Money Day with Bernard Lietaer – Post 1

Aug 10, 2017 by

by David Ellmayer & Carlos Castro

On Thursday, August 3rd the AEMS summer school had an introductory lecture by Bernd Lietaer about the basic properties of our monetary system. Bernd Lietaer is an economist and author whose main interests are complementary currencies and the historical role of money in society. His lecture started with a game which involved four rounds. The rules were simple. Initially we had to put cash on the table, whereby the minimum was five euro and the maximum 50 euro. After every round we were supposed to write down how much money we had and what personal emotions were connected to these moments. The first one included that every participant stood up and took an arbitrary amount of money from another group member. After this round everyone had to put one third of his/her “wealth” into the “treasury” which was represented by a small paper bag. In the second round every group member had to give an arbitrary amount of cash to another one. The third round included that every participant took from the treasury what he/she wanted. In the fourth and last round the group members took and gave to each other arbitrary amounts of cash.

Bernd Lietaer then asked us to give insights into our feelings during the game. Some mentioned that taking money from others – as it was the case in the first round – felt like stealing. It was very exciting to see that some students felt better to decide autonomously to give money rather than being taken by others without asking. Another very common impression was that some people felt powerful when they had money to give which also provided the chance to redistribute within the group in some rounds. Many of us had the feeling that certain aspects of the game represented how financial trade works and especially to what degree, in what quality money affects our style of acting. One of the main points Bernd Lietaer observed was that no one asked why we, the students, had to give one third of their cash to the “treasury”.

The game helped to make the involvement in financial markets a little bit more tangible. How different people react when they had the choice of what to do with their and others’ money. The psychological and behavioural component seems to play a decisive role in that particular context. Furthermore, also the interaction between individuals had a relevant part in that game. It was an illustrative simulation on the micro-level. In general, it might be useful to integrate games like this in awareness raising concerning economic processes.

After the game, Bernd Lietaer continued with an introduction into the general setup of our monetary system by providing actual examples. He first posed the question what the most frequent value of wealth of US households was before the 2007 crisis. After a short round of collecting responses he provided the correct answer which is: zero. We were surprised by this fact. Some guessed 100.000$, others around 10.000$ but obviously no one had this result in mind. The reason for this low value was obviously the high private debt in that period. So this seemed to be an impressive start for the lecture. He then focused on two main misconceptions of money, which is on the one hand the construction which allegedly prescribes that interest is only paid when someone borrows money. The other flaw in the setup of money he addressed was that everybody is not treated equally. The main example he brought into play was that people with higher wealth earn more from interest rates than they pay whereas at the bottom of the distribution it works vice versa. Lietaer’s concluding statement therefore was that the monetary system is to a large extent characterized by extraction and concentration.

The lecturer helped us to understand an approach to money that is different from the mainstream perspective and why it is necessary to make a change towards a new monetary system. He emphasized in a compact way what the fallacies in the basic principles and the fatal implications for inequality and economic development are. His proposal that complementary – mostly local – currencies are a possible option to transform the current institutional setup was described comprehensibly and seemed to be a promising solution for most of the summer school participants.