We have discussed the importance of being clear when we talk about types of government, money systems or economic systems. However, because authenticity and trustworthiness require some form of power and authority, we need to touch on the realm of governance. Just keep in mind we’re talking about governance per se, and governance takes many different forms, which are not the subject here.
Every money system that ever existed has been overseen by some authority responsible for assuring the money system has integrity, people keep their promises, and pledges and property receipts can be redeemed. Authority may be unwritten cultural norms and consequences, or written laws requiring people are good for their promise, pledge or IOU. In small communities, people may know everyone’s history and who is good for their word, and unwritten norms will suffice. Larger communities that include strangers, must depend on some established authority – government and laws.
The past 200 years have been deeply influenced by a powerful myth: the authority called the free marketplace. In this imaginary place, trades can be managed and predicted with mathematical certainty, or at least a high degree of probability, because they are all rational. It is a place where, when everyone is free to do as they want, the marketplace will become an all-knowing, magical and invisible hand that establishes the true value and measure of all and everyone – in monetary terms, of course. Efficiency and the ability of money to make money are the highest values in this mythical place, dubbed laissez-fairyland by LA Times journalist Joel Havemann back in 1991.6
The myth of the magical marketplace birthed the field of economics as a subject that could be studied scientifically. According to the misconception that everyone is rational, if one figures out the correct mathematical formulas, collects the right data and plugs it into a computer – Presto! we get an economic theory with which to manage economies or make stock picks.
It is a false and dangerous premise. For example, in 2000 a mathematician named David X. Li created a formula called the Gaussian Copula Function. In February 2009, Wired magazine described this formula as
…an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.7
Risk was supposed to be readily managed and reduced almost entirely. It wasn’t. And, this blind faith in mathematical predictability and the free market put the entire global economy into a tail spin and depression.
No valid study of economics can consist solely of mathematicians playing with numbers and relying on the market’s invisible hand. Humanity’s interrelationships are deep and seldom predictably rational – even by chaos or evolutionary systems theory. Society, government, cultural values, healthy, wealthy and wise individuals, business, resource extraction, and waste are inseparably interrelated.
A money system is by definition a community-wide system – and every community has some form of authority and governance. Free market advocates want the invisible hand of this mythical, rational marketplace to rule as the ultimate authority. They want political government to leave them alone – free to do as the market will allow. In essence, they are demanding those with the most money rule, because that is the predictable outcome when money is given free rein — it reigns.
Trustworthiness and wealth
Wealth and the power it bestows establish the trustworthiness of most money by serving as a form of guarantee. This wealth can belong to an elite few who one hopes will act ethically and morally – or who are considered divinely sanctioned to act any way they want and it will be considered the way of the world. Or this wealth can be the common wealth that is shared by all, some legally owned by individuals, some owned by the public.
The notion there should be no common wealth, individuals should own everything and they should be free to do as they want with what they own, is part of the myth of the magical free marketplace. The idea is that all these private owners will act rationally to protect their investment and everything will work out for the best. This ignores that we live in community and the well-intentioned, ignorant, or selfish actions of others can do irreparable harm to all of us – and do so, on a daily basis (Chapter 6).
In reality, we share in the common wealth of our communities and our nation. A safe community, with good schools, public libraries, efficient transportation systems, high speed internet for all, accessible health care, abundant recreation, and social spaces for gathering, is a prosperous and wealthy community. When the common wealth is rich, so are the citizens. When the common wealth is depleted and only the rich can afford some measure of well-being, the community is stressed and unhealthy. Just as a chain is only as strong as its weakest link, a nation’s common wealth must be measured by the health and strength of its poorest community.
In reality, we share the common wealth of a healthy planet. We breathe the same air, and drink water from a globally connected system. We rely on the planet’s limited arable land for our food. The healthier our planet, the healthier we will all be. We only have one planet and we are on this big blue space ship together.
The idea of wealth and common wealth and the roles they play in a society strays into economic and political theory. However, it intersects with monetary theory; wealth can guarantee that a money is trustworthy – whether the wealth is owned by individuals or governments.
NOTE ABOUT WORDS. I struggled to decide what to call the wealth of a nation – the wealth that makes a nation rich. This is the wealth that can be enjoyed by everyone. It is wealth that enriches all our lives. It is the foundation of society.
Common wealth is wealth that can be owned by individuals. For example, we are all richer when there are many food choices – grocery stores, delis, restaurants. We are all richer when there are many wonderful and affordable entertainment choices. We are all richer when technological innovations make life safer and healthier.
Common wealth is wealth that can be owned by the public. For example we are all richer when we have public parks, good roads, excellent public services.
Common wealth is wealth that cannot be owned by anyone. For example, we are all richer when we breathe clean air and drink clean water. We are all richer when our arable land is enriched and sustained. We are all richer when biodiversity and ecosystems are healthy and sustained.
Commonwealth as one word is a synonym for republic. It usually refers to a political construct. Sometime it works and conveys what I mean by the wealth of our commons. And, sometimes it doesn’t. When the meaning can be synonymous with republic, I’ve used commonwealth. Otherwise I’ve opted to use the two words common wealth.