Power, Politics, and Activism

The US-American political scientist Dr. Gwendolyn Hallsmith started her lecture on “Power, Politics, and Activism” by reminding us of the characteristics of our monetary system and its power dynamics. What was very striking and serves as the basis for the later presented proposals is her description of money as a monoculture. Despite the existence of different currencies globally, by using the same bank debt issuance system only a single type of money is in circulation. She considers such a monoculture problematic because it is vulnerable to shocks - if the banks crash, the whole economy crashes. Continuing with terms borrowed from natural sciences, Dr. Hallsmith calls instead for an ecosystem of currencies, which includes local, business and food currencies, time and care banks - some of which she explained in more depth.

Most promising seems to be the concept of Time Banks, which arguably are the easiest reform you can do. They are relatively simple to set up but take community collaboration. Basically, Time Banks introduce time as a unit of exchange: one hour equals one service credit. This time-based currency values everybody’s contributions equally. Another interesting example of complementary currencies that was mentioned is Terra, a currency for international trade. Terra is established by creating a standardized basket of the most important internationally traded commodities and services, where storage costs are incorporated as negative interest rates, and that is inflation-resistant, less volatile and thus a stabilizing force for the global economy.

Another main insight taken from this lecture is the interplay between small-scale and large-scale initiatives, such as the setup of a small cooperative in a village managed by the community, or the creation of government funds to finance alternative banks. All of these examples are contributing to the enhancement of power democracy - the access right of any citizen to have a voice in power decisions. Dr. Hallsmith mentioned that this power democracy is a dynamic in which, historically, the citizens have always been subjects to the power exercised rather than agents of power. That distances the citizens from wanting to participate in their power institutions. This feeling of dissatisfaction with the system, the large-scale, must be taken as the start of an active play of citizens in their communities to start changing some small-scale rules, such as local currencies, credit access, or interest rates. In this way, citizens can start being heard by small-scale institutions that, sooner or later in a democratic society, will shout out their needs to the large-scale institutions, such as big banks, central banks, or government secretaries. This interplay that emerges from the interaction of decisions and plans between these two levels is the crucial characteristic of the democratization of power that any citizen, no matter the scale, could feel part of. The case studies that Dr. Hallsmith pointed out primarily served to support the idea that sustainable solutions can be implemented by small-scale institutions with a huge impact in society in the absence of a systematic change plan by large-scale institutions. However, she reinforced the call for more attention by public institutions to help finance these solutions.

Furthermore, Dr. Hallsmith presented the importance of public banks – a rare sight in the United States. However, the Bank of North Dakota (BND) was mentioned as such an example of how to regain democratic control over banking and the financial system. Rather than having public funds being extracted from local communities to fuel Wall Street speculations, public banks can ensure that those funds are used to stabilize local economies, since they are ultimately accountable to the democratic institutions of the state. This example sparked a discussion on whether such a proposal went far enough to adequately address the environmental and social issues of the banking system. Public Banks, such as Sparkasse in Germany for instance, are still investing in speculative assets and military equipment as highly profitable sectors.

In the context of this discussion, it seems appropriate to conclude with the top five leverage points that Dr. Hallsmith proposed as most important to bring about the necessary change: ownership, money, markets, management and metrics. Ownership will not suffice to transform the monetary system, but it is arguably a starting point of leverage.

Based on the lecture "Power, politics, activism" by Gwen Hallsmith during the AEMS 2022.
Written by: Hannah Jennewein and Jaime Reyes