6.1 General Outlook of Our Newly Proposed System of Money Creation for the Benefit of the Private Sectors

As already explained in more detail in Chap. 4, one of the principles of the new system of money creation—or, NMWO—proposed in our earlier workFootnote 1 is that there would be put an end to so-called private money creation, i.e. the (scriptural or book-entry) money creation to which a private (deposit) bank proceeds when it grants credit to third parties (for total amounts exceeding its cash reserve).

In accordance with our proposal, this model should be replaced by a system of pure public money creation that would be entrusted to a New World Monetary Institute (abbreviated, ‘NMWI’), which would become the central monetary institution within the framework by the to be established New World Monetary Order (abbreviated, ‘NMWO’).

The level of money creation for the benefit of (the central governments of) the countries participating in the NMWO has already been dealt with in detail in Chaps. 4 and 5 above.

Below, in a similar manner, we shall now elaborate on the outlook of the possible levels of money creation for the benefit of the private sector(s) that could take place in such a NMWO, specifically:

  1. (1)

    Money creation for the benefit of individuals (and families) to meet basic living needs.

  2. (2)

    Money creation for the benefit of individuals to help launch professional careers.

  3. (3)

    Private money creation for the benefit of the nonprofit sector (as long as it will continue to exist under validation of the NMWO).

  4. (4)

    Private money creation for the benefit of the entrepreneurial sector.

6.2 Money Creation for the Benefit of Individuals (and Families), for Basic Necessities of Life

The first sub-level of money creation for the benefit of the private sector, distinguished under our earlier proposals for a NMWO, would involve money creation for the benefit of individuals (and families), intended to meet their basic life needs.

Mindful of the intent of these proposals to establish a fair system of money creation, it should be pointed out that the notion of ‘basic necessities of life’, or ‘basic life needs’, should be interpreted sufficiently broadly as the totality of the needs of an individual or family, from the point of view of building a truly dignified existence (and thus not a mere survival on the current poverty limits used in various, capitalist countries, respectively in the international contextFootnote 2).

Here, as also noted earlier, a further underlying objective of the NMWO should be that the notion of a dignified existence be given the same minimum interpretation for every human being, wherever born or living in the world (be it that, of course, objective local—including cultural—factors may be taken into account).

The notion of basic life needs should thus certainly not remain limited to absolute necessities of life, such as food, drinkable water, medical care, and (decent) housing, but should be understood in a much broader sense, including, for example, on the one hand, the domain of a sufficient level of material comfort (including access to such things as transport, communication, recreation, etc.) and, on the other hand, also the domain of certain immaterial basic life needs, such as (obviously) education and training, the ability to participate in a community.

In the NMWO, the mechanisms of money creation for the benefit of individuals (and families) should ensure that everyone, worldwide, will be able to meet all of these basic life needs.

When establishing such a system of money creation on behalf of the private sector, the NMWO will, furthermore, have to consider the systems of collective care (and related services) already discussed in Chap. 5. that countries, participating in the NMWO, will be able to set up based on the allocation model discussed in more detail in Chap. 4.

The latter will themselves already meet various basic life needs to a substantial degree, including even a universal basic income. This implies that, where we shall below discuss the methods of financing basic necessities of life on behalf of individuals, we shall be referring to the remaining basic life needs (and their financing) that are not (in a sufficient manner) supported by the public, collective care systems discussed in Chap. 5.

In order to fulfill the objective(s) of the NMWO that everyone should be able to secure a dignified existence (and that the methods of money creation should contribute to this objective), in our proposed NMWO, money creation for the benefit of individuals to meet basic life needs will rely on various techniques, including credits without interest charge, credits with a negative interest charge and, in exceptional cases, even non-refundable allocations to private persons.

At a minimum, no interest will be charged on loans for basic life needs, although repayment obligations may continue to play a role.

In this regard, the insight that interest levying constitutes a method of enrichment for the rich at the expense of the poor is already an old one, dating back to philosophers of Classical Antiquity (e.g., Aristotle), in addition to early Christian doctrinal systems.Footnote 3

In modern times, interest levying has been justified, among other things, because it can provide an answer to the devaluation, over time, of the purchasing power of money (ergo, to the inflation risk).Footnote 4 The latter argument has, in our opinion, at best value in cases when existing money is lent out to a borrower, but has no place in a context in which the granting of credit is part of the creation of new money. In the latter case, at most, it could be argued that, in the context of money creation by the private banking system, a private bank may be forced to borrow money itself (on which it must pay interest), albeit even this last argument will no longer be relevant in the context of our proposed NMWO.

The aforementioned repayment arrangements will, furthermore, have to be tailored to the reasonable ability of the borrower in question to earn from his employment, or otherwise, a sufficient income to enable him to repay the credit and, increasingly, to provide for himself and his family, whereby it cannot be the intention that a chronic dependence on such NMWO credit for basic life needs should arise.

Such lending (but also the monitoring of a private borrower’s credit file) will, additionally, have to be done on a sufficiently personal basis.

A file manager (working within the national central bank that grants the NMWO credits) will have to adequately assess the borrower’s person, creditworthiness, and repayment capacity, in accordance with guidelines to be provided by the national central bank, itself part of the NGSCB. At the same time, the granting of credit to finance basic life needs will have to be sufficiently easy to access. The reason for this is that NMWO credit to finance basic life needs will have to be a true right of any human being, whereby such credit will be easily obtainable, provided several basic conditions are met, including:

  • A (simple) request, specifying the reasons for the credit (which should fall within the notion of (basic) necessities of life, as to be defined in the NGSCB regulations).

  • A (sufficient) demonstration of the borrower’s actual ability to repay the credit.

Credit to meet basic life needs will however still remain credit, hence essentially repayable. The potential borrower will have to be able to demonstrate, at the time of applying for the credit, that, at least in the medium term, he will be able to repay the credit and that he will make the necessary efforts to do so, in particular through his work in the production sphere.

The low-threshold nature of the mechanism of credit for basic necessities of life will, in other words, not constitute an excuse for avoiding the provision of labor altogether, on the understanding that, within the NMWO, the fruits of such labor should belong primarily to the person who provides it (and not, as is too much the case at present, in the first instance to the wealthy within society who, in accordance with the principles of capitalism, strive in chief to enrich themselves through an (often shameless) exploitation of other people's labor power).Footnote 5

In other words, the underlying intention of the NMWO should be that the global economy should gradually evolve towards an economy in which everyone, on a global scale, can provide for their basic life needs through their own reasonable efforts (both in terms of minimum, as well as maximum) and in which, consequently, the NMWO mechanism of credit for basic necessities of life will serve mainly for the pre-financing of certain major expenditures, such as the purchase of a home (house or apartment).

Furthermore, not only the granting, but also the monitoring of such NMWO credit will have to be strongly personalized, whereby, for each borrower, an appropriate balance will have to be pursued between, on the one hand, the expectation that everyone, within reasonable limits, will keep participating in the production processes (in the broad sense of the word, therefore by no means to be limited to industrial or service productivity, but including, for example, productivity in so-called softer sectors such as art, education, and care provision), and, on the other hand, the personal aspect of the credit files concerned.

Finally, the possibility of providing (free) credit to meet basic life needs should also become the exclusive domain of national central banks within the NGSCB. Such lending could, preferably, be organized in a sufficiently automated manner, on the understanding that there will also be opportunities for in-person consultation between the lending central bank and the prospective borrower, when useful or necessary.

6.3 Money Creation for the Benefit of Individuals for the Start-Up of a (New) Professional Activity

A second sublevel of money creation for the benefit of the private sector, distinguished in the context of our earlier draft of a NMWO, concerns the one that should be set up to provide a fair opportunity for everyone to establish a basic professional activity.Footnote 6

Indeed, one of the underlying principles of the NMWO should be that every human being, on an equal footing, should be given the opportunity to engage in a professional activity of their choice and, from it, earn a professional income sufficient to meet their basic life needs.Footnote 7

In other words, we do not take the view provided by Ayn Rand (and the likes) that (unsuccessful) human beings are inherently lazy creatures, but rather that the organization of the socio-economic order should guarantee that every human being, through their labor, can flourish, provided that (1) this remains within reasonable limits (ergo not in accordance with the currently prevailing neoliberal models of coercionFootnote 8), and (2) the labor-providing person themselves will enjoy a perspective of a reasonable income from their labor—which in turn presupposes the abandonment of the prevailing, capitalist models of exploitation, in favor of a socioeconomic model in which everyone will be able to reap the benefits of their own labor.

Whereas in the current, capitalist economic order, numerous people, in exchange for an agreed remuneration (which is often, be it with great differences from country to country, ridiculously low in relation to the gigantic profits flowing to the capital providers of the enterprises/employers) (cf., furthermore, in Sect. 7.1), place their labor at the disposal of another market player (e.g., a company which then becomes an employer), an economically equally valuable model is that in which a person conducts their own professional activity on an independent basis.

Whereas some people (especially in wealthier countries) are fortunate enough to take ownership and/or control of an existing business started by others (e.g., by inheriting it from a parent), a much larger group of people is usually not so fortunate. In addition, today’s neoliberal societies are characterized by a multitude of other forms of nepotism, for example, the fact that those born into a wealthy class will be able to rely on the networks of their wealthy parents (and other relatives) in their later careers, while this is not the case for children of poor classes who would already manage, without the support of such a network, to pass higher studies. In fact, recent research has even shown that such class inequality already originates in the womb, to the extent that professional success in later life depends primarily on the lottery of chances associated with conception and birth (and hardly on skills or talents).Footnote 9

The capitalist system makes little to no effort to acknowledge this basic reality and the intrinsic soci(et)al inequality (and therefore injustice) that results from it, with the result that such more fortunate people who, in addition to having access to a much better education, inherit a successful business and/or extensive professional network from a parent (or other relative),Footnote 10 will be able to start out in professional life with a huge advantage over other people who are not born in such a fortunate circumstance.

Indeed, within today's society, worldwide, all levels of economic and social life are gradually permeated by such, yet intrinsically completely unjust nepotistic thinking and acting, if not only the business world, but also, e.g.: (1) the political world; (2) the cultural and leisure industries; (3) the academic world, etc.

In any case, it is extremely distressing and testimony to the low level of civilization achieved so far that, in the year 2022, one man, by birth, finds himself in a world in which he will be bathed in the greatest possible wealth and luxury for the rest of his life (without ever having to do anything, or much, for it), while the other human being, just as much by birth, and even if he struggles to his death, ends up in a world in which poverty, besides even hunger and disease, will be his portion (and this, if he reaches the age of maturity, for the rest of his life) (a phenomenon which in the past has been described by Oxfam as the condemned to stay poor syndrome).Footnote 11

The economic system that will emerge based on the NWMO should, hence, recognize the intrinsic unfairness of the current societal models in terms of career possibilities and opportunities, and look for solutions to remedy this.

At the very least, a climate will have to be created in which everyone will be given a basic, fair opportunity of full professional development, which is why the pursuit of this objective should become a second (sub)level of money creation for the benefit of the private sector, namely the level of money creation/credit with a view to ensuring basic access to a sound professional life.

The notion of ensuring basic access to professional life will also need to be given a sufficiently broad interpretation, and may include things like financing specialized (professional) training, financing the costs associated with the start-up of a new activity, etc.

For the remainder, this second subcategory of loans to individuals could be subject to the same principles and rules as loans to meet basic life needs (as discussed in Sect. 6.2).

In addition, for those who continue to hire out their labor to an enterprise, work should be undertaken on a more equitable organization of the enterprise system, characterized, among other things, by a fairer distribution of the capital gains created by such enterprises. We shall develop some further ideas on this in Section 7. (Cf. Sect. 7.2.)

6.4 Lending to/Money Creation for the Nonprofit Sector

The third sub-level of money creation for the benefit of the private sector within the NMWO proposed in our earlier work would have as its object the so-called nonprofit sector.

Indeed, in numerous countries (amongst which, certainly, Western and Western-inspired countries), there exists a (thriving) nonprofit sector.

In many countries, this sector includes, among other things, a rich (private) association and foundation life.

To finance their operations, such associations, foundations, and similar organizations that fall under the (broad) category ‘nonprofit sector’ (or the more common term, at least in Anglo-American areas, ‘NGO sector’, where NGO stands for ‘nongovernmental organization’), often boast of various forms of government grants, in addition to contributions from members (besides other types of donations from individuals), which does not prevent such entities from also being in need of credit in some cases.

In addition, the nonprofit sector provides, in many countries, various tasks that are closely related to the public interest,Footnote 12 without seeking, at least in principle, a personal benefit for the stakeholders within such associations, foundations, and other organizations belonging to this sector.

Other (especially developing) countries, as a rule, enjoy far less the luxury of such an extensive nonprofit sector of their own, if only because the governments of such countries lack the resources to subsidize such associations, foundations, and other nonprofit organizations, and their populations themselves are often faced with much more basic needs than participating in such entities (albeit that in these poorer, in many cases developing countries, nonprofit organizations originating in rich(er) countries often do operate).

The proposal we formulated in our earlier work is that, within the framework of the NMWO, policy regarding the nonprofit sector, would itself henceforth be framed within the monetary policy of the global community itself.

A preliminary question here will be to what extent there will still be room and need for government funding of such nonprofit associations.

Indeed, the establishment of the NMWO should lead to a new type of government that, worldwide, will work primarily for the common good of its entire population (while also respecting the limits of planetary carrying capacity). (Cf. above, Chaps. 4 and 5.)

In other words, a large part of the tasks that are currently fulfilled by the private nonprofit sector (think, for instance, of organizations such as Oxfam, Greenpeace, the Red Cross, 11.11.11., Doctors Without Borders, among many others), will under the NMWO gradually shift to, and thereby start sorting out under the responsibility of, the national governments themselves.

This implies that, ideally, a substantial proportion of these nonprofits will themselves become redundant, or at least start merging into the bosom of (fully NMWO funded) governmental institutions that will take over their functions.

To the extent that, in addition to these (henceforth) altruistically functioning (national) governments, there would still be a need for private organizations that would continue to help fulfill tasks of general interest, at least during a transition period, there will nevertheless continue to be a funding need for this type of non-profit organization.

Where appropriate, the financing of such non-profit organizations could continue to exhibit a mixed character, namely in addition to (1) government financing (which could then be considered as compensation for the outsourcing of tasks that in fact are government tasks), also (2) financing from the hands of private individuals (e.g., through membership fees and donations).

To the extent that such future non-profit organizations would (or could) continue to participate in carrying out the basic governmental task of establishing a global living environment in which the well-being of every human being is put first, their credit needs will also be able to be met by and from the NMWO monetary authorities.

This implies that such non-profit organizations could also be granted access to credit from the national, central bank of the countries within which they operate.

The lending policy to such non-profit organizations will also, preferably, have a regulatory basis, whereby (1) the basic governing principles (including the underlying objective that the non-profit sector—to the extent that it will be directed to tasks of general welfare—would gradually merge into the renewed government apparatus), would be laid down in the NMWO treaty; (2) the NMWI itself would be empowered to draw up a general framework of more specific guidelines on the organization and operation of the non-profit sector, in relation to the role of the (national) governments of the participating countries; and finally, (3) the national central banks of the countries participating in the NMWO would be empowered, with regard to their credit policy, to specify the aforementioned general guidelines in the form of national guidelines (applicable within their countries).Footnote 13

The latter type of credits could, like the other credits of general welfare to be provided by the NMWO, have a in principle ‘for free’ character, be it that there could be room for a differentiation depending on the extent to which a given non-profit organization effectively takes care of basic needs of general welfare, or of needs of a more luxurious character.

Incidentally, in exceptional cases there could even be made use of non-refundable allocations within this third sub-level of money creation for the benefit of the private sector.

6.5 Money Creation for the Benefit of Enterprises

Finally, the fourth sub-level of money creation for the benefit of the private sector within the context of the NMWO will involve the established business community.

The NMWO proposed in our earlier work will, of course, not be able to function in accordance with the premises proposed above without a new vision of the ethics of entrepreneurial life, particularly on the question of how to deal with the profit motive that now completely dominates entrepreneurial life.

Given the immense importance of this issue, which has not otherwise been addressed in detail in our earlier work, a separate Chap. 7 will be devoted to it.

6.6 Conclusions

The NMWO that we proposed earlier offers numerous perspectives for redesigning the socio-economic order, in which many of the injustices of capitalist models of organization could be remedied.

The thoughts expressed in this chapter on this subject aspire to offer, at most, a first reflection on this subject matter. If humanity should ever be prepared to implement a new monetary system such as the NMWO proposed in our work (or a variant of it), the task in working out the regulatory framework on this subject will be to strike the right balance between establishing a new monetary and economic system capable of satisfying the basic needs of all human beings and which will also bear witness to a far greater justice than the prevailing capitalism makes possible.

Relative to the historical precursors of capitalism—notably medieval feudalism (and in other countries or territories, similar caste systems) and pre-existing civilizations that relied on slavery—it can be witnessed that capitalism had the great advantage of providing a model for economic growth and progress (rather than stagnation). However, capitalism lost sight of the fact that in a world with limited opportunities, economic growth cannot continue unrestrained forever, which has been capitalism’s first Achilles’ heel. In addition, four centuries of experience with capitalism have demonstrated that its operating methods and models, inherently bring about an inequitable distribution of the surplus values created by the economy, a characteristic that constitutes the second, main shortcoming of capitalism.

It is nevertheless urgent that both shortcomings be remedied. What this will further imply for the organization of the entrepreneurial sector will be discussed in Chap. 7 more thoroughly.