Thursday 9 April 2015

Iceland, the Greens and the money revolution

The Green Party is a bit of a conundrum.  Go to their events and you find a strange division between the articulate, highly effective handful of activists who make things happen and the rest - who tend to be mildly misanthropic, angry types.  Perhaps a bit like me.

I have no difficulties at all with their basic premise.  It is the overlay of mushy do-gooding kind of unthinking positioning on the left that I find infuriating.  It shows little or no thought about the real changes that a greener society would require, especially a society no longer in thrall to economic growth.

They are against student loans, and heavens they may be right - but it isn't a principled stand.  It is a thoughtless one.  Especially as, behind this unco-ordinated positioning, there seems to be a great deal of equally uncritical rage.

I understand this positioning is designed to attract disaffected Labour and Lib Dem supporters, who would - I would have thought - come to them in even greater numbers if they had genuinely thought through the kind of policies we need.  But nobody has.

Consequently, they are blocking progress towards the big shift we need - which will have to attract the conservative right as well as the conservative left if it has any chance of shifting the political world on its axis.

But then, the Greens have at least had the guts to propose a bold Liberal solution: a citizen's basic income of £72 per person, as of right.

This is a traditional Liberal policy, proposed originally by Conservatives working with Beveridge, who saw it as an antidote to the huge bureaucracy of welfare state means-testing.  It would set people free from poverty in a dramatic and effective way, and it would slash the corrosive bureaucracy of welfare.

The trouble is that the Greens have not costed it.  Nor is it possible to cost.  As far as I know, nobody has found a way that such a policy could be even marginally affordable under the current design of money.

When the Social Credit Party of Alberta took control in 1943, their similar basic income proposals were ruled illegal by the Canadian supreme court, since when nobody has even tried.  But changes are happening elsewhere which might make this idea more practical.

The Prime Minister of Iceland, Sigmundur David Gunnlaugsson, has commissioned a report proposing a change in the way money is created.  At the moment it is created by banks in the form of loans, and inflation is controlled by altering the central bank interest rates.  The proposal is that this should change: money would be created interest-free by the central bank instead and issued into circulation - well, that isn't clear, but potentially as a citizens' income.

This is an outline of a far more stable economic system.  Its other implications are not clear either, except that it would change domestic banks from money-creators into money-warehousers.  It is the proposal put forward in the 1930s by the Chicago School economists, and never enacted.

If Iceland goes ahead - and they might - this could herald one of the big shifts in economics everywhere.  If it fails, of course, it will be forgotten.  But if it succeeds in creating a more stable economic system that spreads prosperity, other countries will follow suit.

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Anonymous said...

Good article. George Monbiot is strongly backing Caroline Lucas he (used) loved the idea of recession he wrote an article called “Bring on the recession”, in which he argued that, as “unpleasant as it will be”, and yes, “some people [will] lose their jobs and homes”, a recession might at least help prevent “ecological disasterYou

skintnick said...

It's also discussed here but comments make clear that it is very unlikely these proposals will actually be adopted in Iceland any time soon :(

Dr Purva Pius said...
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