Review of
Life, Money & Illusion
by Richard Priestman, Kingston, Ontario
President of the Kingston Chapter of the
Committe on Monetary and Economic Reform (COMER)

Review appeared in COMER's September 2006 issue

Life, Money & Illusion; Living on Earth as if we want to stay

"Money is to civilization what blood is to an individual.
Money connects billions of people in mutual provision
in the same way that blood connects billions of cells
toward the same end."

Mike Nickerson

"Money is the life blood of civilization. Without money it would be very difficult for any but small communities to work together in mutual provision. By enabling millions of people to cooperate, money provides a great service. With this service, however, comes danger. Money gathers and flows in economic streams. The greater these flows, the greater the temptation to tap in and drink deeply."

Mike Nickerson's thesis is that the capitalist, market economic system has
been very successful at producing goods which people need or want, but has
done so at the expense of depleting natural resources, destroying or
polluting the environment, and people who are living in poverty. Wealth, as
measured in money or possessions, is plentiful, but wealth, as measured by
the well being of people, is lacking. The economic system uses Adam Smith's
recognition that self-interest provides the incentive for individuals to
find better ways to produce things, and thereby create more wealth for
themselves and their community, but has forgotten that Smith's philosophy
also recognized a free and open market - not one where prices are distorted
by very large players - and that "the wealth of nations is measured by the
welfare of the people". A system which leaves many in abject poverty while
accumulating vast wealth for a few cannot be considered successful when
measured by the yardstick of "the welfare of the people".

The book explains in a very convincing way why we (western, developed
societies in particular) must change our economic system from one based on
growth to one based on sustainability. Nickerson's 10 years of research is
very apparent as he relates this theme over and over again to historical
data. Nations became addicted to "growth" because it produced wealth,
because they have been able to push external environmental and human costs
"under the carpet", and because money, as a measure of growth, was so easily
created. By the 1970's the dangers of continuous growth were broadly
understood, culminating in the 1983 UN resolution creating the World
Commission on Environment and Development. Its report in 1987 (Our Common
Future) confirmed that "we are indeed faced with a crisis of proportions
unparalleled in recorded history" - that what is needed is "sustainable
development" to meet the needs of the present without compromising the needs
of future generations - but business as usual has continued. The rational
question raised by the book is, why? What are the forces maintaining the
status quo?

Those who are benefiting the most from the present system deny the facts
because to accept them would lead to a major change in their life styles -
and they have the wealth and the power to resist such changes. Add to this
the millions of people who have been led to believe that economic growth is
necessary, and the inertia becomes almost impossible to overcome.
Conventional economics has become the religion of the modern world, and to
question economic growth has become heresy. "Traditional economics accounts
only for the interactions between people. We need to expand economic
accounts to include interactions with our ecological foundations."

The book provides a brief history of the development of "money, markets and
an orderly world". Money not only facilitates trade, but also division of
labour, production and development. With increased trade, markets developed
and became an efficient mechanism for balancing supply, demand and price,
providing the market remained free of manipulation. Today, much market
activity is manipulated to increase demand in order to keep the economy
growing. People are encouraged to keep buying even if it means going into
debt, and debt adds another incentive to produce in order to get out of
debt.

While money has made the market system workable, money itself is a major
problem because it is created as debt (primarily by private banks) and the
money created is only for the principal; it does not include the interest.
Therefore, the economy must grow in order to create additional money to pay
the interest. Trading in debt instruments and other financial paper now
comprises the greatest volume of market transactions. The private banking
system is immensely powerful and remains so because governments have given
them the privilege of creating money (and then paying interest to them)
instead of creating it themselves at cost. Monetary reform is urgently
needed. Nickerson discusses several examples of currencies not dependent on
money created as debt.

Having outlined the problems of our runaway economic and monetary systems,
we are faced with the question of what to do about it. It would be helpful
to have a means of measuring well-being - social, environmental and
economic - rather than just economic conditions . Measuring the wealth of a
nation by its GDP is much easier than measuring its well-being, and fits in
with the current economic system, but making decisions based only on how
much money is being made and ignoring social and environmental factors often
leads to disasters. An instrument to measure well-being has been developed
called the Genuine Progress Index (GPI). Those promoting this concept are
members of groups such as Atlantic GPI, Alberta GPI and the Canadian Policy
Research Networks, and other individuals including the author. With the
help of Joe Jordan, M.P., a Private Member's Motion was passed on June 2,
2003, stating that "the government should develop and report annually on a
set of social, environmental and economic indicators of the health and
well-being of people, communities and ecosystems in Canada".

Obstacles to Change:

"An economy based on sustainability makes sense when people think about it,
but it's not a possibility that gets much exposure through conventional
channels. It will take widespread popular assertion before sustainability is
adopted as society's goal. Material expansion presently brings great wealth
to those with fortunes to invest. They secure their fortunes by controlling
the commercial media and, thereby, how most people view the world."
Nickerson says it is a "Question of Direction". "Should our goals be based
on the life perspective, or the money perspective?" While the life process
cannot be changed, the economic system is adjustable. The huge impulse
toward economic expansion has yet to recognize that today's biggest problems
result from its success.

"Anyone who thinks that an economy
can be expanded forever, within the confines of a finite planet, is either
a madman or an economist." Kenneth Boulding, Economist

We must decide if we wish to continue as we are, or change direction and
follow the path of sustainability.

My gut reaction to "Life, Money and Illusion" is: this is fascinating; it's
an eye-opener; it grasps the essence of life and human society. In
particular, it speaks in easily understood terms about people working
together, trading their skills and knowledge to satisfy needs, and the
importance of money in facilitating this trade. From the perspective of
monetary reform, it shows how money has been used and misused, how its
misuse has contributed to the concept of perpetual growth and why we must,
as a community, take control over money creation and its use if we are to
change from a growth dominated society - which will eventually collapse - to
a sustainable one. These ideas should be discussed in our schools from
about grade 7 and up! The book is well indexed with 115 references.

Richard Priestman, Kingston, Ontario
August 23, 2006