Translator: Sue McGregor Reviewer: Nadine Hennig
Let me start with a question.
How many of you think that the worst of the crisis is behind us?
OK.
Let me ask it differently:
How many of you think that the worst of the crisis is in front of us?
OK.
A vast majority.
I asked the same question ten days ago
in front of a roomful of financial journalists.
I got the same response.
It's interesting, because when you read the media, the financial press,
it's all about agreed issues, and it's all gone,
and everything is fine.
And I find it intriguing
that you don't believe it.
A second question:
How many of you think that unemployment is going to be
a growing issue for the foreseeable future?
Anybody who doesn't believe it?
We have two people.
Alright.
I think I chose the right example
because I'm going to address these issues,
why you're right, why the majority of you is right.
What's going on is a structural crisis.
What we have been told about, what governments are doing
is very simple.
They have been trying to deal with
saving the banking system at huge cost
and relaunching the economy, i. e. stop-gap measures.
No structural action.
Second,
unemployment is going to be a big issue,
a growing issue worldwide,
but also here in Europe, in the United States.
And the last time we had to deal with an issue of that scale
was the 1930s.
We didn't do very well.
And the only solution, we ended up finding out, was a war.
I think we have actually a big challenge of finding a better way.
And action is now.
What I hope to tell you today is there is a solution,
and we don't have to wait for anybody to start implementing it.
We actually have the power to do so ourselves.
So these are the three key points I'm going to make.
The plan is very simple. There is a structural cause.
What is it?
What is the structural solution and what do we do about it?
Let me start with a story.
I give you a car,
and it doesn't have brakes,
and the steering wheel is not quite reliable.
I'm sending you across the Alps to Italy,
or across the Rockys to California.
Do we agree you'll have an accident?
Okay.
However, when you have the accident, the reaction will be,
"What a terrible driver, Mr Greenspan, Mr. Bernanke.
What a terrible driver you are!"
Or, "Gee whiz, look at those road maps you're using.
They're out of date.
The curve in which you actually had the accident wasn't even on it.
Good Lord! No wonder you had an accident!
Let's update the maps, let's do some regulations,
fine tune a few details, put on a new tire,
and off you go again."
Guess what will happen.
Another accident.
Actually, we have been doing this for a while.
What we're living is number 97 in the last 25 years in banking crashes
and number 176 in monetary crises.
These are not my statistics. These are World Bank statistics.
At what point do we have to say, "There's a problem with the car?"
Do you have to wait for [number] 99?
Why not wake up?
We're dealing with a structural issue.
Structural issues require structural answers,
not stop-gap measures.
The evidence I'm going to show for what structural cause is,
comes from very unexpected domains.
It comes from complexity theory,
and it comes actually from the study of natural ecosystems.
My colleague, Bob Ulanowicz - who, as his name indicates,
very clearly is American;
he's at the University of Maryland -
has spent 25 years in quantifying, measuring,
how biomass moves through networks in natural ecosystems:
Chesapeake Bay, the Amazon, the Serengeti Plain, whatever.
In other words, what we're dealing with
is you have the sun coming in, you have plants growing,
you have animals eating plants, you have animals eating animals.
We eat it all, and what does that make?
And what he discovered is that a sustainable network
has some very specific characteristics.
It requires - and we can start with the fact that a natural ecosystem
has to be sustainable to be around, right?
We've been trying for a couple of million years
before it got there.
So you know, the ones that were not sustainable
are not going to be found today.
And the sustainability, which is the capacity to survive,
to actually thrive and flourish in different environments,
different contexts, different challenges over time -
that's what sustainability is -
depends on a balance between two key variables:
efficiency and resilience.
We can measure that with a single metric.
That's what the breakthrough is.
Until now, when we were talking about sustainability in any field,
we were dealing with a bunch of indices,
because we really don't know.
We can't say, this system is 98,5% sustainable.
You have indications
that some things look a little more sustainable than others.
Now we can do this.
That's the breakthrough.
And it applies to any network, any complex network.
So let's show what he found.
You have two key variables: efficiency and resilience.
Efficiency is the capacity for a system
to process a quantity of biomass in an ecosystem,
in other words, "throughput."
Resilience is the capacity to survive,
to adapt, to a drought, a fire,
changes in the environment, whatever.
So these are the two variables, and the weight between the two,
the importance is shown by these two volumes.
This is a little too cute.
In fact the reality is, we're dealing with a little range here.
It's not at one precise point of 100%.
You go to about 97%, or 98%, 6 1/2% percent on both sides.
It's not one point. It's a range.
But it's a narrow range. That's important.
And the weight is there.
OK.
Apply the same concept, and I'll tell you in a few minutes
why the same concepts do apply to an economy, to a financial system.
We are putting all the weight on efficiency.
It's the only thing we know.
When a bank sinks, what do we do?
If it's big enough, we save it.
If it's not big enough, there's a big one that absorbs it,
because it's going to be more efficient.
The reason we have a monopoly of a national currency
is because of efficiency.
The reason for Milton Friedman's comment
that we needed a more efficient system globally,
was efficiency.
And that's why we needed to dismantle all the regulations.
So, we know only that variable.
No prizes for anybody who guesses what will happen to that system.
It will do "Bing!" or [in Dutch] "Ploff!"
That's what a crash is.
We've done it a number of times.
Why can we measure this?
There are two variables that are structural -
the emphasis is on structural -
i.e. they depend on the nature of the network
that explains both the efficiency and resilience.
One of them is diversity, and the other one is interconnectivity.
What are we talking about?
Diversity is how many different animals are around.
Interconnectivity is who can eat what.
These things are structural, I repeat and emphasize.
That means that any network, any complex network,
can be measured in the same way.
It doesn't depend on what passes through it.
It is biomass, say, in an ecosystem.
It's electrons in an electrical circuit.
Do you remember the big blackout in electricity here in Northern Europe?
Half of the United States [going black].
What they were doing, was this.
Engineers know about efficiency, don't they?
That's what I was taught.
Information in your immune system.
Every one of us has that complex network in ourselves,
and some of the diseases we are dealing with,
like AIDS and cancer,
were so tough to eliminate because that's precisely where they lie.
They deal with the immune system which is a network.
Finally, last but not least, money in an economy.
It is the same structure.
Now, what are we dealing with?
Low diversity. Monocultures.
We know that a match in that stuff, and "Poof!", the whole thing goes.
Low interconnectivity.
Pandas are very cute, however they have one big problem.
They eat one type of bamboo.
If you don't have that type of bamboo, you're in trouble.
Compare that with a natural rain forest,
or a squirrel.
A squirrel will eat anything,
including strawberries that we don't find in a forest.
(Laughter)
So what is a structural solution?
Are we clear on why that relates to what we talk about
and why it applies to our money system?
The answer is complementary currencies, something that sounds strange.
But typically if you'd had a course in economics,
you'd never heard of it.
Because, of course, we have a monoculture of one single currency,
and couldn't need anything else.
Complementary currency is anything
that circulates in parallel with conventional money.
"Miles" are an example.
They are different types of medium of exchange.
All currencies, all governmetal currencies,
link unmet needs with unused resources.
An empty chair with loyalty. These are loyalty currencies examples.
This is just one example, not the interesting ones,
but we are all familiar with it.
There are hundreds of thousands in the world right now.
More interesting are the ones
that are actually changing behaviour patterns
in a positive sense for societal purposes.
That's why I'm going to be focusing on unemployment.
It's one creative currency that actually leads to unemployment.
The first thing to understand
is that unemployment is not General Motors.
There's a lot of news about 9,000 jobs disappearing from General Motors.
However when 10,000 small and medium-sized businesses disappear,
nobody is there for the burial.
Seventy to 90% of all private employment is in that little sector
that nobody knows how to support.
The problem is cash-flow.
Why?
I'm a small business.
When I buy something, I have to pay cash, or at best in 30 days.
But when I sell something to a big company behind that curtain,
then I'm paid in 90 days or 120 days.
So as I try to grow, I'm strangled.
I go to a bank, but the bank says, "I'm not interested."
Because I'm not a good client. I'm not a profitable client.
It's a lot of work, and little profitability.
The answer is currency that actually breaks the bridge.
How does it work?
Back to being the small little enterprise.
Behind the curtain I have, say, the government
that I just sold something to, and will pay me in 90 days.
The next thing I do is get insurance.
Part of that network, Commercial Credit Circuit (C3) -
by the way, this is not theory, it exists in Brazil, in Uruguay.
I'll talk about it in a second.
I get an insurance on my invoices.
What happens?
I can now pay one of my suppliers. You.
What do you do?
You have a choice.
You can either request from a bank to get conventional money
and get out of the system,
or you can pay one of your suppliers.
But if you want national currency, you pay the 90-day interest and bank fees.
I don't.
So you have an interest in actually spreading it around
to the rest of our community here.
So that is the mechanism.
What does it do?
It actually injects working capital at zero interest
to all the participants in the network.
In Uruguay, they did the right thing.
The key thing is acceptance in taxes.
That is how the monopoly of money is enforced.
So by having the government accept taxes
payable in that currency, or that network
that will become national currency in 90 days.
Remember?
Ninety days later, I'm getting paid,
and everybody who had those units gets national money at no interest costs.
So we have a very dynamic system.
Conclusions.
For policy makers, that's what you need to do,
if you want to address unemployment:
help the small and medium sized business sector,
and you'll get that problem late.
As you do in Uruguay.
And if you do that, you actually get additional income
that otherwise wouldn't have happened.
It doesn't cost the government. They're not applying subsidies.
I claim that complementary currencies
are today exactly in the same field that open source computer programmes
and microfinance was ten years ago.
Very few people heard of it and if they heard of it it's marginal.
It has changed, it will change.
It would be crazy to believe
that we're going to go into an information age,
and the most important information system, our money, will not change,
which is the hypothesis that everybody works on.
Now for net-citizens, I think we have a choice.
We can either stick to the monetary status quo,
and it gets a little overloaded,
or we can hitch our little wagon on something that was designed
for the 21st century.
For those of us who are part of small and medium-sized enterprises,
don't wait for "Big Daddy" to save you.
These systems can be started at any scale.
The software is available in open source.
You can download it free on the net.
You can start your own system.
Talk to your suppliers. Talk to your customers.
Create your own network and get going.
We can save employment, structurally.
This will work, not only for the crisis; this will work forever,
in a completely different economy, because we actually have a way
of injecting working capital exactly where it is needed:
successful businesses, small and medium-sized.
They are successful because they have invoices.
If it is a stupid product, a stupid service,
they won't have invoices.
This is the mechanism.
Thank you.
(Applause)