So what is wrong with Interest anyway?

Abstract:

This paper seeks to discuss the role interest has played in the modern financial system. Tracing historical debate pertaining to the legality of interest, the paper highlights how the shift in this debate paved the foundations for much of our modern day financial architecture. As a result, the paper asserts that money today is mainly created as interest bearing debt with a host of associated consequences. Amongst these are a perennial economy of scarcity, endemic debt pressure, constant inflation, an ever present risk of default, and the environmentally irreconcilable paradigm of perpetual growth. With regards to the last point the paper, in keeping with many contemporary ecological commentators asserts that perpetual growth and sustainability are mutually exclusive concepts. The former necessitates an incessant demand to privatize, commoditize, and monetize ever-increasing amounts of the earth’s resources; while the latter requires us to embody a more collaborative, conservative approach towards the resources of the world. By linking these and other seemingly disparate concepts such as the distortion of the dynamics of fair trade, destruction of local markets, displacement of rural populations, famine, global poverty and the eradication of local ecosystems - the paper proposes that any serious reformation of the financial system has to start with reforming what lies at the root of it. Namely, the concept of charging interest. It has been said that money is the root of all evil; this paper asserts that it is not money per say, but a particular construct upon it. A construct that alters the function of money towards a certain dynamic – a dynamic that is best reviewed afresh as we seek to chart a course for change with regards to impending challenges that face us all.

 

In the empires of usury the sentimentality of the man with the soft heart calls to us because it speaks of what has been lost.
-- Lewis Hyde

 

Introduction

 

The global financial crisis of 2008 wasconsidered by many economists to be the worst financial crisis since the Great Depression of the 1930s[1]. Indeed, the after-effects of the crisis are still being felt with the corresponding downturn in economic activity having led to a persistent global recession and contributed in part to the recent European sovereign debt crisis[2].

 

Crisis is an interesting word; etymologically the word is said to be derived via Latin from a Greek root meaning 'turning point'. Likewise the Chinese word for “crisis” is said to be composed of elements that simultaneously indicate “danger” and “opportunity/crucial moment”[3]. As such, the recent crisis may be said to have provided us with an opportunity to examine the principles that underlie the global financial system. For many, such reflection may have been long overdue; to them, "economics does not stand on its own feet, but is a 'derived' body of thought from meta-principles that instruct it" (Schumacher[4], 1989).

To such thinkers, while the financial crisis may have prompted various Regulatory proposals and responses[5], the roots of the crisis lie within the foundational norms of the system itself. Today the notion that the financial crisis was only a manifestation of systemic symptoms and underlying structural problems is not an uncommon one and finds increasing voice in the advocacy of a number of notable academics and financial professionals[6].

Systemic problems need systemic solutions, which in turn usually require a great deal of reflection to uncover; in that regards it could be said that never did a time require a greater degree of reflection than the age we live in; for it is one that heralds a convergence of crises. To many, we live in an age where finance[7], energy[8], health care[9], and most importantly the ecosystem[10] are headed towards collapse. Alarmingly, noted academics and authors have been quoted on record as saying that this potentially may be the last century for the human race[11].

 

Surprisingly, these crises do not arise out of isolation to the financial one, as Eisenstein says, “Contemporaneous with the financial crisis we have an ecological crisis and a health crisis. They are intimately interlinked." (Eisenstein, 2001). What is it that links these crises together? When a figure as mainstream as the former administrator of the United Nations Development Program, James Gustave Speth, writes about impending environmental doom and asks what he calls the big question, mainly, "How can the operating instructions for the modern world economy be changed so that economic activity both protects and restores the natural world ?"[12] (Speth, 2008), we see that what links the crises is the function of a common intermediary that defines our relationships and institutions – namely, Money itself.

 

Today money imbues practically every societal function, relationship and institution and yet many of us struggle to define what it actually is? Even the economist defines money by what it does; its functions, namely as a medium of exchange, unit of account, and store of value, but rarely will you find an economist defining money by what it actually is. Therein lies a key point; for in its essence money is an abstraction, a social construct that returns back to our very perceptions, identities in how we choose to define our relationships. In that regards, what is it about our money today that has perverted it from being the potential agent of mutually beneficial and consensual connection to an agent of the opposite; today, wisely, perhaps, many people refuse on principle to mix commerce with friendship, wary of some ‘mysterious’ conflict between money and relationship.

 

This paper argues that money today employs a construct that alienates as opposed to one that unites; the roots of this construct lie in the simple act of charging 'money on money'. That such a construct on money can have such 'far-fetched' consequences as to precipitate a series of global crises may be difficult to fathom, as such, this paper attempts to portray the 'logic of interest' – to indicate how the belief that "money costs money" consequentially brought about a series of destructive 'logical[13]' steps culminating in the modern financial architecture with all its associated ramifications that we see today. As such, the paper aims to answer Speth's big question, by drawing readers to the function and role of money itself – it argues that the most effective way of amending the operating instructions of the modern world economy lies in amending the role of its primary agent, the role of interest.

 

Before we commence and understand what interest does it is worth reflecting on some historical perspective, namely the original debate as to its permissibility.

 

A brief look at how Interest came to be legalized

 

Interest or Usury[14] as it was earlier known, the practice of charging ‘money on money’, finds the strongest condemnation within many of the classical and religious traditions – as the Hindu, Buddhist, Greek, Judaic, Islamic and Christian traditions ably demonstrate (see Appendix B). With regards to Western Europe and Christianity, it was only from the 13th century onwards that theories began to emerge with regards to its legitimacy. These theories, originally ranging from semantic justification[15] to legal strategies[16] were employed to circumvent the dominant prohibition, all with various degrees of ‘success’. Gradually, by the 15th century, Christian reformism as advocated through Luther (1483–1546) who thought of usury as an evil necessity, and Calvin (1509–1564) who argued for the aspect of motive to be the determinant in usury’s permissibility, led to a change in thought in Western European circles. This allowed for economic expediencies to effectively overshadow the prevalent moral philosophy at the time, culminating in King Henry VIII of England, in 1545, permitting the charging of interest up to a maximum rate of 10%. The pattern was repeated in Italy, where by 1509; eighty-seven Banks had been set up with Papal approval despite insistent pleas of traditionalist theologians, chiefly Augustinians and Dominicans that the interest charges taken by the Banks were contrary to all tradition, natural and Divine Law. Through this process, Western Europe underwent a shift in the economic debate as to whether interest or usury was legally justified to one in which the only question that remained was the level to which it could be legally charged. The ramifications of this development were to have far reaching consequences for the wider world, as one Scholar puts it: “The legal toleration of interest marked a revolutionary change in public opinion and gave a clear indication of the divorce of ethics from economics under the pressure of an expanding economic system.” (Davies, 2002, p.222)

 

The Story of the Goldsmiths and the birth of modern Banking

 

The newfound societal legal tolerance of interest played a key role in affecting the lives of one group in particular – the goldsmiths. Goldsmiths were originally depositaries for Gold or money; safe-keeping Gold deposits from the public in return for receipts promising payments and redemption to the bearers of those receipts.

 

In what was eventually to become the antecedent of today’s financial system; sixteenth century Goldsmith bankers discovering that the proportion of receipts redeemed was far less than those issued, began issuing and lending in surplus amounts to the total amount of Gold they actually kept. This was on the pre-text that no-one would discover the additional receipts and that the surplus amounts could be destroyed upon redemption, with the interest charged on these loans pocketed as profit.

 

Step 1: The Logic of interest at work with the Goldsmiths

 

It is important to note that it was the unaccountability of interest as a debt that gave direct incentive to the Goldsmiths to lend above and beyond their reserves; for to simply print their own receipts on their own consumption would eventuality lead to their being caught, for in a local economy the receipts would only circulate for redemption and sooner or later they would be found out. While to lend the receipts into the economy at interest would allow the goldsmiths to subsequently destroy the excess money on redemption; while legitimately, in the public eye, keeping the interest. This distinction of lending into the economy as opposed to spending into the economy was a key one – for the former allowed for the returned receipts to be destroyed while the latter necessitated redemption in Gold – Gold which never existed. Thus, we see that the newfound legality of interest was a key lever in promoting the Goldsmiths to the fore as a financially elite class – one able to make money, lend at a profit and destroy it without others being aware. One could argue, as this paper does, that the arrival of such a class would only have been logically deducible as soon as such a society accepted the legality of interest and thus this paper posits this as the first step towards its institutionalization. (For more details on the institutionalization process, see Appendix C)

 

Step 2: From Goldsmiths to a National Bank

 

This process of creating fictional money, lending at interest, destroying the loans and subsequently keeping the interest; before starting the process all over again –theoretically was able to continue ‘in perpetuity’, provided of course the Goldsmiths always got the ‘fractional reserves’ of Gold right. The key was to ensure that there was never a run on their reserves greater than the amount of Gold they actually had. It was the most lucrative business to be in and gradually, as the process became further institutionalized and centralized - the most powerful. A key point in this regards was in 1694[17]; with the lobbying power of the Goldsmiths and early merchant bankers significant in Britain, they forwarded a loan of £1.2 million to William of Orange in his war of succession against James the second. In return, they earned the right to ‘nationalize’ the debt, form the first national Bank of England and issue its equivalent in paper currency at the same rate of interest. This was the first instance of an independent Central Bank with a national debt - providing a template for centralized commercial banking (Commercial Banks backed up by the Central Bank) as being the major provider of credit expansion towards the needs of a State.

 

Step 3: Global expansion of the Commercial Bank-Central Bank model

 

In time, with such a process being very successful in generating credit and the colonist ventures of western Europe being more and more in need of capital and credit - this very method of operation; albeit with a few technical changes and the support of Central Banks came to be institutionalized in what has come to be known as modern banking today. So banks would be able to use the money deposited with it as a reserve against which they would issue their own money ex nihilo; in excess of its reserves and then charge interest upon it. This process defined as 'institutionalized usury’ (Rowbotham,1998, p.26), would come to supply the vast bulk of a nation’s money supply.

 

Step 4: Money comes into existence as 'interest bearing debt'

 

In modern parlance, the process still remains very much the same, except that the banks don’t use gold anymore. While the government manufactures the coins and paper, banks create the bulk of a country’s money supply by simply entering digits into customer accounts. This money referred to as bank credit forms over 95% in most cases of a nation’s money supply, money created almost entirely by banks through lending as interest based debt. The fractional reserve has today come to be known as the ‘capital adequacy’ ratio in which banks are expected to build up their reserves in bank credit; a factor which only spurs them on to lend more – as by and large it is the interest they accrue that subsequently becomes their reserves. The inherent instability of such a system rests on the fact that the Central Bank has the capacity to step in as a ‘lender of last resort’, a factor that has in and of itself contributed to greater impunity from banks with regards to their lending practices. (see Appendix C for more details on the money creation process of modern Banks)

 

 

 

Fig 1: Showing the key steps resulting in modern banking (Source: Authors own)

 

 

The destructive logic of interest upon Colonialism

 

The logic of interest has been defined to give rise to a "system that demands constant, endless growth." (Graeber, 2011, p.346). This logic is clear, as Douthwaite (1999 , p.28) says, "A fundamental part of the modern capitalist system is the payment of interest on borrowed money." Mentioning what he considers the only two ways in which such interest can be paid back, he says, "Growth is one method. When an economy grows, incomes increase and profits can come from those extra incomes without anyone having to be made worse off…The second way of making profits applies if there is little or no growth. In this case…some or all of its profits will be made at the expense of someone else." (Douthwaite, 1999, p.28). Within the paradigm of interest 'constant endless growth' thus appears as a systemic design feature, for within its 'logic', growth is needed as much to prosper as to survive. As Douthwaite says, "In our present economic system, the choice is between growth and collapse, not growth and stability." (1999, p.29). Within this light perhaps it would not be an exaggeration to say that interest bearing debt was the major inducing factor to prompt the seeking out of ‘new markets’ of the colonialist impulse. Following the Goldsmith Bankers, soon enough, ever expanding trade routes were funded by newly established commercial Banks (particularly the Medici Banks); with it being primarily Genoese and German bankers that funded Spanish and Portuguese exploration and the importation of New World gold and silver. As Graeber (2011) says, " Starting from the baseline date of 1700, then, what we see at the dawn of modern capitalism is a gigantic financial apparatus of credit and debit that operates – in practical effect – to pump more and more labor out of just about everyone with whom it comes into contact, and as a result produces an endlessly expanding volume of material goods…At every point, the familiar but peculiarly European entanglement of war and commerce reappears – often in startling new forms….Almost all of the bubbles of the eighteenth century involved some fantastic scheme to use the proceeds of colonial ventures to pay for European wars. Paper money was debt money, and debt money was war money, and this has always remained the case." (2011, p.346). Perhaps more charitably, Richard Douthwaite chooses to explain European expansionist ambition in light of what he calls the "growth imperative", as he says," It is easy to see why business and governments constantly strive to create growth, since the alternative is debt, depression, unemployment and commercial disaster. They are obeying the growth imperative, a force that has largely shaped the past 24o years, leading to the construction of empires, two world wars and the creation of the European Economic Community, among much else." (1999, p.29 – 30). Describing the scrambling for territory among European powers and illustrating Africa as an example; he mentions how by the end of the 19^th century only 4 percent of the Continent was not incorporated into the supply and marketing system of a major power[18]. In time, with the development of better transport, "Plundering missions, like those of the Spanish in the New world, the Portugese and later others in Africa, and the East India Company in India, were converted to a more formalized system necessary to keep the 'mother country' supplied with raw materials." (1999, p.37-38) Such a system necessitated more "subtle forms of exploitation"(1999, p.38) as Germany and other populous European powers, "had come rather late to the territory-grabbing game and was unhappy with what it had got…Thus it was the need for growth that brought about the First World War." (1999, p.39 – 40) With the formal dismantling of empires, the logic of interest or the "growth imperative" would continue to act in more "subtle ways"– arguably through its application upon Corporate Law, International Regulation and finally upon concepts of Property and Capital itself.

 

The destructive logic of interest upon Corporate Law

 

As interest highlights the role of capital as being the sole determinant of all economic success; arguably at the expense of everything else, it would be deductive to assume that its 'logic' would eventually conform law and regulation into forms that best suit its inherent function – thereby maximizing itself. Intuitively, we could say this indicates structural forms that best allow for the maximization of capital.

 

Armor, Hansman and Kraakman (2009) state that the five core structural characteristics of the business corporation are: (1) legal personality, (2) limited liability, (3) transferable shares, (4) centralized management under a board structure, and (5) shared ownership by contributors of capital. (2009, p.7) In their paper they state, "these characteristics have strongly complementary qualities for many firms. Together, they make the corporation uniquely attractive for organizing productive activity." (2009, p.7)By productive activity we could infer is meant the maximization of capital, for the paper reveals each of these elements as being favored for this very reason.

 

The logic of maximizing capital (at all costs) has been described by former Havard University Business School Professor David Korten as one that destroys life, to quote:

 

"The publicly traded, limited liability corporation is more accurately described as a pool of money with special legal rights and protections dedicated to self-reproduction. The People, including the CEO and directors can be dismissed without recourse. Only the money, which the corporate officers are legally bound to serve, has rights. In theory it is the shareholders whom management serves, however, since most shares are held in trust by various institutional investors, the real shareholders are generally invisible even to the corporate officers. Management’s real focus is on the money, not the shareholders. In effect they are hired by money to nurture its growth and reproduction even at the expense of life[19]”.

 

Tracing history from the first major modern corporations such as the Muscovy (Russian) Company (chartered in 1555), through to the two East India Companies (The British[20] and Dutch, both chartered in 1600's) right to today's global multinational corporations - their history bears witness to Korten's assertion; namely that they nurture their growth 'even at the expense of life'. They have been remarkably successful in this, today of the world's largest 100 economic entities, 51 are corporations and 49 are countries[21]. They have been assisted in this in large part by international regulation and multilateral institutions that arguably too have been impacted upon by the Logic of interest.                                                                                        

 

The destructive logic of interest upon Global Regulation

 

The logic of interest, that which chooses to "nurture economic growth and reproduction even at the expense of life", is not one confined to Corporate Law alone –it would arguably go onto impact global international regulation as well. The three key organization facilitating global trade, wealth and development could be said to be:

(a) IMF[22]

(b) World Bank[23]

(c) WTO[24]

 

Despite the underlying theory being that these International Financial Institutions (IFIs) (i.e. the IMF, World Bank and WTO) in promoting economic growth and free-markets generate wealth for development and poverty reduction; the evidence as per Caufield (1997), Rowbotham (2000) and others is much the opposite. This may not entirely be unexpected, following the logic of interest, that of maximizing growth – the key question would be growth for whom? As Rajesh Makwana, Director of the NGO 'Share The World's Resources' (www.stwr.org), argues," The combined effects of trade liberalisation and IMF/World Bank policies are insidious, devastating numerous aspects of social and economic life in developing countries. It is clear that the ultimate beneficiaries of the IFIs’ policies and actions are wealthy private investors, corporations and speculators. These small groups of private individuals ultimately end up holding the reigns to the majority of the world’s natural resources, agriculture facilities, technology, services, intellectual property and finance mechanisms. Their businesses are invariably based in the US and EU, ensuring that the economic output, or GDP of their host countries remains high.[25]" In his paper Rajesh arguesthat it is corporate interests at the IMF and World Bank[26],their Lobbying at the WTO and consequential Structural Adjustment Programs (SAPs[27]) that have forced emerging economies to liberalise their financial markets, devalue their currencies, ensuing recessions and financial crisis. Without mincing his words he argues what the cause for these measures are, "Not surprisingly, the neoliberal, open-market model preached by the IMF and Wold Bank was not the model adopted by all existing economic powers during their industrialisation and development. Instead they protected their own markets from foreign goods and investment and continue to do so, donating huge subsidies to domestic business. Indeed, the US and EU remain, to this day, highly protected economies. The hypocrisy of liberalising emerging markets is evidently in the self interest of economically dominant countries. Enforcing these policies on developing countries is akin to economic imperialism.[28]"This is consistent with the observances of Rowbotham (2000), who refers to the policies of IMF and the World Bank as being an effective continuation of the colonization of old; one which was for corporate interests and continues to be. (Rowbotham, 2000, p. 46)

The link this entire process of suspected corporate manipulation has with interest has not been lost on many a statesman; as the former President of Brazil, Luis Ignacio Silva is reported to have said:

"Without being radical or overly bold, I will tell you that the Third World War has already started - a silent war, not for that reason any the less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies . . . It is a war over the foreign debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, more shattering[29]…" (George, 1990, p. 238)

A key demand accompanying World Bank loans has often been the privatizing of common, state resources - arguably a most striking case of this were the 'Water Wars' fought in Bolivia in 2000 and 2005. As Crane and Matten (2010, p.86) state "in 2002, more than four-fifths of World Bank contracts required privatization". The authors mention the infamous Law 2029 which granted monopoly rights to private water corporations for the areas they operated in; such that, "people were not allowed to use water for free out of their wells or even to collect rainwater." (2010, p.86) The role of interest in privatizing the common is also something alluded to by a variety of Scholars, the next section shall touch upon this.

 

 

The destructive logic of interest upon the concept of Property

 

While most economies recognizing the need for private property and enforceable property rights; most religious and traditional law have always held a distinction between that which can be private and then can be changed. As Eisenstein (2011) illustrates, the role of interest has increasingly privatized four broad categories of the common wealth comprising natural, social, cultural, and spiritual capital – turning them in turn into a proxy for money[30]. Echoing the views of monetary reformists such as George (1995) before him, he sees interest as bringing to life the ancient myth of King Midas (whose touch turned everything into Gold) as it increasingly "converts the unique and sacred into the monetized and generic"[31].

In a paper addressing the perplexing proposition of sustainable growth he says," The nature of capital today is aligned with the increasing expropriation of natural resources and the cultural commons. There are two reasons for that. First, because money is created as interest-bearing debt, there is always systemic growth pressure. As soon as growth slows, debt rises faster than income and the intensifying debt pressure fuels increasingly desperate attempts to extract more money from somewhere (other people, nature, etc.) Politically, this translates into the very growth-friendly policies that are destroying the planet. Second, the social and environmental costs of this extraction are off the balance sheet, externalized onto other people, nature, and future generations. This is how the destruction of a forest to create 100,000 board feet of lumber is, preposterously, counted as an increase in wealth. The forest no longer contributes to soil stability, oxygen production, climate stability, biodiversity protection, and so on, but those losses are not included in the price of a plank of lumber. Together, these two factors drive the conversion of the natural commons everywhere into money.[32]"

Whether one agrees with Eisenstein's logic as to the cause – the symptoms he describes are there for us to see. Today forms of natural capital that we barely knew existed have become property as multilateral agreements such as the International Property Rights (TRIPS[33]) aim to force developing countries to extend property rights to indigenous seeds and plant varieties[34]. Corporate property rights have already been given over individual plant genes, thereby potentially impacting agricultural practices that two thirds of the world relies upon for their livelihoods. Likewise indigenous cultural and local knowledge is increasingly sought to be patented [35]while viable treatments and cures are denied to the needy on the basis of such patents[36]. When Six corporations own 70% of patents on staple food crops[37], when the electromagnetic spectrum[38], sequences of genetic DNA[39], and, even the earth’s capacity to absorb industrial waste is privatized[40] – something has definitely gone wrong with the world and how we see property.

 

And yet that is not all; today while it is increasingly being recognized that an offshoot of economic growth entails the conversion of nature into product, according to Eisenstein less understood perhaps is the related conversion of relationships into services. Today, the increasing "atomization of community, the disintegration of civic culture, the enclosure of the cultural commons, and the deskilling and helplessness of nearly the entire population[41]", is all as much a part of the story of perpetual economic growth as the commodification of nature. As he elsewhere says, "When money mediates all our relationships, we too lose our uniqueness to become a standardized consumer of standardized goods and services, and a standardized functionary performing other services. No personal economic relationships are important, because we can always pay someone else to do it. No wonder, strive as we might, we find it so hard to create community. No wonder we feel so insecure, so replaceable. It is all because of the conversion, driven by usury, of the unique and sacred into the monetized and generic.[42]"

 

In an almost exact adaptation of the King Midas myth we too are converting natural beauty, human relationships, and the basis of our very survival into money. As Eisenstein asks, "Must we, like King Midas, find ourselves marooned in a cold, comfortless, ugly, inhospitable world before we realize we cannot eat our money?[43]" The logic of interest like King Midas' touch is not immediately apparent; but as the apocryphal King himself discovered becomes more so as the effects become manifest and impacting – in perhaps the final twist to its logic, the only thing left for King Midas to touch was himself – within the logic of interest this would entail money further deconstructing and commodifying itself.

 

The destructive logic of interest upon the notion of Capital itself

 

Consistent with the logic of interest, through the passage of time, restrictions on the movement and subsequent maximization of capital itself were also to be removed and restructured. "On August 15, 1971, United States President Richard Nixon announced that foreign-held U.S. dollars would no longer be convertible into gold – thus stripping away the last vestige of the international gold standard…By doing so, Nixon initiated the regime of free-floating currencies that continues to this day." (Graeber, 2011, p.361) Whatever his reasons were[44], with the global system of credit money entirely unpegged from gold, the world entered a phase of financially unprecedented history – perhaps best termed 'growth gone wild'.

 

In the recent 2009 Banking Bill debate held at the House of Lords, the Earl of Caithness has been quoted to have said: "…our UK money supply has grown from £31 billion in 1971, when President Nixon closed the gold window, to in excess of £1,700 billion today. Let us consider the implications of those last two figures. They mean that every year since 1971 the banking system has created, on average, for its own use, in excess of £44 billion. That is more per year than the entire money supply which had, until 1971, sustained our economy since recorded history and through two world wars.[45]"

 

This new dawn of "the financialization of capital meant that most money being invested was completely detached from any relation to production of commerce at all, but had become pure speculation." (Graeber, 2011, p.376) All of this speculation has seemingly come at a cost; as Lietar and others (2012, p.12) have noted: “According to the IMF, between 1970 and 2010 there were 145 banking crises, 208 monetary crashes and 72 sovereign-debt crises-in other words, a staggering total of 425 systemic crises. An average of more than 10 per year! These crises have hit more than three-quarters of the 180 countries that are members of the

IMF, many of them being hit several times.[46]”

 

The 'financialization of capital' as referred to by Graeber (2011, p.376) could be largely said to be twofold: the trading of capital on the foreign exchange markets and the trading of 'positions on capital' on the financial derivatives markets. As Lietar and others (2012, p.11) note:" Today’s foreign exchange (forex) and financial derivatives markets dwarf anything else on our planet. In 2010, the volume of foreign exchange transactions reached $4 trillion per day. One day’s exports or imports of all goods and services in the world amount to about 2% of that figure." It is worth reflecting on this figure for as Lietar and others (2012, p.12) go onto say, this entails that "98% of transactions on these markets are purely speculative." (2012, p.12) Quoting Keynes who once famously said: "When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” (Keynes, 1936, p.159), Lietar chooses to refer to our global economy today as- the 'Global Casino'. (Lietar, 2001)

 

This increasing rift between between the financial markets and the real economy – alternatively called the rift between Wall Street and Main Street is what prompts the likes of Korten (2010) to state"A Declaration of independence from Wall Street", wherein he proposes his 'Agenda' to travel from "Phantom Wealth to Real Wealth." (2010, Title Page) Within the book he proposes that "Asset bubbles create only phantom wealth that increases the claims of the holder to society's real wealth and thereby dilutes the claims of everybody else." (2010, p.32) This 'fallacy' he later ascribes to the erroneous belief that because "interest grows faster than trees" (2010, p.32) it is better for the economy.

Of even greater concern than the forex markets to the likes of Korten and Lietar, at least in notional terms, is that of derivatives; as the name implies these are contracts that derive their notional value from underlying contracts being in effect speculative positions on them. As Korten (2010, p.118) says: "the total notional amount of over-the-counter derivatives still outstanding totaled an eye-popping $604.6 trillion in June 2009, compared with an estimated 2009 gross world product of $ 58 trillion[47]." In effect, as Lietar and others (2012) similarly state - this was over eight times the entire world’s annual GDP in same year!

 

The focus of trade on capital itself and its further stripping into derivatives (options, futures, swaps, etc.) has led us to a global casino , wherein 'waves of credit' are described by Lietar (2012) as being more akin to a 'financial tsunami' than those in a calm sea. This has its own volatility and repercussions. According to the London based think-tank, International Financial Services London (IFSL): "During the financial crash of 2008, the global total of asset-backed securities issued and sold to investors fell by 79 percent to $441 billion, as overleveraged borrowers, banks and investors exited the market.[48]" The volatility and unpredictability of modern financial markets has already been demonstrated at the individual level in the form of 'rogue traders' such as Jerome Kerviel and Nick Lesson, both of whom almost overnight racked up more in losses than the entire capitalization of their Banks (with the latter bringing down Baring Bank); perhaps it is time we realized that the implications for modern economies are just as dire. (Crane and Matten, 2010, p.162)

 

Thus we see that in a final twist of narrative, the logic of interest has completely distorted trade itself. As Eisenstein says," To maintain the exponential growth of money, then either the volume of goods and services must be able to keep pace with it, or imperialism and war must be able to escalate indefinitely. All three have reached their limit. There is nowhere to turn. The credit bubble that is blamed as the source of our current economic woes was not a cause of them at all, but only a symptom. When returns on capital investment began falling in the early 1970s, capital began a desperate search for other ways to maintain its expansion. When each bubble popped -- commodities in the late 1970s, S&L real estate investments in the 1980s, the dotcom stocks in the 1990s, and real estate and financial derivatives in the 2000s -- capital immediately moved on to the next bubble, maintaining an illusion of economic expansion. But the real economy was stagnating. There were not enough needs to meet the overcapacity of production, not enough social and natural capital left to convert into money[49]."

 

Conclusion

 

Having followed the logic of interest and its effect upon the annals of history till the present, it is important to reflect on where we stand and the options available to us. As alluded to at the beginning of this essay, we are currently at the threshold of a crisis of our own making; today, we have reached an impasse in our ability to convert nature into money. As Eisenstein says," There is little more we can convert. Technological progress and refinements to industrial methods will not help us take more fish from the seas -- the fish are mostly gone. It will not help us increase the timber harvest -- the forests are already stressed to capacity. It will not allow us to pump more oil -- the reserves are drying up. We cannot expand the service sector -- there are hardly any things we do for each other that we don't pay for already. There is no more room for economic growth as we have known it; that is, no more room for the conversion of life and the world into money.[50]"

 

And yet perhaps this is not immediately apparent to most of us. Perhaps this is because the logic of interest is as Eisenstein (2007) says, the logic of an addict. To quote, he says, "The logic of interest is the logic of an addict. It assumes that always and forever, we will find some way to feed an endlessly growing need to consume. We will always be able to find some new resource, some new form of capital to convert into money. Like the craving of an addict, interest demands that more and more of life be directed toward feeding it…The longer any addiction is maintained, the greater the depletion of life, and the more extreme the measures required to perpetuate it. Just as the addict cashes in life insurance policies, borrows money from friends, and eventually converts every physical resource and social resource into money, so also does our civilization seek out every possible source of unexploited social, natural, cultural, and spiritual capital. However good our intentions to preserve it, interest generates an unstoppable force that assails it from all directions, always seeking a way in.[51]"

 

Perhaps this may be a reason to despair for some; this paper in keeping to the spirit of Eisenstein (2007, 2011) contends this is a reason for hope. Just as with any addict, someday the crisis assumes a proportion that cannot be ignored, when an addict's resources of goodwill, money, pawnable assets, friends, and credibility are almost exhausted; there is nowhere else to turn - except inwards.

 

Crisis heralds a chance for a new narrative, one previously inconceivable but presently feasible and doable. As we continue to scramble towards applying new and not so new fixes to further prop up this interest based system at an ever greater cost to alleviate the very problems caused by it – hope emerges in initiatives that challenge the structural dynamics of interest. “Bailout” packages raised from public money given to the very banks that have caused the crisis have run their course, in their place is an emerging mass popular movement determined to claim back the freedom of people for themselves. Ecological awareness, localism, green design, community currencies, ecology-based economics, gift economics, negative interest currencies, public co-operative interest-free banking, community land trusts and open community markets are all moments of clarity arising after the weight of addiction dissipates. These movements are all premised on a change in narrative; a realignment in the words of Eisenstein (2007, 2011) and Korten (2010) from one of separation to one of interconnectedness – to begin to see the world as an organic whole, holistically as opposed to the reductionist, deterministic machine model. [see Appendix A]

 

Today, money represents a paradox of interesting dichotomy; it is both next to nothing (physically being slips of paper, bits in computers) and next to everything (the primary agent for the coordination of human activity). In its mystery and illusion, we have forgotten that we are its masters; that we can construct in a way that works best for us all. Is it not time we created a supportive financial environment that decreases our reliance on debt and increases our sense of community – time we saved the world from a Frankenstein of our own creation? Time we saved the world from interest.

 

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Appendix

 

A note on Religious and traditional thought pertaining to Interest/Usury

 

As McIntosh states in his paper the practice of usury has been "repeatedly condemned, prohibited, scorned and restricted, mainly on moral, ethical, religious and legal grounds. Among its most visible and vocal critics have been the religious institutions of Hinduism, Buddhism, Judaism, Islam and Christianity. To this list may be added ancient Western philosophers and politicians, as well as various modern socio-economic reformers." (McIntosh, 1998)

 

The Hindu view: The earliest known references to usury are to be found in ancient Indian (mainly Hindu) religious manuscripts of the Vedic texts of Ancient India (2,000-1,400 BC). In later Sutra (700-100 BC) texts the first sentiments of contempt for usury are expressed, with the higher castes of Brahmans (priests) and Kshatriyas (warriors) forbidden from being usurers or lenders at interest.

 

The Buddhist view: Though it is commonly purported that the prohibition of usury is embedded in the fifth path of the Eight Fold path of Right livelihood (sammá-ájíva), early scriptural reference of negativity ascribed to usury can be traced to the Jatakas texts (600-400 BC), wherein usury is referred to in the demeaning manner of stating that “hypocritical ascetics are accused of practising it”.

 

The Greek view: Aristotle (384-322 B.C.) believed the practice to be unnatural and unjust, in the first book of Politics he writes:

 

“The most hated sort [of moneymaking], and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And this term Usury which means the birth of money from money, is applied to the breeding of money, because the offspring resembles the parent. Wherefore of all modes of making money this is the most unnatural.”

 

Likewise Plato condemned usury in two of his works, his Republik and Law’s, whereas Cato and Seneca condemned usury and equated it to the same as murder for 'consuming the life of the borrower'.

The Judaic view: In the Old Testament, God is said to have spoken in a manner conveying an outright prohibition on usury:

 

“[He that] Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live . . . he shall surely die; his blood shall be upon him.” [Ezekiel 18:13]

 

Elsewhere, however the prohibition is selective:

               

Thou shalt not lend upon usury to thy brother; usury of money; usury of victuals; usury of anything that is lent upon usury. Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury, that the Lord thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it. [Deuteronomy 23:19–20]

 

Despite this demarcation it is worth bearing in mind that in the Halakhah, or Judaic Law, interest bearing contracts tainted by 'avak ribbit', literally the' dust of interest' are not enforceable (The Jewish Encyclopedia, 1912),which implies that interest was never seen as 'rightful earnings' despite the dispensation.

 

The Christian View: Jesus’ expulsion of the moneychangers from the temple is precisely seen as a parable conveying the Christian notion that usury as profit generated from money-lending is evil.

 

Elsewhere readings of Mathew 25:26-27 and Luke 19:23 casts the usurer as one who - ‘reaps where he did not sow’. All of this supported by the various Christian Councils over the centuries, such as:

~ The Council of Nicaea (325 A.D) banning the practice amongst clerics.

~ The Council of Charlemagne (768–814 A.D), in which the Church extended the prohibition to laymen, defining usury simply as a transaction where more is asked than is given.

~ The Second Lateran Council in Rome (1139 A.D) denouncing usury as a form of theft, requiring restitution from those who practiced it.

~ The Council of Vienne (1311A.D) declaring that any person who dared claim that there was no sin in the practice of usury be punished as a heretic.

 

It is also worth mentioning that early Christian Scholastic thought such as Saint Anselm and Saint Thomas Aquinas equated usury to theft and of being a double charge, with the latter specifically stating that Time is not a commodity that anyone can sell. All of this clearly illustrates the early non-compromising nature of the Church with regards to interest or usury.

 

The Islamic View: The Islamic view against usury is well known, having sparked a modern financial movement against usurious banking in the name of Islamic finance. Islam equates usury to a ‘War against God’; interestingly this is the only such instance in the Qu'ran of the use of such terminology. War is a strong word and yet others using Thomas Hobbe's famous phrase have defined interest in similar terms as being the 'war of all against all'[52]. The definitive Qu'ranic verse against usury is:

 

"Those who consume interest cannot stand except as one who stands being touched by a Devilish touch into insanity. That is because they say, "Trade is [just] like interest." But God has permitted trade and forbidden interest. So whosoever receives an admonition from his Lord and desists may have what is past, while his affair rests with God…God destroys interest and gives growth to charity…O you who have believed, fear God and give up what remains [due to you] of interest, if you be believers. And if you do not, then be informed of a war [against you] from God and His Messenger. But if you repent, you may keep your principal – oppress not and you will not be oppressed." [Qu’ran, 2:275-279]

 

Interestingly this verse could be said to allude to four dominant features of usury that have become manifest today, namely:

(a)    Scarcity – This fits into the paradigm of the 'Devilish touch' defined in this verse and elsewhere [Qu’ran, 2:269] as being "threatened with poverty and urged to immorality".

(b)   Distortion of Trade – as embodied in the verse, "they say, "Trade is [just] like interest." – implying the parameters and paradigm of trade are distorted when coupled with interest. Thus, Islamically a 'free-market' economy can best function only when de-coupled from usury, for to operate within the context of usury – is seen as freedom to oppress. The Fair Trade movement may concur with this argument.

(c)    Ecological destruction – The Qu'ranic argument of a war against God seen as the faith equivalent of interest's war against nature has arguably never been more manifest than modern times; as Eisenstein says, "the imperative of perpetual growth implicit in interest is what drives the relentless conversion of life, world, and spirit into money." (Eisenstein,2007).

(d)   Structural Oppression – the Structural oppression inherent in interest has been illustrated in recent times by many such as Dr.Margrit Kennedy who demonstrates in her book (Kennedy, 1995) that interest structurally redistributes wealth from the large majority to a small minority[53]. This inherent structural oppression could be said to be what the Qu'ran is alluding to when it says, "oppress not and you will not be oppressed."

 
 

[1] Business Wire News database, 2009. Two top economists agree 2009 worst financial crisis since great depression; risks increase if right steps are not taken. (February 29, 2009). Available at:<http://www.reuters.com/article/2009/02/27/idUS193520+27-Feb-2009+BW20090227> [Accessed 04 November, 2012]

 

[2] Wikipedia, 2007-2012 global economic crisis. Available at:<http://en.wikipedia.org/wiki/2007%E2%80%932012_global_economic_crisis> [Accessed 04 November, 2012]

 

[3] There is some dispute as to the second of these meanings, see Wikipedia, Chinese word for "crisis". Available at< http://en.wikipedia.org/wiki/Chinese_word_for_%22crisis%22> [Accessed 04 November, 2012]

 

[4] In his seminal work, "Small Is Beautiful: Economics as if People Mattered", the noted economist E.F.Schumacher states economics to be a 'derived' science that accepts instructions from what he refers to as meta-economics. In his landmark fourth chapter entitled "Buddhist economics", he attempts to illustrate what the meta-principles of modern economics are by deliberately contrasting them with those contained within a faith paradigm such as Buddhism. Indicating modern economics to "consider consumption to be a sole end and purpose of economic activity", he states that "Buddhist economics must be very different from the economics of modern materialism, since the Buddhist sees the essence of civilisation not in a multiplication of wants but in the purification of human character." It is instructive that Schumacher when discussing his reasons for choosing Buddhism to illustrate the contrast states that the "choice of Buddhism for this purpose is purely incidental; the teachings of Christianity, Islam or Judaism could have been used just as well as those of any other of the great Eastern traditions.”(1984, p.55). Earlier in his book, Schumacher highlights how the contrast between popular religious faith and modern economics at the meta-level was something not lost on many of modern economics key founders, quoting Keynes who, during the economic hardship of the 1930s, advised using the idea of personal enrichment as the driving force to pull society out of the Great Depression, he illustrates the economist as saying the time is not yet for a “return to some of the most sure and certain principles of religion and traditional virtue—that avarice is a vice, that the exaction of usury is a misdemeanor, and the love of money is detestable.” "Economic progress, (Keynes) counseled, is obtainable only if we employ those powerful human drives of selfishness, which religion and traditional wisdom universally call upon us to resist.  The modern economy is propelled by a frenzy of greed and indulges in an orgy of envy, and these are not the accidental features but the very causes of its expansionist success.  The question is whether such causes can be effective for long or whether they carry within themselves the seeds of destruction." (1984, p.31). It is worth noting that Keynes' foresight led him to seeing a natural end to what he deemed to be a pretense of economic necessity vis-à-vis the "most sure and certain principles of religion and traditional virtue", to him such pretense was needed for limited duration only and was not intended to serve as absolute principle, as he said, "For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.” See: Keynes, J.M. Extract from essays in Persuasion, 'The Future', p.371-372. Available at <http://www.interestfreemoney.org/papers/extract-keynes-essays.htm> [Accessed 04 November, 2012] For a more detailed discussion note on the meta principles of modern economics please see Appendix A.

[5] A series of proposals introduced in June 2009 by United States President Barack Obama and key advisers address consumer protection, executive pay, bank financial cushions or capital requirements and expanded regulation of the shadow banking system and derivatives. Likewise Basel III regulations for banks introduced by European regulators proposes increased capital ratios, limits on leverage, narrow definition of capital (to exclude subordinated debt), limits on counter-party risk, and new liquidity requirements.

 

[6] Prominent amongst whom would be Nobel Prize winning Economist, Joseph Stiglitz [see: http://web.sg.ethz.ch/Latsis_2012/downloads/slides/stiglitz.pdf ] and currency expert and pioneer, Bernard Lietar, See: Lietar,B. Ulanowicz,R. Goerner.S and Mclaren.N, Is Our Monetary Structure a Systemic Cause for Financial Instability? Evidence and Remedies from Nature, Journal of Future Studies, April 2010: Special Issue on the Financial Crisis< http://www.lietaer.com/images/Journal_Future_Studies_final.pdf > [Accessed 04 November, 2012]

 

[7] The fragility of the global financial system is illustrated by impending hyperinflation, currency collapse, and depression waiting for the day when the American dollar can no longer be sustained.

 

[8] Peak Oil and the dependency of all aspects of our economic infrastructure and food supply on fossil fuels is a significant challenge when one considers that no conventionally-recognized alternative energy source can possibly hope to replace oil and gas any time soon..

 

[9] Recent times have seen an epidemic rise of autoimmune diseases; heavy metal poisoning, electromagnetic, chemical, and genetic pollution. These factors aligned with the degeneration of the modern diet, the toxicity and impotence of most pharmaceutical drugs causes significant cause for concern.

 

[10] Climate change, global warming, desertification, coral bleaching, tree death, topsoil erosion, habitat destruction, irreversible loss of biodiversity, toxic and radioactive waste, PCBs in every living cell, swaths of disappearing rainforests, dead rivers, lakes and seas, increasing slag heaps and quarry pits all point to the fact that the planet the next generation will inherit will be very different to one we currently live on. Causing environmentalists like Bill McKibben to coin a new name for our planet – eaarth < http://www.billmckibben.com/eaarth/factsandfigures.html>.

[11] See: Sir Martin Rees, one of Britain's most distinguished theoretical astrophysicists who holds that there is a 50:50 estimate that this will be humanity's last century.

<http://www.amazon.co.uk/exec/obidos/ASIN/0434008095/guardianunlim-21> Also see: James Lovelock, originator of the Gaia theory, who expects "about 80%" of the world's population to be wiped out by 2100.” <http://www.guardian.co.uk/theguardian/2008/mar/01/scienceofclimatechange.climatechange>

 

[12]See: As quoted in his book, “The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability.” <http://www.amazon.com/The-Bridge-Edge-World-Sustainability/dp/0300136110>

 

[13] By logical the author intends a 'deductive' process – one that shows the legalization of interest as resulting in a series of consequential steps that follow deductively from the previous one; thus showing that interest displays an inherent logic of its own – a logic that co-opts states, institutions and individuals into serving its rationale and modus operandi. As will be illustrated later in this paper, a key part of this modus operandi is that of the perpetual growth of capital. Needless to say, such logic is destructive by nature.

 

[14] The demarcation between Usury and Interest is historically at least, a false one. The papal position before Henry VIII's 1545 "An Act Against Usurie" was that usury was the sin of any amount of interest charged on a monetary loan. This was in keeping with scholastic theologians of Christendom such as Thomas Aquinas who saw usury as an abuse of the natural essence and function of money; hence the allowance for 'non-usurious' rates of interest was a later development introduced by the moral relativism advocated by Christian reformists such as Calvin (1509–1564) and Luther (1483–1546). This paper adopts the pre-reformist position in considering usury and interest alike and as such uses the terms interchangeably with no difference intended, except where interpretative difference occurred historically, in which cases the relevant distinction will be made explicit.

 

[15] See: Hispanus of Rome (1220 CE) – who coined the term “inter-esse” literally ‘in between is’ as a justification for a late payment (effective interest) charge on a defaulted loan. This justification allowed for deliberately short periods of usury free lending to be used as a ruse – to effectively ‘trigger’ the late payment period and then charge “inter-esse”, which many claim to be the etymological origin of the word now known as interest.

 

[16] See:“Retrovendito” – the resale contract – that was eventually prohibited by the church as an obvious legal ruse and “Contractum trinius” – which combined an investment, sale (of profits) and insurance contract (against losses) resulting in a fixed fee in respect of money invested.

 

 

[17] About this event Graeber (2011) says, "It was only with the creation of the Bank of England in 1694 that one can speak of genuine paper money, since its banknotes were in sense bonds. They were rooted, like all others, in the king's war debts. This can’t be emphasized enough. The fact that money was no longer a debt owed to the king, but a debt owed by the king, made it very different than what it had been before. In many ways it had become a mirror image of older forms of money…This was the first independent national central bank, and it became the clearinghouse for debts owed between smaller banks; the notes soon developed into the first European national paper currency." (Graeber, 2011, p.339-340)

[18] "…by the end of century France had secured 4 million square miles, Britain 3 million and Germany, Portugal, Belgium and Italy about 900,000 each. Only two countries – Liberia and Ethiopia, just 4 per cent of a continent the same size as the United States, Australia, India and China put together – were not incorporated into the supply and marketing system of a major power." (1999, p.38-39)

[19] See: <http://livingeconomiesforum.org/ii-pathology> [Accessed 12 November 2012] David Korten is one of the foremost authors against Corporations and globalization; a former Harvard Business School Professor and a Development Economist, he is a strong advocate for a people driven economy. One that is for Main street as opposed to Wall Street, one that puts real wealth over phantom wealth. (Korten, 2010)

 

[20] "The East India Company was abolished in 1858, discredited by the 'Indian Mutiny' in the year before; its armies and officials were transferred to the Crown. "It was deprived of its powers which had been wielded for two centuries with such merciless despotism…the public conscience of the nation was awakened by the spectacle of a structure of tyranny and wrong far exceeding in atrocity and extent anything that had ever been known in the history of the human race." Wrote an American author, C.Edwards Lester, in The Glory and Shame of England (1864). An English merchant agreed, saying that the company had obtained local goods "by every conceivable form of roguery..fines, imprisonment, floggings, forcing bonds upon them etc" The company’s indigo trade was typical: peasants in Bihar and Bengal were made to grow the crop at loss-making prices for fear of imprisonment, and forced labour was also used for its processing." (Douthwaite, 1999, p.38)

 

[21] < http://www.corporations.org/system/top100.html> [Accessed 12 November, 2012]

 

[22] IMF: Created by the US and British Governments at The Bretton Woods Conference after World War II (1944 Hampshire, USA), the International Monetary Fund (IMF) was created to maintain global monetary cooperation and stability by making loans to countries with balance of payment problems, stabilising exchange rates and stimulating growth and employment.

 

[23]World Bank: Likewise created at The Bretton Woods Conference after World War II (1944 Hampshire, USA), the World Bank was originally intended to ensure economic and corporate sustainability in countries affected by the war - mainly in Europe. Since the 1970’s the World Bank has steadily increased its original mandate of providing long term loans for reconstruction, to funding multimillion dollar infrastructure projects in developing countries. It is the single largest source of development finance in the world, lending for broad structural and economic changes, long-term development and poverty reduction, building roads, dams, pipelines, extracting natural resources etc. Being the major provider and source of finance for poorer countries – it can arguably be said to be the most impacting financial institution on the lives of millions in the majority world.

[24] WTO: The World Trade Organisation was established more recently, in 1995, to replace the General Agreement on Tariffs and Trade (GATT), its aim is to lower tariffs and non-tariff barriers in order to increase international trade. Ostensibly, it does this by fostering ‘free-trade’ between nations, which it seeks to achieve by liberalizing markets; namely ‘opening them up’ to global competition, removing local government barriers, tariffs and regulation that may hinder corporate interests connected with import and export.

[25] < http://www.stwr.org/imf-world-bank-trade/decommissioning-the-imf-world-bank-and-wto.html> [Accessed 12 November 2012]

 

[26] With regards to the IMF and the World Bank, it is arguably easy to trace their Corporate influence. Both institutions are based in Washington USA, and although owned by their 184 member countries, have the majority (40%) of all votes held by just 7 countries (the G7). The US holds the largest share at 18%, which grants them the ability to veto policies that do not serve US interests. Additionally votes are allocated according to financial strength (‘one dollar one vote’), resulting in those financially powerful countries (and the commercial interests that influence them) determining the monetary, economic and development architecture of the global economy. [facts and figures taken from website above]

 

[27] Recently renamed Poverty Reduction Strategy Papers (PRSPs) as part of an effort to address the issue of ‘government ownership’ of structural adjustment policy.

 

[28] < http://www.stwr.org/imf-world-bank-trade/decommissioning-the-imf-world-bank-and-wto.html> [Accessed 12 November 2012]

 

[29] Luis Ignacio Silva, at the Havana Debt Conference in August 1985, quoted by Susan George, A Fate Worse Than Death p 238

 

[30] < http://sacred-economics.com/sacred-economics-chapter-5-the-corpse-of-the-commons/> [Accessed 12 November 2012]

 

[31] Ibid.

 

[32] < http://charleseisenstein.net/why-rio-20-failed/> [Accessed 12 November, 2012]

 

[33] <http://www.wto.org/english/tratop_e/trips_e/trips_e.htm >

 

[34] See < http://www.inmotionmagazine.com/global/vshiva4_int.html> wherein the Environmental activist Vandana Shiva says: "If you want to have one tool for imperialistic control, it’s patent law under the WTO agreement… With the broadening of patents to life forms, patents do not just regulate technology they regulate life."

 

[35] See attempts to patent the 'Neem Tree'< http://www1.american.edu/ted/neemtree.htm>

 

[36] See the story of the man who stood up to the plaintiffs of 39 pharmaceutical corporations who sued the South African government for its effort to import and produce cheaper generic HIV/AIDS drugs, which the corporations alleged violates their patent rights under international trade law. < http://www.time.com/time/nation/article/0,8599,106995,00.html>

 

[37] < http://www.actionaid.org.uk/_content/documents/trips2_3132004_122755.pdf>

[38] < http://www.brookings.edu/~/media/research/files/papers/2007/2/28useconomics%20crandall%20opp08/pb_deregulation_crandall>

 

[39] < http://www.policymic.com/articles/3633/should-dna-data-belong-to-private-companies-the-genetic-alliance-fights-for-open-access>

 

[40] As Eisenstein (2011) says, "Pollution credits and similar schemes seek to convert the earth’s absorptive capacity into property."

 

[41]< http://charleseisenstein.net/why-rio-20-failed/> [Accessed 13 November 2012]

 

[42] < http://www.realitysandwich.com/money_and_turning_age> [Accessed 13 November 2012]

 

[43] Ibid.

 

[44] Graber (2011, p.364) alludes that, "Nixon floated the dollar in order to pay for the cost of war in which, during the period of 1970-1972 alone, he ordered more than four million tons of explosives and incendiaries dropped on cities and villages across Indochina…The debt crisis was a direct result of the need to pay for the bombs, or to be more precise, the vast military infrastructure required to deliver them." Elsewhere, while noting that U.S. citizens had not been able to cash in dollars for gold since 1934, he says, "The immediate effect of Nixon's unpegging the dollar was to cause the price of gold to skyrocket…The result was a massive net transfer of wealth from poor countries, which lacked gold reserves, to rich ones, like the United States and Great Britain, that maintained them." (2011, p.362)

 

[45] < http://www.publications.parliament.uk/pa/ld200809/ldhansrd/text/90205-0003.htm> [Accessed 13 November, 2012]

 

[46] < http://www.clubofrome.org/cms/wp-content/uploads/2012/05/Money-and-Sustainability-the-missing-link-Executive-Summary.pdf>

[47] Reference in book (Korten, 2010, p.290) is: Bank for International Settlements, table 19 (see chap.7, n.5).

 

[48] Website < www.ifsl.org.uk>

[49]< http://www.realitysandwich.com/money_and_turning_age>

[50] Ibid.

 

[51] See< http://www.ascentofhumanity.com/chapter4-11.php > 'The Crisis of Capital'

[52] See: Charles Eisenstein: Sacred Economics (podcast with Ethica Institute of Islamic Finance) in which he uses Thomas Hobbe’s famous phrase in the context of interest.< http://www.ethicainstitute.com/Ethica-Interview-Charles-Eisenstein-Author-of-Sacred-Economics-the-Gift-Economy-and-How-It-Translates-to-Islamic-Finance.aspx>

[53] For further details please see < http://www.zoupic.com/tag/wealth-distribution/ > [Accessed 04 November, 2012]