“Just” Economics. Is there really no money?

By Rosalind Dean

On Saturday morning, 20th September, over 100 people turned up at St Mark’s Church in Broomhill to try and get their heads around the ways in which our country’s economy could better serve all our people, rather than disproportionately benefitting the richest.  Our guide was Ann Pettifor, the economist, academic, advisor, author and activist.  She specialises in global financial systems, international financing and sustainable development.  All very daunting, but she reassured us that it is “complex but not incomprehensible”.

Rebuilding War-Torn London in 1942

Ann’s talk included a reported conversation between John Maynard Keynes and an eminent architect in 1942.  It went something like this. 

Architect. We cannot rebuild London after the war.  Where is the money to come from?

Keynes. But surely, Sir John, you don’t build houses with money.  Do you mean that there won’t be enough bricks and mortar and steel and cement?  Or maybe not enough builders?  Or architects?

Architect.  Oh no, there will be plenty of all that

Keynes.  Well, why not assemble all this good material into houses?

Architect.  What I want to know is – where the money is coming from?

The point being made by Keynes (and Ann Pettifor) is that money is a way to bring together all the resources we already have and make them work.  The rest of the talk was about money, where it comes from and how it is created.

“Is there really no money?”

More of us are turning sceptical about the “no money” argument, because it turns out that we can find the means when it is felt to be urgent enough: to wage wars, for example, or to combat pandemics.  So why can’t we find the means to make sure all our people have the basic necessities of life?  Not just adequate food and warm homes, but clean water, pure air, a stabilised climate and a natural world that can provide the ecological services we need.

Call it credit for investment, not debt

Part of the “no money’ argument centres around debt – the debt that it seems we are asking our children and grandchildren to pay off.  But turn this around and think of it as credit for investment, from which our children and grandchildren will benefit.  

The important question is, what is the credit for?  If it is for productive activity, like teaching children or insulating houses, then it produces both a return (better qualified children, lower energy costs) and it creates employment, wages and profit.  Increased incomes mean that people can be taxed, which secures the government loans and provides a return to the government, which it can use to repay debt.

The problem in our country is that we are very low in the investment league tables.  

Inequality

Back to the “justice” in “just” economics.  The problem with credit is that it goes to the people who have assets.  They can borrow, creating more wealth, against which they can borrow more, and create more wealth, and so on.  

If you have no assets, you cannot get credit, however productively it might be employed.

One of Ann’s main points is that governments can cut through this, and can use credit for activities that benefit us all.  This can impact our sense of well-being now, our productive capacity and our long-term well-being as global threats from climate change are mitigated.  We definitely need to rethink the balance between public and private power and wealth.

One of the worries about credit-for-investment is that it creates inflation.  If there is too much money chasing too few resources, then prices go up.  Calculating productive capacity in an economy is quite complicated, but there are plenty of people willing and able to be trained to care for our elders and children if credit were made available.  And maybe we could divert the resources currently allocated by the 1% to what we might think of as vanity projects, such as the multi-million pound yacht.

What did the audience think?

After an hour’s talk from Ann, the participants went away to consider the issues Ann raised.  Here are some of the questions that emerged.  What are the chances of a government adopting these suggestions?  How do we get these ideas over in plain English?  How do we restore trust in the financial system?  Do we want South Yorkshire (one of the poorest areas of Europe) to be engaged in arms manufacturing, or social investment, or both?  Should taxation go up, especially on the richest?  Should it be tax on wealth or income?  What should be in the next budget?

Taking action

It is clear the audience wanted action.  It is clear that some of the actions to redirect the financial system are required at international level.  But there are actions that can be taken at the national and local level.

I am not an economist and I find it hard to evaluate all these arguments.  But I think it is important for us to be aware that there are other ways of looking at our economic situation, so we do not accept uncritically that “nothing can be done”.

Here is a video of the morning.

St Mark’s Sheffield : Just Economics with Ann Pettifor

Further reading.

Books by Ann Pettifor