Dundee Conference 2015 – Scotland’s New Economy: Rethinking Economics and Money

Scotland’s New Economy: Rethinking Economics and Money

This workshop which was led by Duncan McCann, a researcher in Finance and Business with the New Economic Foundation, and focussed on two key issues for the future:

  1. the need for a new, alternative economic model;

  2. the prospects for a new, complementary currency for Scotland.

Duncan began by outlining why we need to develop an alternative economic model. Put simply, the current neoliberal approach is not working. The UK suffers from growth driven by rising personal debt, high government deficits and debt, rising inequality and the longest period of decline in wage growth. The root of this is an economic system which is:

  • unsustainable

  • unfair

  • unstable

  • unhappy

To counteract this, we need to develop an alternative economic system, one which is founded on the values of:

  • human dignity
  • common good
  • stewardship

A key part of this will be to create a new story, a new narrative about the economy. It will also involve weakening existing power bases and building new power bases. Duncan ended this section by outlining some possible themes for economic reform. These included:

  • different goals – beyond GDP

  • changing tax base

  • ownership and control

  • diverse financial system

  • basic income

  • re-balancing time

  • social return on investment

The second part of Duncan’s contribution was on money and complementary currencies. The current money system is bank money. This means that 97% of the money supply is created out of nothing by commercial banks when they lend to individuals or companies. They then charge the borrowers in this money. The main problems with this system of bank money are that it is:

  • growth dependent, and leads to

  • private gain, public loss

  • impoverished peripheral economies

We need therefore to change to a system that is based on:

more money and less debt

This is possible as money is essentially a social construct – an agreement by people to use something as a medium of exchange that is based on trust. We can therefore create our own currency. In the first instance this can be a complementary currency, one that would run alongside sterling. A complementary currency is:

  • an alternative means of exchange

  • that connects unmet needs with unused resources

  • and can fulfil specific social, economic and environmental goals.

Duncan then outlined a project he is working on for such a currency for Scotland:

  • a new non convertible national complementary currency

  • created debt free

  • circulates permanently

  • distributed equally to every “eligible” person in Scotland

  • a free/low cost public digital payment system available to all

This is an ongoing project and there are still details to be worked out. The benefits of a successful complementary currency include:

  • generating additional spending in the local economy

  • the potential to become the main domestic currency in an independent Scotland.

Creating an alternative narrative for the economy

The afternoon World Cafe sessions were primarily devoted to generating ideas that my prove useful in creating an alternative narrative. The following responses were to the question – What is the economy for?

  • people as citizens

  • democratic control over allocation of resources

  • improving the quality of life

  • usage not private ownership

  • resilience and diversity

  • stewardship

  • empowering communities

  • the common weal (redefining wealth)

  • sharing resources

  • social returns

  • enabling people to fulfil their potential, especially young people

  • meeting basic needs

Other points/questions raised in the afternoon

  • move towards a flatter economy with less disparities

  • land reform to free up land for housing complementary currency cane set up before independence

  • would a citizen’s income replace all benefits?

  • would some people still need additional support?

  • how to deal with the wealthy and with privatisation?

  • the transition movement as a model for an alternative narrative

Alister Rutherford

March 2015

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