(With apologies to “Sixteen Tons” – an American folk song)
I wrote what follows on January 20, 2009. Seems uncomfortably prescient now, except for the change of focus to smartcards.
In the Guardian, today, George Monbiot floats the idea that privately-issued currency, in the form of time-limited private scrip (i.e. the money is for spending – if you hoard it, it becomes worthless – and thus the economy remains buoyant), is one potential solution to the present crisis. This would operate alongside sterling, not instead of it.
This idea does have historical precedent – read The Future of Money, by Bernard Lietaer, or check it out online – and has been shown to work extremely well; there are even a few embryonic schemes running in the UK.
The most successful proposal for such a scheme was devised by German economist Silvio Gessell, who became finance minister in Gustav Landauer’s ill-fated Bavarian republic – you can check this out online easily, too. The way it would work, according to Gessell, was that communities in dire financial straits should issue “stamp scrip”. The back of each banknote would contain 12 boxes. To keep the currency valid, the note’s holder would have to buy a stamp each month and stick it in one of the boxes (it’s not entirely clear what the stamp would be bought with; presumably currency issued by the central bank). This, of course, ensured the money remained in circulation, and wasn’t hoarded, and after a year, with all 12 boxes filled, the notes would be withdrawn from circulation.
So, inspired by Gessell, in 1923 a private scheme was launched to save the coal-mining community, and the mine, in the town of Schwanenkirchen, Germany, from financial disaster. It was so successful that 2,000 corporations across Germany implemented the system. Clearly, then, these schemes work very well if allowed to but, in Germany, at least, they were too successful, and were killed off by the Ministry of Finance, at the behest of a worried central bank, in 1931. An event which ultimately had dire consequences for Germany and, it can be argued, brought about the perfect circumstances for the rise of Hitler and the Third Reich.
So much for history, but what worries me is the possibility that the Department of Work & Pensions may seize upon the idea. Suppose, in an attempt to reduce the benefits bill, they decide to issue the sick and disabled with Government scrip redeemable only at, say, Tesco and Sainsbury’s (not Aldi, Lidl or Netto – foreign companies – to ensure the money stays in the UK coffers), and to pay for rent and utilities and other essential services, but not, for example, at pubs, or to pay for any other sources of enjoyment. Such a policy would find a great many supporters among the ranks of Daily Mail readers, for whom the idea that disability benefit claimants might have the temerity to derive any pleasure at all from their lives is anathema.
This would be the perfect way to grind down the chronically sick and disabled even more than they already are, boost the government’s standing at the Daily Mail (never under-estimate the influence of this scurrilous rag), and, I wouldn’t be too surprised to find out they’re already actively considering it at the DWP.