Interview with Bernard Lietaer
by Pamela Gerloff
natural to be generous and to share our resources? Maybe,
says Bernard Lietaer, author of 10 books, including
Future of Money: Creating New Wealth, Work, and a Wiser World
(Century/Random House, 2001) and
Of Human Wealth: Beyond
Greed and Scarcity
(ACCESS Foundation, 2003), but it goes
against our cultural norms. And that, he maintains, is the
fault of our money system. Our money system shapes us, fostering
particular emotions and behaviors, thereby affecting fundamental
aspects of society. To create a giving society, change the
way our money system works. Sound impossible? Not to Lietaer.
He says it's perfectly do-able, and within a single generation,
Is this an entirely
new way of thinking about money?
it to be a new angle. The reason is that I have been exposed
to money systems from a variety of perspectives, in a way
that few people have. My friend Willis Harman, who was the
founder of the Institute for Noetic Sciences and a mentor
in my life, said I had been trained for 25 years to look
at money systems as no one else has. Most people believe
that the existing system is the only one possible. The image
that comes to mind is that humans are to money like fish
are to water. Fish are born, live, and die in water. That
is why it is so difficult for them to understand the nature
of water. Similarly, we humans live within our money system
and it is generally transparent to us. But I've been tossed
around a few times and become a flying fish, so I've been
exposed to our money system from the outside. That's why
I may have a different perspective on money.
If what you say
The Future of Money
is true, the ideas you introduce
are startling in their ability to get at the root of core
social problems, such as poverty, the breakdown of the family
in Western society, and even, perhaps, violence. They can
also make us more generous people.
money system affects, in particular, our emotions and relationships.
Money systems can promote greed and scarcity or generosity
and abundance. Therefore, different money systems have predictably
different effects on individuals, communities, and societies.
And this is not
theoretical; it is based on empirical evidence?
Yes. In the
world today there are several thousand communities that
are experimenting with non-conventional money systems operating
right alongside conventional money. These exist in places
like the United States, Europe, China, and Japan. And we
now have considerable evidence that different currencies
create different behavior patterns and relationships among
the people who use them.
What are some
of those behavior patterns and relationships and how can
a money system do all of that?
Let me start
first by defining what money is, and is not. It is not a
thing, though it may appear to be one. If you have a thing-say,
a pen-and you go off to a deserted island, you still have
a pen; it will still function as a pen on the island. In
contrast, money is an agreement within a community to use
something as a medium of exchange. Therefore, when you take
money to your island, the money becomes simply a piece of
paper or metal or whatever. But it is no longer money because
on your island the agreement has become meaningless.
Because money is an agreement within a community,
we can design money to be almost anything we want it to
be. For example, it can be a piece of paper, a coin, practically
any item, or a service performed. When we agree to consider
something an acceptable medium of exchange, we have established
a form of currency.
And because money
is an agreement, it exists only where relationships among
very existence of money implies a community within which
the medium of exchange is acceptable to all. The community
could be a group of friends who meet to play cards and use
tokens as money. The community could be a temporary one,
such as soldiers on the war front who used cigarettes as
a medium of exchange. Or it could be the world community
in which an exchange agreement is reached by treaty, as
in the case of the Bretton Woods agreement in 1945, which
made the dollar acceptable reserve currency worldwide.
You say that the
kinds of relationships that result from money exchanges
are different, depending on the currency system you're using.
When you go to a store and buy a pack of batteries, you
pay with dollars and the transaction is over. It's complete;
something has been exchanged for another thing.
However, in what is called a gift-giving
economy, when you make a transaction, something very different
occurs. Let's say you're on your way to the store to buy
some AA batteries. Your neighbor, sitting on his porch,
sees you. You stop to chat and he says, "Oh, I have some
extra batteries. Here, you can have a couple." Now you have
the batteries; you have made a transaction. But it's an
"open transaction" -a reciprocal exchange has not occurred.
So you now have a connection to your neighbor that, as a
human being, you are not likely to ignore. Perhaps the next
time your neighbor runs out of milk, he'll knock on your
door and ask if he can borrow some. A relationship has been
formed or strengthened.
And when relationships
are formed, community is built.
Gift exchanges actually build community. In fact, the word
'community' derives from the Latin cum munere, which literally
means, "to give among each other." So in our language itself,
there is the recognition that community is related to the
act of giving to one another.
It seems that
the idea of reciprocity is important to your concept of
community and gift-giving. In community, there is a giving
back and forth. The giving isn't in only one direction.
tend to become reciprocal. When I give you something, someday
you will give something back- either to me or to someone
else in my community. In contrast, commercial money exchanges
are a closed transaction, so no ongoing relationship is
formed. I give you the money and you give me the item or
service and we're done. Neither of us owes anybody anything.
It's an effective means of exchange, but it doesn't tend
to lead to community building.
And this is true
within the family as well?
Yes. We used
to live in extended families. In fact, we can still observe
such extended families in southern Italy and South America,
where a familia typically consists of 70 or 80 people. But,
gradually, there has been a systematic worldwide trend toward
replacing extended families with nuclear families. Why?
Part of the answer is that we now have money exchanges within
the extended family. When Granddad moves in, we expect him
to pay for his housing with his pension. When our children
do household chores, we pay them for their work. Such monetized
exchanges fail to create relationships of reciprocity. The
parents have given their children the gift of life, the
gift of education, and so many other things. If the children
don't have the opportunity to give back to their parents,
they are unable to participate in an essential aspect of
The "giving among
Yes. So when
you start paying your son to cut the grass, you may unwittingly
undermine the family.
So how do we restore
families and communities through our money system?
now are using "local currencies" that create and reinforce
community. There are various systems in use. One of the
simplest is time-dollars, where the unit of account is the
hour of service. For example, for every hour you give in
service to someone in your community you are entitled to
receive an hour of service from someone else.
Another system is in operation in the town
of Ithaca, New York. There, they have created a paper currency
called "Ithaca Hours," which is intentionally limited in
its circulation to approximately a 50-mile radius around
Ithaca. Many local businesses accept payment in both Ithaca
Hours and conventional money. Keeping the currency local
ensures that the money remains within the local economy,
rather than being spent elsewhere. It also tends to create
ongoing relationships among community members.
These local currencies, used in conjunction
with our conventional money system, allow communities to
solve many of their problems without relying on conventional
money to do it. This means that scarcity of money is no
longer an obstacle to solving social problems.
you give many examples of non-conventional
currencies throughout the world that have had very positive
social effects. If these currencies are so effective, why
don't we replace our conventional money system with them?
I don't believe
we should discard the money system we currently have. For
one thing, it is so deeply embedded in our social and economic
system that it would be very hard to do. But the deeper
reason has to do with the necessary complementarity between
cooperation and competition within a society. There has
to be a balance between "gift-giving" and "monetized" economies.
-an agreement within
a community to use something as a medium of exchange.
which people offer gifts, or their skills and talents,
to others without receiving conventional money in
- an economy
where informal gift exchanges have been replaced
by exchanges using conventional money. The United
Nations uses this criterion to define a "developed
money system that uses conventional money as the
medium of exchange. In a conventional currency system,
money is issued with interest, through bank-debt;
by definition, the money must be scarce and therefore
elicits competition among it users.
a means of exchange other than conventional money,
used in local communities to link unmet needs with
unused resources. Complementary currencies do not
have interest, and elicit cooperation rather than
competition among users.
the Taoist concept of yin-yang to articulate this idea because
English does not have adequate words to express it. Using
Chinese words may seem exotic, but the concept of yin-yang
is a very precise construct for which Western language simply
has no equivalent. It means more than just opposites co-existing
together. It contains the idea of transcending polarity to
reach a higher unity.
philosophy, yin represents the feminine energy, and yang
represents the masculine. They are not opposites; they are
elements of a whole. Both are needed
to have a balanced system. Each element of the whole has
its own characteristics. For example, yin diffuses, flows,
and creates networks; yang centralizes, concentrates, and
"normal" or conventional money is an extreme yang construct.
It is centralized and hierarchical. It is created by bank-debt
through an authority-the Federal Reserve and the banking
system. As economists Jackson and McConnell correctly state:
"Debt-money derives its value from its scarcity relative
to its usefulness." In other words, conventional money has
to be scarce or it will become valueless. Furthermore, it
is always created with interest, which further concentrates
money; by definition, interest flows from those who don't
have money to those who do. Finally, everybody needs to
obtain this money because it is the only one the tax authorities
accept in payment. So people have to compete among each
other to obtain that scarce currency. In short, every feature
of our conventional money system is yang.
money system is the opposite. The currency is not issued
by a central authority. In the time-dollar system, if I
do something for you I get a credit and you have a debit;
the money is created by the people who use it. And there
is always enough of it. If we agree that I do something
for two hours instead of one, we create enough currency
to reflect that fact. We don't have to compete to obtain
this currency, and I don't have to borrow it from somewhere
and pay interest on it.
potlatch model of the Northwest Indians is an example of
a yin economy. In that system, those who are most admired
and respected are those who have given the most. They spread
their wealth out among the community through the potlatch
ceremony. In our yang economy, we tend to view people who
have concentrated wealth as being the ones to admire.
What you're saying makes a yin economy sound more desirable
than a yang economy.
I don't see yin as "good" and yang as "bad." My point is
that we need both in proper balance. There is a role for
competition and concentration of money and a role for cooperation
and flow of money. However, I do maintain that in our modern
society, the fact that we have a monopoly of yang currency
systematically distorts that balance.
Taoist system, when there is an imbalance toward yang, the
solution is not to get rid of the yang, because that would
only create excess yin-which would be another kind of imbalance.
Instead, whenever there is excess yang, Taoists always recommend
that we "calm the yang and activate the yin."
Among the Northwest Indians- who lived in what is
today Washington, Oregon, and Northern California-the
potlatch ceremony was a ritual through which gifts
such as food and clothing were distributed to members
of the community. Those who shared their wealth in
this way were regarded with admiration and respect.
How do we do that?
One powerful way to "calm the yang" is to give some of your
money away when you have more of it than you need. In a
yang economy, this takes effort because you're operating
'out of the box,' from a yang perspective. If, for example,
you're giving money away for reasons other than to avoid
paying more taxes, you're abnormal in such a monetary system.
But giving away money will help create a balance in the
overall system, because it is dispersing some of the currency,
which has been overly concentrated in one place.
way to "activate the yin" is by introducing what I call
complementary (or yin) currencies into local communities.
What are complementary currencies?
They are currencies that link unmet needs with unused resources.
Such currencies don't have interest, and elicit cooperation
rather than competition among the people who use them. Complementary
currencies-when sufficiently developed-counterbalance the
effects in a community of the conventional currency.
for example, there is a traditional "dual currency" system-one
is a gift-giving currency, where people offer their skills
and talents to others; the other is the conventional national
currency. Typically, an adult Balinese spends about 30%
of his or her time in the complementary- currency (yin)
economy, and the balance in the conventional (yang) economy.
People who have visited Bali and have been able to appreciate
the quality and joy of life of the ordinary Balinese will
have some idea of what a world in balance
Would you say more about what happens when we don't have
a balance of currencies?
A society that operates exclusively with a yang currency
will tend to "starve" all yin functions: for example, community
building, and taking care of our kids, our elderly, and
the environment. It will also suffer from various dysfunctions,
which even those who have a lot of that currency will experience.
Well, the countries that are most "developed" are those
that are the most "monetized;" that is, they have replaced
informal gift exchanges with conventional (yang) currency
exchanges. They are also those that, by many measures, have
the least healthy community functioning; they have very
high levels of despair, suicide, and social dysfunction.
individual level, I know some wealthy people who are truly
happy, but they are rare. In a discussion I had with several
financial professionals who advise multimillion-dollar families
about what to do with their money, unhappiness was one thing
those advisors could say that their clients had in common.
Unhealthy family relations was another.
And you attribute this to our currency system?
An extreme yang currency system has a shadow phenomenon,
in the Jungian sense of shadow; it is the manifestation
of something that is repressed. For a long time, I asked
myself, "What is the difference between a society that is
using only conventional (yang) money, and a society using
a dual (yin-yang) money system?" It took me six months of
research and four months of living in Bali to realize what
the answer is.
What is it?
The short answer is trust. In a society with dual currencies-which
is therefore in greater yin-yang balance- people trust the
universe to be supportive; they trust their community to
be helpful when needed; they trust the family to be there,
whatever happens; and they trust the future. In a society
where the yin is repressed, people lack trust.
culture, the most typical dysfunction within wealthy families
is distrust. This lack of trust manifests in a pattern of
four concentric circles, which psychologist Bernice Hill
calls "the sacred wounds of money."
outer circle represents the social level. Let's say I am
known as a person of wealth in my community, and I make
a reservation at the restaurant down the hill. There is
a whole set of expectations that comes into play even before
I arrive. People at the restaurant will expect me to come
with a specific type of car, a specific type of woman, and
a specific type of interest in food, because of my financial
reputation and status. This is known as "the burden of expectations."
I, Bernard, do not exist anymore as an individual. I am
everything that goes along with the label of me as a wealthy
man. Of course, because I am a wealthy person, I'm supposed
to leave a big tip, even if I didn't think the service was
good. If I don't, I'm a bastard. So I can't trust the feedback
society gives to me about myself and who I am.
second circle represents the lack of trust among my friends.
One of the major questions people of wealth have is,
he or she really my friend? If I were no longer wealthy,
would this person be my friend?
So, people who are wealthy
have trouble trusting their friends.
there is the family level. Let's say my brother is being
very nice to my grandfather. I wonder: Will that create
a problem with my inheritance? (Will he get more than I
will?) Or perhaps my father says to me, "If you marry that
girl, I'll disinherit you." So my family interactions are
tainted by money, which makes it difficult for me to trust
there is the individual level- and this shows up particularly
among those whose wealth is inherited.
Who am I? Am I
only a bank account? Is there something about me that's
me and not just my money?
In the end, I have no clue.
So I don't quite trust myself.
are the shadow sides of money. Loss of trust is the core
of the problem. And the first reaction that people who are
not wealthy have is, "I wish I had that problem"-which is
absolutely not understanding the depth of the issue. The
cliché, of course, is that money doesn't buy you happiness,
but even that doesn't address the deeper issue of loss of
Lack of trust does seem to be a pervasive phenomenon.
All of that is from the perspective of an individual with
wealth. From a broader societal viewpoint, the distrust
manifests as the breakdown of community. If we believe we
can address social problems by throwing money at them, we
are not addressing the issue of people not being able to
trust each other.
society using exclusively conventional money, money typically
gets concentrated at the top of the social system. If you
have money, you get more by just having it. Then you find
that others are jealous of it, so you need police and an
army to protect it. In such an environment, people can't
trust anyone or anything.
by introducing local (yin) currencies into an excessively
yang conventional currency system, we begin to recreate
community. It's like weaving a tapestry. When I give to
another person, I weave a community strand by creating a
relationship with the particular community member I am giving
to. We are becoming interdependent.
am using a time-dollar system, I am weaving strands a little
differently. I am still creating strands within the community,
although not with the particular individual I have given
to. It is, instead, a multilateral process. I give something
to one person, that person gives something to another, and
eventually, someone else gives something to me. It is the
combination of all these interactions-all these many strands-that
completes the tapestry. This is what it means "to give among
each other." And this is how we build community. The role
of the gift is greater than it may appear.
bottom line is that we need to realize that our current
conventional money is not value-neutral. We now have evidence
that complementary currencies create different types of
relationships than conventional currencies do. We can promote
competition, greed, and scarcity, or cooperation, generosity,
and abundance with our money systems. The choice is ours.
25 years, Bernard Lietaer has been active in the domain
of money systems in an unusual variety of functions. While
at the Central Bank in Belgium he codesigned and implemented
the mechanism for converting Europe to a single currency
system (the ECU). During that period, he also served as
president of Belgium's Electronic Payment System. His experience
as a consultant addressing monetary issues spans four continents
and ranges from working with multinational corporations
to governments of developing countries. He co-founded one
of the largest and most successful currency funds, becoming
its general manager and currency trader. Mr. Lietaer was
a professor of international finance at the University of
Louvain and is currently a visiting professor at Naropa
University in Boulder, Colorado. He is the co-founder of
ACCESS Foundation, an educational non-profit organization
that focuses on disseminating best practices in the domain
of complementary currencies.
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