini at New York University. I was one of the early ones—I first wrote this in 1999, predicting that before 2010, we’d actually hit the wall.
Rubini said this recession is going to be long, deep, and brutal. Nobel Prizewinner Joseph Stiglitz, the ex-head economist at World Bank who’s currently at Columbia University, said that in the beginning of a recession, the debate between economists is whether it’s going to be a "V"—deep and short—or a "U"—not as deep but longer, as in three to four years. He says this one could possibly be in the form of an "L"—hitting the ground and staying there.
TRACY: Why did you see this coming, when very few people didn’t?
BERNARD: This problem is structural, and it is being treated as if it were a cyclical problem, or a managerial problem, in that things were badly managed. The kinds of solutions the federal government is doing, like dropping interest rates, saving the banks, saving some key businesses and doing big projects—all these things have been tried for 18 years in Japan. 18 years.
And Japan is now where they were then, 18 years ago [when the country entered its own banking and economic crisis].
When I say the problem is structural … let me give you a metaphor. Let’s assume I give you a car. And I say "By the way, that car doesn’t have any brakes, and the steering wheel doesn’t work one time out of two." Then I tell you to drive it across the Rockies.
Guess what? You’re going to have an accident! That’s pretty certain.
Now I come back to you and say, "What a bad driver you are!" And, "Oh, gee, they really didn’t do a good job on those maps. They didn’t warn you about that curve where you crashed."
What we’re doing with the regulations to "fix" the economic crisis is akin to saying that the way to prevent an accident in the car I gave you is to make better maps. Nobody is saying the car is the problem, i.e. the system you’re driving is the problem.
Our money system is structurally brittle. It doesn’t matter if you put a very clever guy or a stupid guy at the wheel. The clever guy will take a half hour to have an accident, and the stupid guy will take ten minutes.
I know the structure of money systems. If you have a professional look at the car, they can tell you, "Don’t drive that thing." That’s what I’m saying about the current money system: Don’t drive that thing. It will get into an accident.
TRACY: What is wrong with our monetary system today? Why shouldn’t people "drive that thing?"
BERNARD: Basically, for any complex to be sustainable needs to have a balance between two factors: resilience and efficiency. These two factors can be calculated from the structure of the network that is involved in a complex system. A resilient, efficient system needs to be diverse and interconnected. On the other hand, diversity and interconnectivity decrease efficiency. Therefore, the key is an appropriate balance between efficiency and resilience.
This is more understandable in ecosystems. One animal that can eat only one plant is going to get more easily on trouble than a more omnivorous one. If that plant gets in trouble, the animal will become extinct. If he eats 50 types of plants, when one plant gets in trouble, he can just eat some of the others.
The same thing is true for whatever eats that animal. It’s a chain of the appropriate levels of diversity and interconnections—which are the key to sustainability. We have know been able to measure quantitatively the conditions under which any complex flow network will be sustainable as a function of these two structural variables of diversity and interconnections.
Our economy is precisely a complex flow network where money circulates, similar to biomass circulating in a natural ecosystem. When you apply what we learn from ecosystems to money systems, it’s clear that our current money system is a monoculture, and that creates problems. Just imagine that you plant one type of plant on the whole planet and eradicate everything else.
It’s very predictable that one day, that crop will get in trouble. We don’t know have to know from what—whether a new microbe or climate change or whatever. It is structurally brittle. Look at any financial institution, at any bank. They’re all photocopies of each other. There’s no diversity of institutions and even less diversity of currency. Therefore, just as you say its very logical that an ecosystem like this will collapse, it’s very predictable a monetary system like this will collapse, too. And it hasn’t finished collapsing, by the way." (snip) ...
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