Humans imagine that they have rights and obligations and belong to social classes. This is what is meant with social order. There has been a variety of rights and obligations and social classes throughout history.1 Societies usually have a ruling class who invents the social order and benefits the most from it. A social order needs some kind justification to convince everyone to accept the rules that come with it. That is where religion comes in. You can compare the Code of Hammurabi, a Babylonian law from 1750 BC, with the United States Declaration of Independence from 1776 AD.
The Code of Hammurabi declares that the Babylonian social order is based on universal and eternal principles of justice dictated by the gods. It divides people into three classes, nobility, ordinary people and slaves. The code then sets out all kinds of laws and punishments for transgressions. The United States Declaration of Independence begins with the following words:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness.”
On closer inspection 3,500 years didn’t make a lot of difference. The eternal principles are replaced by self-evident truths but the order still needed divine support. There is no mentioning of classes. All men are created equal. But the devil is in the detail. Women and slaves did not have these unalienable rights when the constitution was written. Only nobility was done away with as businesspeople were the new ruling class. In the 200 years that followed slavery was abolished and women received equal rights before the law, but businesspeople are still the ruling class.
Saying that people are equal and have equal rights is problematic. People are not equal in their abilities as well as their opportunities. For example, we can imagine the right to live but we all die. Some people die young while others live very long. Many people are poor and have no access to good education. Some are rich and can go to the best universities. Still, we imagine that people have equal rights, just like the Babylonians imagined that people are divided into classes.
Social orders are the result of history, economics, and politics. Ideas are at the basis of them. Equality is a revolutionary and modern idea that has gained ground during the last centuries. It has affected political orders on every corner of the globe. Even the worst dictators now say in public that all people are equal.
A social order is also a collective imagination. A social order doesn’t exist in reality as such, but only in the minds of people. If people agree on a social order, whether it is a division into classes or the notion that everyone is created equal, it can be stable. Social orders bring peace and stability and that is the most compelling reason to have them. If people agree on a social order they can cooperate more easily as the order settles many matters that would have to be negotiated otherwise. A reason why certain social orders prevail over others is because they create more powerful societies.
Featured image: United States Declaration of Indepence
1. Sapiens: A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.
In philosophy, the state of nature is about human nature and our natural way of life. We are social animals who operate in groups. What makes us unique is that we can collaborate flexibly on any scale. We employ language and shared imaginations like corporations, nation-states, money and religions. They help us collaborate. In this way, we created an imaginary world, civilisation. We can program ourselves to a significant degree and have different cultures. So, what is our natural way of living? That is hard to tell, but we can say a few things.
We help our family and friends but can also cooperate with strangers. It is not something we learn. It is natural human behaviour. Other social animals also do it, including chimpanzees, our closest relatives. Chimpanzees live in small troops of a few dozen individuals. Like us, they have close friendships, work together with reliable congeners and avoid unreliable ones. They have social rules, may cheat and probably can feel guilty. Like human males, chimpanzee males can be violent and kill each other.
Like human leaders, chimpanzee alpha males acquire their status by building coalitions and gaining support. Others show their submission to the alpha male. He strives to maintain social harmony within his troop, like a king maintaining peaceful relations between his subjects. He takes coveted pieces of food like the government takes taxes. Alpha males gain their position by building a coalition of supporters. Usually, a chimpanzee band has several alliances.
Coalition members in a chimpanzee band build and maintain their ties through intimate daily contact. They hug, touch, kiss, groom and take fleas from each other’s furs. Like humans, they do each other mutual favours. The coalitions in a chimpanzee band have good relations to protect themselves against outside enemies. Within the group, there are friendships and more distant, colder relationships.
There is a limit to the size of a group of chimpanzees. To function as a chimpanzee band, all members must know each other intimately. They must remember how others acted in the past to guess what they will do. Unlike humans, they have no language to share social information. Humans gossip to share information about others. Thus, we can learn someone is unreliable without being cheated upon ourselves. That allows us to collaborate in more sophisticated ways in larger groups.
Chimpanzee groups with more than a few dozen individuals are unstable. Its members do not know each other well enough to establish a hierarchy. Separate groups of chimpanzees seldom cooperate and compete for territory and food. There have been cases of prolonged warfare between groups of chimpanzees, including a few instances of genocide. Early humans lived similar lives but could live in larger and more stable bands of up to 150 individuals. The size of a group with which we can closely cooperate is one of our natural limits. We have overcome that limit with shared imaginations, which might be unnatural and a source of many troubles we have today.
Shared imaginations
We think in terms of cause and effect. We believe clouds cause rainfall. Our imagination also allows us to attribute causes to imaginary things. If the harvest fails, we can think the gods are angry. To deal with that, we can start a ritual like sacrificing a goat in the planting season to please the gods. Rituals also have another role. They bond a community and can outlive the beliefs that created them and lose their meaning. Many atheists still celebrate Christmas and think of eating turkey rather than the birth of Jesus.
Large groups face difficulties acting as a collective. Distinguishing between the contributions of individual members becomes challenging, so cheating and opportunistic behaviour are more common. Money, states, and belief systems like religions and ideologies help us deal with that. Money can keep track of our contributions and usages. States enforce cooperation. Religions and ideologies help us collaborate, for instance, by promising rewards in the afterlife or telling inspiring tales of worker solidarity.
For that, we share our imaginations. We imagine laws, money, property, corporations and nation-states. We think a euro banknote has value, even though it is just a piece of paper. And that is why we can use it for payment. If we believe the banknote is worthless, we cannot accept it or use it for payment. We imagine a law exists and, therefore, it works. Without these shared imaginations, our societies would stop functioning. Our cooperation also requires an inspiring story like a myth about the founders, a religion or an ideology.
Stories are the basis of our large-scale cooperation. We change how we cooperate and build societies by changing the stories. In 1789, the French population switched from the story of the divine right of kings to the sovereignty of the people. That changed the organisation of French society from feudal to modern, an advantage that Napoleon could subsequently exploit on the battlefield. Intelligent animals like monkeys can learn new behaviour but cannot change their organisation because they lack the stories to do so.
Norms and values
We invent rules and follow them. That is also in our nature. The rules differ per group, but all groups have rules. Norms are shared rules and expectations about the behaviour in a group or society. They maintain the social order, define cultural values, and shape social interactions. Norms can be laws, folkways, mores, taboos. Values are beliefs about what is important to us and society. Values can be honesty, respect, fairness and kindness. Norms and values thus reflect our rules.
Our rule-following behaviour is ingrained in our nature and comes with emotions like anger, shame and pride. If we have rules, we can spend less time negotiating about who does what and who gets what. It allows us to cooperate more efficiently and effectively. It also limits our freedom. We cling to our norms and values. Rules make societies stable. But they cause trouble if they have outlived their usefulness and block much-needed change.
Most of our communication is gossip. We need the group to survive. To survive, we must understand what is happening in our group. We talk about other people in our group, for instance, who is cheating or breaking agreements and what we should do about it. Groups enforce their rules by pressuring or ostracising those who do not conform to them. Being evicted from your group is particularly traumatic as it can lead to death.
Our inclination to attach value to mental models and theories promotes social stability. It also makes societies conservative regarding ideas and rules. Rules and institutions emerged to meet a specific challenge and become a burden once they have outlived their usefulness. Social change is often not a process of small steps but of long periods of standstill alternated with sudden dramatic changes.
Violence is often crucial for change. The fear of violent death can motivate us to do things we would not do out of self-interest alone. Those who benefit from the current arrangement hold off changes, so violence or the threat of violence can end the stalemate. That happened in the French Revolution. The human desire for recognition means politics is seldom about mere self-interest. We also judge leaders and the rules in society with our norms and values.
The struggle for recognition
Societies require individual members to play particular roles. Each role has a status and norms based on the values and beliefs of the culture of that society. Socialisation is learning your role in society and the norms and values that come with it. Groups of humans, including societies, have social hierarchies with statuses attached to the roles people play. In organised societies, status differences are more pronounced than in small groups. That is called stratification.
An individual or a group can recognise another person’s or group’s status, including this person’s or group’s beliefs and customs. The struggle for recognition differs from the struggle for material goods. All parties can gain from an economic transaction. You can exchange your fish for bread if you want bread more if someone else has bread and desires fish. But humans imagine social hierarchies. The recognition of one person, group or nation thus comes at the expense of others.
We aspire to social status, and some compete for leadership. Chimpanzee males compete for the status of the alpha male but also cooperate to defeat an enemy. We not only desire recognition for ourselves. We also seek respect for our beliefs and the groups we belong to. Much of our struggle concerns respect for groups such as women, ethnic minorities and homosexuals. There is an economic aspect, such as equal pay for women, but it is primarily about recognition. Pay is also a token of respect.
You cannot enforce recognition. Others must feel you deserve it. Leadership comes from a group acknowledging that a specific person has exceptional courage or wisdom or is impartial in conflicts and a desire from a community to have a leader. Once a society develops, we transfer our recognition to political institutions like parliaments and courts rather than individual leaders. In both cases, the political order requires legitimacy to make people accept the order and adhere to the rules.
Changing our environment
We change our environment. So, if we have a natural environment, we can make it unnatural. The first humans lived as hunter-gatherers in small groups of a few dozen individuals. Everyone in the group knew each other. If that is our natural way of living, city life would be unnatural. Our mental makeup emerged from evolution, so living in large cities could produce psychological problems like stress and alienation. The biblical vision of the state of nature is Eden, where people lived in harmony with nature.
But what does that mean? In the last 400,000 years, humans have become the top predators. That had enormous consequences for what we can eat and do. And it had psychological and social effects. Humans did not evolve but suddenly rose to their new position. Many historical calamities and things about how humans behave towards others and the environment, from the deadly wars to how people treat the ecosystem around them, result from this fast change that our evolution could not match.
Humans like Neanderthals, and later the modern humans, Homo Sapiens, began using fire. It gave them light, warmth, and an effective weapon against dangerous animals like lions and bears. That changed the balance of power between the animal species. The humans came out on top. Humans also used fire to change their environment. They started burning down forests and collected dead animals cooked in the fire to eat them. And cooking allowed them to eat more sorts of food.
The Agricultural Revolution was another dramatic change in human lifestyle. To feed more people, humans began to grow crops and herd animals. With agriculture, more people could survive, but it created new problems. Hunter-gatherers could move on in the case of conflict, but farmers had to protect their land and cattle against thieves and invaders. And so there were more intense conflicts, and people began to organise themselves for larger-scale wars in tribes and states.
Latest revision: 23 December 2023
Featured image: cover of The Origins of Political Order
From: The Origins of Political Order: From Prehuman Times to the French Revolution of Francis Fukuyama.
A few centuries ago, over 99% of the world’s population lived in abject poverty. In 1651, Thomas Hobbes depicted human life as poor, nasty, brutish, and short. It had always been that way. Yet, a few centuries later, a miracle had occurred. Nowadays, more people suffer from obesity than from hunger. The life expectancy in the poorest countries exceeds that of the Netherlands in 1750, the wealthiest nation in the world at the dawn of the Industrial Revolution. This miracle is the result of science, innovations and a massive build-up of capital. How could that happen? That is because interest rates have come down from 30% in the Middle Ages to near zero today. Only, what caused interest rates to go that low?
In the economic sphere, it is the outcome of an epic battle between ‘Time Preference’ and ‘Capitalist Spirit’ that raged for centuries. The capitalist spirit won. Ordinary people suffer from a condition known as time preference, which causes them to spend their money on frivolous items. They think, ‘Live today, because you can be dead tomorrow.’ Economists say they lack trust in the future. There are also capitalists, who are special people who suffer from an illness called the capitalist spirit. Rather than spending their money on frivolous items, they think, ‘Don’t live today, but invest, so you will have more money when you die.’ Economists say that they have trust in the future.
And so, capitalists save and invest while ordinary people work for them and buy the products and services their ventures produce. When time preference prevails, there are few savings and high interest rates. People are poor because there is a lack of money for investments. When the capitalist spirit prevails, there are ample savings, low interest rates, and wealthy individuals with excess capital to invest. This miracle wouldn’t have happened without low interest rates, as investment returns must be higher than the interest rate, and interest rates can’t be low without efficient financial markets and trust in political and economic institutions. So, how did that come about?
In the Middle Ages, Europeans gradually developed a capitalist spirit. The ethic of the merchant gradually spread, so that money and profit, rather than Christian values, came to drive Europeans. They found new trade routes and exploited their colonies. Initially, Spain and Portugal led the way, but their kings were short of cash and heavily taxed their people. Many merchants moved to the Dutch Republic, which was more business-friendly because the propertied classes ran it. The Dutch didn’t have a strong state with an army, so taxes were also lower. The Dutch invented the stock market, featuring publicly traded shares, a crucial financial innovation that helps manage risk. Since then, investors could invest in a corporation at any time and sell their investment at any time.
Later, Great Britain became the dominant power. The British business elite, who paid most of the taxes, didn’t like paying for incompetence and corruption. After they had gained control over the British state in the Glorious Revolution of 1689, they forced the state to improve its competence. The British invented fractional reserve banking with a central bank, thereby creating efficient financial markets. Their colonial empire also expanded, so that they came to control the largest market, which favoured economies of scale. Once the competent government and financial innovations were in place, the Industrial Revolution took off. Low interest rates made long-term investments in machines profitable.
Once interest rates had decreased, economic growth accelerated, enabling investment returns to cover interest payments, which allowed financial markets to expand and drive further growth. The capitalist miracle is that financial markets helped boost trade and production by creating money that doesn’t exist to start businesses that don’t yet exist to make products that the people those businesses will hire will buy with this newly created money. Financial markets are at the basis of the capitalist economy. When growth slows, interest-bearing debt may collapse the global economy, but so far, financial innovators have invented new schemes to lend more, helped by low interest rates. Low interest rates make an economy possible, not high ones. But trust makes low interest rates possible.
Usury: the hidden cancer
As long as there was growth, there was more for most people, even though the division of the fruits of capitalism has its shortcomings. Personal qualities explain some inequality. Some people work harder, some are better entrepreneurs, some are more frugal, some are more useful, and some are better at exploiting others for their personal gain. These people usually end up wealthier. Still, the primary driving force in the capitalist system has little to do with individual qualities. It is profit or interest. Interest comprises all returns on capital. Interest is the reason why the rich get richer at the expense of the rest of us.
Interest fuels a global competition driven by innovation and economies of scale. As a result, a few oligarchs have become exceptionally wealthy, often by cornering markets, such as in the tech sector. Wealth inequality will be the most urgent immediate challenge once there is less to go around. It is unacceptable that people are starving because of a fuel shortage while the elites fly around in their private jets. Today, the increased use of artificial intelligence drives up energy prices, pushing humans out of the energy market.
Interest rates emerge in a market. Credit in the banking system and the actions of central banks have a profound influence, making financial markets more efficient. Still, supply and demand in financial markets remain key factors. Silvio Gesell had already envisioned, in 1916, that efficient global financial markets would eventually drive interest rates to zero. He based his prediction on the observation that interest rates were the lowest in London, which had the most developed financial markets at the time.
Wealth inequality, caused by decades of neoliberal supply-side economic policies, also plays a role. Gutting labour rights and social benefits to lower taxes for the rich caused their wealth to trickle down via lower interest rates. The wealthy, awash in capital, have run out of sensible investment options because working-class people lack the funds to spend. And so, interest rates decreased, allowing the working class to borrow more, propping up the economy with asset bubbles, in yet another usurious scheme in which the rich exploit the rest of us. Adding mortgage debt has long helped keep several economies afloat, including the Netherlands’.
Most people pay more interest than they receive. We pay interest via rents, taxes, and the price of everything we buy. Interest works like a tax on poverty that the poor pay for the benefit of the wealthy. Lower interest rates could benefit most people by lowering prices. You don’t see that happening. In a usury-based financial system, lower interest rates allow us to borrow more, putting more money into circulation and raising prices. As we borrow more, we may end up paying even more interest. To improve their yields in a low-interest environment, capitalists invent new schemes, such as leveraged buyouts and vampire capitalism. Lower interest rates also enabled more predatory lending because they made loan-sharking profitable at higher default rates.
Lower interest rates have worsened the excesses in the financial system. That is because we live under a usurious financial system. Had the maximum interest rate been zero, loan-sharking and leveraged buyouts wouldn’t be possible. But that would require us to look after people in financial trouble and limit their freedom, rather than giving them the liberty to borrow from payday lenders and credit card corporations. The underlying problem is the merchant’s ethics, which has become the foundation of our moral system, which is no ethics at all. A world without merchants is a world without many comforts we take for granted, but trade also makes us dependent on a system of governments and markets. Interest plays a crucial role. Investments must at least return the prevailing interest rate. Things aren’t straightforward, so ‘interest is evil’ is not a helpful approach to the matter. But what precisely is usury?
What is usury?
When you ask someone what usury is, the answer might be charging an excessively high interest rate. Traditionally, usury referred to paying for the use of money. In other words, usury is charging interest on loans. In this traditional definition, the currency has a constant value, so the borrower must repay the same value. If a ruler debases the currency and halves its gold content, a lender has a legitimate claim on the same amount of gold, hence twice the amount of currency. The reasons why usury is damaging are:
Usury turns money into a tool of power, enabling the rich to exploit the poor.
Usury disrupts the circular flow of money, causing economic hardship.
Fixed interest payments cause financial instability as incomes fluctuate.
Making a profit from a business venture is not usury. However, all capital income is interest, and interest contributes to wealth and income inequality, unless the interest rate is at or below the growth rate. Capitalism has raised living standards, so the prevailing view is that its benefits outweigh its drawbacks. Today, capitalist economies excel in generating money for capitalists by turning energy and resources into waste and pollution to market non-essential products and services in the bullshit economy. Therefore, the drawbacks now surpass the benefits, and by a wide margin.
The economist Piketty found that interest rates on capital were higher than the economic growth rate most of the time.1 That is unsustainable. It requires capital destruction that creates new room for growth or lower interest rates. In the past, World War I, the Great Depression, and World War II annihilated capital and created new room for growth. And so did the end of communism at the end of the 20th century. Eastern Europe, China and India became new centres of growth. The wave of capital seeking a return has finally reached Africa, the last frontier. From now on, growth must come from ‘wealth-creating’ non-essential activities in the bullshit economy, such as data centres that run artificial intelligence.
Value standard
The idea behind banning usury is that it is unfair for borrowers to return more than they borrowed. Traditionally, the poor borrowed from the rich, so charging interest would make them even poorer. If you borrow a loaf of bread, you return it. That is simple. Money, however, is an abstract measure of value, so what is usury and what is not requires a value standard. Islam forbids charging interest on money and debts, but also prohibits the debasement of currencies. According to Islamic law, money is gold or silver. Lenders should receive the same amount of gold or silver as repayment for the loan. There is, however, no reward for the risk of lending, which impedes capital formation. It is one of the reasons why the Industrial Revolution didn’t take off in the Islamic world.
A Natural Money currency serves as the value standard, so usury refers to charging an interest rate above zero on loans. To serve as a standard, the currency must have a stable value. The value of the Egyptian grain money came from its backing by grain stored in granaries. During the gold standard, gold was the value standard, as you could exchange national currencies for a fixed amount of gold. The backing of today’s fiat currencies is the economy. The Quantity Theory of Money states that Money Stock (M) * Velocity (V) = Price (P) * Quantity (Q), so Money Stock (M) depends on Velocity (V), Price (P) and Quantity (Q), and the value of a single unit such as the euro, is M / units in circulation.
A grain or gold backing can give the currency a stable value because there is a limited amount of grain and gold. Such a limit doesn’t exist for fiat currencies. Still, Natural Money currency can serve as a stable value standard because its issuance depends on lenders’ willingness to accept negative interest rates. Lenders thus only lend when they expect the currency’s future value to remain sufficiently stable. When they don’t lend, the amount of money in circulation shrinks due to negative interest rates and debt repayments, allowing the currency’s value to increase and prices to decrease. Trust in the currency thus stems from persistent deflationary pressures, as negative interest rates consume the money supply, and the maximum interest rate constrains credit creation.
Efficiency argument
Today’s global economy is overcapitalised due to massive over-investment in the bullshit economy, so near-term future growth rates will probably be negative, either as the result of an involuntary collapse or a managed decline, and the sustainable interest rate will also be negative. Once the world economy is on a sustainable footing again, there may be sustainable growth, allowing growth rates to become positive once more in the more distant future. A stable economy operating near the maximum growth rate, which can be negative, can achieve its full potential and full employment. That is what the ‘miracle of Wörgl’ suggests.
When average investment returns are near their sustainable maximum, real interest rates are also near their sustainable maximum. The usury-based economy is unstable due to credit expansions and contractions, so it often does not operate at its sustainable maximum, reducing its efficiency. Natural Money helps achieve a stable economy and minimise financial system risk, thereby realising the sustainable maximum. It follows that real interest rates with Natural Money are higher, even when economic growth rates are positive. The maximum nominal interest rate is zero, so higher real rates show up as currency appreciation, allowing an interest rate of zero to yield a positive absolute return.
A simple calculation illustrates this view. Economists assume there is a link between the amount of money and money substitutes (M) in circulation and prices in the equation Money Stock (M) * Velocity (V) = Price (P) * Quantity (Q). If ΔP, ΔM and ΔQ are sufficiently small, and velocity is constant, so that ΔV = 0, then it is possible to approximate this equation with %ΔP = %ΔM – %ΔQ, where %ΔP is the percentage change in price level, %ΔM is the percentage change in money stock, %ΔV is the percentage change in money velocity, and %ΔQ is the percentage change in the quantity of production.
The velocity of money (V) for Natural Money might be higher than for interest-bearing currency, and that could go together with a smaller money stock (M). Still, the velocity is likely to remain constant, as the economic picture is expected to remain stable. Now, it is possible to calculate the real interest rate (r) as the nominal interest rate (i) minus the inflation rate (%ΔP), so that r = i – (%ΔM + %ΔQ).
Suppose the long-term average economic growth rate for interest-bearing money is 2%. For Natural Money, it might be 3% because the economy is more often performing at its maximum potential. Assume that the long-term average money supply increase for interest-bearing money is 6% per year. For Natural Money, it is 0%. The long-term price inflation rate could then be 4% for interest-bearing money. With Natural Money, there could be a price deflation rate of 3% as the economy grows at a rate of 3% with a stable money supply. We can then produce the following calculation:
situation
interest on money
Natural Money
nominal interest rate (i)
+3%
-2%
change in money supply (ΔM)
+6%
0%
economic growth (ΔQ)
+2%
+3%
real interest rate (r = i – ΔM + ΔQ)
-1%
+1%
Economic growth can be higher with Natural Money, allowing real interest rates to be higher. Furthermore, because Natural Money has several stabilisers that reduce financial system risk, the level of risk is likely lower. As a result, the risk-reward ratios associated with Natural Money are better than those in the current usury-based financial system. In other words, the same real interest rate in a usury-free financial system is a better deal because it entails fewer risks. Hence, a usury-free financial system based on Natural Money is more efficient, so there will be a capital flight from the usury-based economy to the usury-free economy after implementing Natural Money on a large enough scale. The efficiency argument demonstrates that usurious finance is parasitic.
The real interest rate may improve more than the economic growth rate due to lower financial-sector profits from phasing out exploitative parasitic activities, such as interest-bearing consumer credit. The rationale is that, without credit card payments, consumers have more disposable income. Furthermore, economic and financial stability can reduce investment risks, thereby requiring less financial sector intermediation. The financial instability and the need for government and central bank interventions in the usury-based financial system create opportunities for politically connected and other savvy and informed individuals, often referred to as ‘parasites’, to enrich themselves at the expense of the general public. The higher efficiency of Natural Money could end that.
The efficiency argument still applies when we switch to a values-driven, people-friendly economy that operates in harmony with nature. The inefficiency of such an economy stems from its inferior ability to generate money for investors by transforming energy and natural resources into waste and pollution in the bullshit economy. That depresses interest rates. That is not an inefficiency in the financial sector. With Natural Money, a values-driven, people-friendly economy can remain operational thanks to the financial system’s efficiency. Terminating the bullshit economy in a usury-based financial system will also depress interest rates. That can bring about an economic collapse, because usury makes capital addicted to growth.
Trust
Someone once asked me on an Internet message board, ‘Why would I lend money interest-free?’ The borrower may not repay. So, why take that risk? We lend interest-free to people we trust, and we may lend to family and friends, even when they are untrustworthy individuals living off our money. After all, they are family and friends. In a market, it won’t happen unless we trust the currency and the borrowers. Hence, ending usury is only possible in a high-trust environment. And investors must be in the market for other reasons than maximising their profits. Those who lend money to organic farms and invest in renewable energy have a different view of investing than vampire capitalists, who scam the government and rob grandparents of their retirement savings.
Credit means trust. Trust in the future is the foundation of the capitalist economy. Investors imagine that the future will be better so that their investments will be profitable or at least not loss-making. Credit, or financial capital, reflects this trust. Most of our money is credit, so its value depends on an imagined future. Some people argue that credit, banking, and central banking are a fraud because they are a fantasy. They may prefer something tangible, such as gold. Indeed, the capitalist economy, as well as civilisation in general, demonstrates the power of human imagination, and our faith in what we believe.
To have trust in the future, investors must believe that their investments are safe. The rule of law, political stability, the absence of graft, and sensible economic policies are fundamental factors for the economy to function effectively. As investments, such as factory investments, are long-term, the risk that a government will annul earlier commitments is a critical factor in investment decisions. Government actions, such as asset confiscation or taxation, can deter investors. Differences in tax regimes are equally damaging, as tax havens parasitise on productive economies that collect taxes to invest in their infrastructure and education.
Interest rates are the lowest in stable countries with low inflation, as trust translates into a risk premium on investments. The greater the perceived risk, the more the future becomes discounted, the higher the interest rates are, and the lower the standard of living usually is. Hence, Switzerland and Sweden have low interest rates, while Argentina and Mozambique have high interest rates. Interest rates in Europe are lower than in the United States. Apart from lower growth expectations, the Stability and Growth Pact, which limits government deficits, plays a role. And the government deficit as a percentage of tax income is a better indicator of the health of government finances than the deficit as a percentage of GDP. These are more sustainable in Europe. And so, trust also plays a role here.
Interest rates in Switzerland are currently at their lowest. In 2025, the key interest rate stands at zero. Interest rates in Switzerland are that low because investors trust the Swiss currency. From 1990 until 2024, the government’s budget deficit averaged at 0.45% of GDP. At the end of 2024, government debt was 20% of GDP. A general rule is that the lower the trust in the currency, the higher the interest rate. Venezuela has the highest interest rate at 60%, but with an inflation rate of 180%, investors are better off with a yield of zero in Swiss francs. In a market, low interest rates signal trust. Hence, trust is a crucial prerequisite for ending usury.
In 2025, interest rates in Turkey exceeded 40% to curb inflation after a failed monetary experiment. The assumption that interest charges cause inflation led Turkey’s leader to force the central bank to lower its interest rates. Inflation soared to 85% in 2022. The Turkish leader was defrauding creditors, thereby transgressing Islamic law. The relationship between interest and inflation exists, but it operates via credit. Credit expansion causes inflation, not interest itself. In a usury-based financial system with fiat currencies, raising interest rates curbs inflation by dampening demand for credit. That obscures the truth that interest is a cause of inflation, but a better way to limit credit expansion is to set a maximum interest rate on loans.
With Natural Money, the central bank doesn’t set the interest rate or manage the money supply. The interest rate and the money supply emerge in the market for lending and borrowing. The holding fee on the currency provides a stimulus by making lending at negative interest rates attractive, so no money remains on the sidelines. At the same time, the maximum interest rate of zero provides austerity, curtailing credit during a boom or when inflation is high. That will cool down the economy and dampen inflation. There could be deflation, and deflation could be permanent. The market for lending and borrowing is free in the sense that the central bank doesn’t manage interest rates and the money supply. However, the maximum interest rate of zero operates as a price control.
Interest rates emerge in the market for lending and borrowing. Negative interest rates require trust in the currency, the government and its policies, the financial system, and, ultimately, in the borrowers. It requires trust in the political economy and the future. In other words, all the world’s governments must be as reliable and capable as Denmark’s, and the global economy must be on a sustainable footing. At the same time, market participants shouldn’t engage in scams. So far, business and ethics haven’t agreed very well. The ethic of the merchant is no ethic at all. The change requires a moral imperative. We shouldn’t harm other people or nature. Instead, we should see the consequences of our actions and change our ways. Only a new religion can make that happen.
The price of usury
Interest promotes wealth and income equality. Most of us pay more in interest than we receive, either directly through loans and rents, or indirectly through the products we purchase. German research from the 1980s showed that the bottom 80% poorest people pay interest to the top 10% of the wealthiest people. You can view interest as a tax on the poor paid to the wealthy. The wealthiest individuals reinvest most of their interest income. That is what made them rich in the first place.
Interest promotes short-term thinking. The pursuit of profit drives the transformation of energy and resources into waste and pollution in the bullshit economy. With positive interest rates, money in the future is worth less than money now. It affects investment choices. Without interest charges, long-term investments would become more attractive. When interest rates are high, cutting down a forest today, selling the wood, and investing the proceeds may give higher financial returns than sustainable forest management.
Incomes fluctuate against fixed interest charges. It can bring borrowers into trouble. Financial instability can lead to economic instability. Usury causes financial crises, recessions and depressions. Governments and central banks manage the problem, but their actions create a false sense of security, allowing debts to continue growing, which will ultimately lead to a financial apocalypse. The underlying cause is usury. However, the road to the end of usury also goes through financial innovation and modern finance.
Fractional reserve banking
Innovations in financial markets have made them more efficient, enabling lower interest rates and increased lending, thereby spurring the Industrial Revolution. A crucial invention was fractional reserve banking. It turned bank deposits into money. There is always a demand for money. It is the most liquid asset. Economists call it the liquidity preference. Money commands power. You can use money to buy anything at any time. We may want to keep cash at hand for expected purchases, unexpected expenses, and investment opportunities.2 And so, we often aren’t willing to lend our money.
Fractional reserve banking enables banks to lend out money that depositors can withdraw. If you lend money to a fractional reserve bank, you can use it at any time, as if it were cash. Banks kept a fraction of deposits in cash reserves to meet withdrawals, knowing that only a small share of depositors would withdraw their money. That freed up funds for investments and helped to lower interest rates. A fractional-reserve bank creates money because a new loan automatically creates a new, equal-sized deposit. And that deposit is like any other deposit. You can use it to make a payment or withdraw cash. Fractional reserve banking eroded the commanding power of money, resulting in lower interest rates.
Fractional-reserve banks can fail when a large number of depositors withdraw their funds at once. The integrity of fractional-reserve money depended on the ability to exchange deposits for cash. That is where central banks come in. They can help banks in times of trouble by printing additional cash and lending it to them at interest. That safety net reduced the risk associated with bank deposits, allowing interest rates to drop even lower, which, in turn, promoted more lending and economic development.
If it sounds too good to be true, then it usually is. Lower interest rates fuelled the economic boom since the Industrial Revolution, which will eventually lead to a technological-ecological apocalypse. Critics of fractional reserve banking and central banking further argue that lower interest rates encourage poor investment decisions and that the safety net provided by central banks creates a moral hazard. If interest rates were to rise, these investments would become unprofitable, leading to bankruptcies and unemployment. And if central banks rescue banks in times of trouble, it will promote irresponsible lending.
There is overcrediting, and lower interest rates promote irresponsible lending by increasing profit margins for usurious lending. The way to end usurious lending is to set a maximum interest rate. More recently, critics have argued that central banks, through extraordinary measures such as quantitative easing, have suppressed interest rates. However, central banks believed that interest rates were too high. They couldn’t lower them due to a price control called the zero lower bound, which distorts the market. By printing money, central banks aimed to generate inflation, thereby allowing them to raise interest rates later.
Reserve requirements
Banks hold reserves, which are money issued by a central bank. Reserves include banknotes and coins, as well as balances that banks hold at the central bank. The primary reason for holding reserves was to meet cash withdrawals from depositors or to make payments to other banks in case depositors transfer money to another bank, and the other bank desires payment in kind rather than an IOU. A reserve requirement is a liquidity requirement. A bank must have enough cash on hand to meet its short-term obligations. Two developments have profoundly affected the need for reserves:
Contrary to the past, depositors hardly ever withdraw their funds in cash, so the money stays within the banking system.
Government debt has become an alternative source of liquidity. Government debt issued in the government’s currency is as safe as cash.
A government can guarantee repayments of debts issued in its own currency by printing more currency, with a so-called independent central bank as a cover, which has become a core foundation of confidence in the current usury-based financial system. The central bank will not let the usury-based financial system fail, so it will print money to buy government debt, which reduces the supply of debt and increases the supply of currency by which to buy government debt, thereby lowering interest rates and allowing the government to borrow more, making new money available to pay interest.
These profound changes have made traditional reserve requirements largely redundant. Banks hardly need any cash in their vaults. If they pay another bank in kind, government debt is as good as central bank currency. Or a bank could borrow at the central bank or another bank and pledge government debt as collateral. The experts concluded that reserve requirements have become superfluous. Government debt has become the actual reserve. And so, banking regulations today focus on solvency, or the ability to meet long-term obligations. Still, it would be a most serious oversight to ignore liquidity.
Globalisation, liberalisation, and derivatives
Advances in information technology and financial innovations have driven the globalisation of financial markets over the past few decades. In the 1980s and 1990s, governments liberalised financial markets and removed capital controls. Capital controls can lead to higher interest rates and higher costs of capital.3 Globalisation and liberalisation expanded the possibilities for borrowing and lending worldwide.4 The increased competition reduced the price of financial intermediation.
Globalisation and liberalisation made financial markets more liquid. It became cheaper and easier to exchange financial instruments, such as bonds and stocks, as well as goods and services, for cash. This development is more commonly known as financialisation. Like fractional reserve banking, financialisation eroded the position of money as the most liquid asset, thereby diminishing the commanding position of money owners to demand interest.
Globalisation and liberalisation also caused trouble. Money and capital could move more freely, making it easier for changing expectations to lead to financial instability. Central bank interventions neutralised a series of financial crises in the 1980s, 1990s and 2000s. Lower interest rates prompted investors to seek higher yields and take on more risk. However, trust and, therefore, liquidity can suddenly evaporate. Some countries used capital controls to counter financial instability while central banks provided liquidity.
Innovations in risk management and derivatives enabled the financial sector to further increase lending. These innovations spread risk, allowing the total amount of risk in the system to grow. Due to a lack of regulatory oversight, derivatives also enabled scammers to sell fraudulent mortgages, contributing to the 2008 financial crisis. Still, banks that professionally used derivatives to hedge their risks weathered the crisis better and had fewer loan write-offs.5
The notional value of outstanding derivatives can be mind-boggling. Their actual value is much lower. You can best compare them with insurance policies. The notional value of your fire insurance policy is typically based on the value of your home. The actual value is the premium you pay. That is, until your house burns down, and the actual value becomes the notional value. Insurers can handle that until many homes catch fire simultaneously.
The actual value of an interest rate derivative on a 3% ten-year bond with a notional value of €1,000,000 might change by €81,109 if the interest rate increases to 4%. As long as parties use derivatives to hedge risks, and counterparties, the ‘insurers’, can absorb the losses, the system will function. An equivalent to all houses catching fire simultaneously could be a sudden increase in interest rates. When the system is more stable, the need for these instruments decreases.
Wealth effect and bubbles
Lower interest rates increase the value of assets via discounting. In theory, the price of an asset is the net present value of its future revenues. Even though that is often not the case in reality, the theory explains why the prices of assets like bonds, real estate, and stocks rise when interest rates decrease. In this sense, lower interest rates can promote wealth inequality, but only when we consider the net present value of assets. If future revenue streams don’t change, wealth inequality is merely a temporary side effect.
There was, however, another dynamic operating underneath. Lower interest rates allow consumers to borrow more by taking out higher mortgages, thereby financing their unsustainable lifestyles. Critics called it a wealth effect promoted by an asset bubble. Lending propped up consumer spending when the incomes of many working-class people were lagging, and the wealth of the rich ‘trickled down’ via lower interest rates as they were running out of sensible investment options, giving them yet another avenue by which to squeeze the working class. In a system of usury, lower interest rates are of no help.
Financial sanity
Interest compounds to infinity. Three grammes of gold at 4% interest turn into an amount of gold weighing twelve million times as much as the Earth after 2020 years. Most of us aren’t long-term planners. We are busy fixing holes rather than solving underlying problems until things fall apart. Economists do this as well. John Maynard Keynes invented government borrowing as a fix for usury-induced debt problems. He once justified his short-term thinking with the world-famous quote, ‘In the long run, we are all dead.’ And this man was the founding father of modern economic policies.
More debt has now become the standard solution for debt problems. Today, most money comes into existence as a loan on which the borrower must pay interest. Every loan creates a deposit. The depositor automatically becomes the lender. If the interest rate is 5%, and €100 is circulating, then €105 must come back. So, where does the extra € 5 come from? Here are, once again, the options:
Depositors (on aggregate) spend some of their balance so borrowers (on aggregate) can pay the interest from existing money.
Some borrowers default and do not return (part of) the balance.
Borrowers (on aggregate) borrow the extra €5.
The government borrows the extra €5.
The central bank creates €5 out of thin air to cope with the shortfall.
Interest payments do not necessarily cause a shortage of money. Still, in reality, they do, mainly because depositors find it, like Scrooge McDuck, difficult, emotionally or otherwise, to part with their money. New debts fill most of the holes caused by the Scrooge McDuckism of depositors. That is why debt levels nearly always increase. Still, the money doesn’t always arrive at the right places, which causes financial crises. A few defaults are acceptable, but too many can cascade into a financial crisis, triggering an economic downturn or even a depression.
The cost of letting the financial system fail is so great that this is not an option. The 2008 financial crisis could have meant the end of civilisation as we know it, had central banks not saved us from a financial apocalypse caused by usury. When no one else is borrowing, the government and the central bank must step in, either by borrowing or printing money outright, to introduce new money into circulation to repay existing debts with interest. In this way, debts continue to grow, and we have become the hostages of the usurers.
The end of the road
The road to the end of usury ran through financial innovations. They lowered interest rates. Today, the world is awash in debt, and interest payments strangle the global economy, so that future interest rates may become negative. That could either be the end of usury or, if usury remains, the end of the economy. The world economy may collapse, or we can have a graceful decline, promoted by the efficiency of a usury-free financial system. The efficiency of Natural Money can help us build a high-trust world economy founded on moral values.
In a simplified world, we rely more on family and community, and less on markets and states, so the economy will also become simpler. Natural Money eliminates risk from the financial system, so that, after its implementation, several modern financial instruments may become obsolete, joining fossil fuels and marketing strategies. Still, economies of scale apply to several essential products and services, including finance. Negative interest rates require risk management that only scale can provide.
Latest revision: 3 December 2025
Featured image: Loan shark picture circulating on the internet, origin unknown.
1. Capital in the Twenty-First Century. Thomas Piketty (2013). Belknap Press. 2. Keynes, John Maynard (1936). General Theory of Employment, Money and Interest. Palgrave Macmillan. 3. Edwards, Sebastian (1999). How Effective are Capital Controls? Anderson Graduate School of Management, University of California. 4. Issing, Otmar (2000). The globalisation of financial markets. European Central Bank. 5. Norden, Lars, Silva Buston, Consuelo, Wolf Wagner (2014). Financial innovation and bank behaviour: Evidence from credit markets. Tilburg University.
In April 2020, the Pentagon declassified videos showing pilots running into unidentified flying objects (UFOs). These disclosures vindicated those who believe extraterrestrials visit us. Former Senator Harry Reid tweeted that the videos only scratch the surface of the available research and materials. Now, think of crop circles. Not all may have been the work of pranksters trying to poke fun at the UFO crowd. The Pentagon claims it doesn’t have evidence of UFOs being extraterrestrial. A few months later, Netflix revived the once-popular documentary series Unsolved Mysteries. Most episodes are not particularly mysterious, and many so-called mysteries can’t be dubbed unsolved. But one particular creepy story is keeping people awake at night. It is about the Berkshire UFO encounters of 1 September 1969.
Four families claim to have been picked up by a UFO and transported by a beam of light on that fateful day. Apart from a few personal accounts, there is little to no recorded evidence that this happened. Not even a local newspaper reported it. The documentary compensates for the omission. Indeed, this is a mystery worthy of being labelled unsolved. The stories of the people involved appear credible because they confirm each other. Thomas Reed, who was nine when it happened, claimed he and his family missed more than two hours of their lives while driving in their car. Reed said his family saw an amber glow on both sides of the road. Then everything got calm. After that, they found themselves back inside the car, but his mother and grandmother had changed places.1
Reed also noted that he saw the then-14-year-old Melanie Kirchdorfer aboard the UFO. She confirms his story. Tommy Warner was a child when the incident occurred. He also claimed to have been abducted that evening. His babysitter, Debbie, confirms his account, saying that she saw him vanish into a bright ray of light. The people involved were not eager to tell their stories, which could have made them a laughingstock. This Unsolved Mysteries episode has left many viewers feeling anxious.2 Is it safe to go outside? Or is a starship lurking out there that could beam us up anytime?
On 16 September 1994, 62 schoolchildren aged between six and twelve saw a UFO outside Ruwa, Zimbabwe. Some children claimed to have seen aliens dressed in black, who allegedly gave them a telepathic message, advising them to respect the planet and not rely too heavily on technology. Dozens of other children who were also present stated they had not seen a UFO or anything unusual. Sceptics argue it was a mass delusion. However, the children who saw the UFO consistently told the same story, differing only in the details. Many children believed the beings were not aliens but tikoloshes, creatures of local folklore.3 If it was not a delusion, then you can say goodbye to objective reality, as many children saw the UFO while many did not. Two realities in one place at the same time? That should make you think. This world could be fake.
For five months after October 2007, hundreds of people saw UFOs over Texas. On 8 January 2008, 19 witnesses saw a massive UFO speeding from Dublin to Stephenville, pursued by F-16 fighter jets. One witness estimated the object to be 1,600 metres (a mile) long and 800 metres (half a mile) wide. It hovered and then sped away at 5,000 kilometres per hour without causing any disturbance like a gust of wind, suggesting the object was not material. However, radar data confirmed what witnesses had reported, indicating that the object was material. Again, this should make you wonder. The local newspaper, Empire-Tribune (ET), was the first to report on the object. Steven Spielberg, the director of ET, made a documentary about it.4 That is a noteworthy coincidence.
The psychiatrist John Edward Mack investigated the mental state of those who claimed to have seen aliens. He initially suspected these persons had mental illnesses. Mack interviewed them and came to believe that was not the case. Many of those he interviewed said their encounters had affected their views, creating a sense of spirituality and environmental concern. Mack was cautious about explaining these experiences, but believed there was a powerful phenomenon causing them. There is a rich history of visionary experiences worldwide. Mack noted that alien abduction accounts can be part of this tradition.5 That didn’t agree with some of his fellow scientists, who subsequently grew keen on excommunicating him from the science religion, claiming that telling someone who has reported a close encounter with an alien that this experience might have been real is professionally irresponsible.
Many UFO sightings lack a credible explanation. In other words, they aren’t evidence of aliens visiting us. A few people have claimed to have seen aliens, but there is no objective evidence of their presence. They never broadcast a message saying, ‘Hello Earthlings, we come from the planet Ploc.’ Not even simply ‘ploc’ did they say. What is also suspicious about these aliens is that they resemble humans. They stand upright and have arms, legs, and heads with eyes. Alien life, if it exists, likely differs from Earth life, and aliens could take any form, for instance, jellyfish or plants, or, more likely, something we can’t think of, suggesting human imagination created the aliens people saw. They are either the imagination of the people who saw them or of those who created this world. And an advanced species warning us of advanced technology? They could have shared it with us. Okay, these aliens may not have a high opinion of us. And what about telepathy if we are beings made of carbon and water, and our minds are just brain chemistry? Something doesn’t add up here if science is correct and these experiences are real.
And so, unidentified flying objects can be anything. Another US government report claims most UFO sightings are weather balloons, surveillance drones, airborne clutter, or optical illusions. Nevertheless, many sightings remain unexplained. The UFO incidents in Berkshire, Zimbabwe and Texas, amongst them. They aren’t mere delusions, nor can a weather balloon be 1600 metres long and 800 metres wide and all of a sudden fly off at 5,000 kilometres per hour, leaving the F-16 pilots chasing them, biting the dust. UFOs and alien abduction stories are part of an array of mysteries, including evidence suggesting reincarnation, ghosts, meaningful coincidences, and premonitions. There is, however, an explanation that doesn’t involve aliens. This universe could be a simulation created by an advanced civilisation, and that civilisation is likely humanoid rather than alien.
Latest revision: 21 July 2025
Featured image: Declassified Pentagon UFO footage
1. 1969 Berkshire UFO Event Gains Recognition. Jim Levulis (2015). WAMC. [link] 2. Berkshire UFO sightings: Unsolved Mysteries episode is spooking viewers – but what happened next? Jacob Stol (2020). The Guardian. [link] 3. Ariel School UFO incident. Wikipedia. [link] 4. Spielberg-produced UFO doc has more than 300 witnesses for a mile-long spaceship. Lauren Sarner (2023). New York Post. [link] 5. John E. Mack. Wikipedia. [link]
Stop whining. Everyone should be rich. Vote for the Tegenpartij (Opposition Party), together for ourselves. It was the motto of the fictional Opposition Party in the Netherlands, run by two shady characters, Jacobse and Van Es. The creators of the fiction, Van Kooten and De Bie, intended to mock populist politicians and their promises. An opinion poll revealed that the party could have won a few seats in the Dutch parliament in 1981, if it had been genuine. But why isn’t everyone rich? Perhaps it is because poor people don’t have enough money. It can’t be that simple, or can it? Some people think it is.
So, why not hand out money for free? It is a scheme known as Universal Basic Income (UBI). There are reasons to consider a UBI. Perhaps, machines and computers will soon do everything. If so, how can we keep humans alive? The wealthy own most of the capital and already get money for doing nothing, while the working class fights over the scraps they leave behind. We can distribute that money more fairly. A UBI might be too expensive, but many countries already have the dole for those who don’t work. And if there are no jobs anymore, everyone must go on the dole.
Some believe that it won’t happen, and if it does, that it will be a nightmare. Most people work for a living, and without them working, we wouldn’t have food on the table or the other things they produce. And so, we should receive a reward for doing something worthwhile. And there is our problem. In ‘advanced’ economies, most people entertain themselves in the bullshit economy, transforming energy and resources into garbage and pollution, while not producing anything we need. A UBI is a more resource-efficient and ecologically friendly way to keep these useless eaters alive.
We run out of resources, so getting money for free is not as stupid as working arse off to leave a wasteland for your children. We should contribute to society if we can. Being redundant is not good at all, as you have no reason to exist. But in the current arrangement, the most wasteful get the highest rewards for transforming energy and resources into waste and pollution. So, it is a bad idea to pay people for doing nothing, but what we do now is worse. If we are to terminate the bullshit economy, a UBI can allow us to adapt to the new situation and survive until we have found sensible employment.
Nightmare scenario?
Until recently, machines mainly did simple tasks. That has already put many people out of work. So far, the surplus of workers has found employment in the bullshit economy. Robots and artificial intelligence may soon make human workers obsolete. And that could be all human workers. When robots can perform the same physical tasks and artificial intelligence surpasses human intelligence, there will be no job that machines can’t do, and humans will be redundant. In that case, we may all retire and live off the dole. A UBI would be the fairest arrangement, because we would all be equally useless.
AI will be better at making decisions than humans. Past experiences are no guarantee of the future. We may have heard the phrase ‘this time is different’ so often that we no longer believe it. But you only have to jump into a time machine to find out that every time is different. Horses may have laughed at the first cars and horseless agricultural machines, thinking that humans would continue to need them like they did since time immemorial. They all ended up in slaughterhouses. So, what will happen to all those redundant energy and resource-consuming humans? We will know once it has happened.
Realising our full potential
Proponents of a UBI tell us that handing out money will make our lives wonderful. Once we get money for nothing, we will be free to realise our dreams and achieve our full potential. If you have always wanted to become a blogger or vlogger, you can accomplish this with a UBI, as you don’t have to work for a living. The opponents of the scheme paint a dismal picture of people sinking into an abyss of idleness, filled with writing blogs nobody wants to read and making videos nobody wants to see, while essential jobs remain undone.
Doing a job is about making yourself valuable to others, not about realising your potential. That is how humans have lived and survived since time immemorial. People helped each other. Essential jobs are not always attractive. In countries with benefits, immigrants often do the unattractive, low-paying jobs. These vital jobs, such as harvesting crops, need to be done. The problem is that the production of essentials is often subject to intense competition, so that these jobs are often hard work for low wages.
A game of Monopoly
The game of Monopoly is a model of capitalism. Proponents of capitalism argue that it isn’t, but that is because this model, like any model, is a simplification and not perfect. If you have played the game more than once, you may have noticed it usually goes like this. At first, players buy streets and create capital by building houses and hotels. You can get rich by making the right investments. You also need luck. You need to be at the right place at the right moment. The game ends when most players are bankrupt.
At that point, there are more houses and hotels than players, but few can afford to stay in them. Like any model that has some merit, it says something about the real world. If you see that billionaires own everything and you can’t afford the rent, the game of Monopoly explains what is happening, to some extent, because no model is perfect. Capitalism is a scam against you, and the rig is interest, or profit on capital. Capitalism only works for the masses when enough of that money gets handed out to them.
Monopoly has a property tax on houses and hotels. If you are rich, you have to pay up. The money ends up in a jar, and if you are lucky, that money is yours. If you happen to be poor, the money transfer can keep you in the game. Monopoly also has a UBI. Every time you finish a round, you receive a fixed sum of money. It keeps the game going. Otherwise, it would end sooner as players would run out of cash. If the game ends, the players can wipe out all the houses and hotels and start anew.
For a game of Monopoly, that might be okay, but in the real world, that is like destroying everything, which is a highly inefficient way of reducing wealth inequality. The alternative is taxing the rich and handing out that money to the poor. In reality, the rich pay little in taxes and leave it up to the middle class to support the poor. The underlying cause of this problem is that interest makes wealth accumulate in the hands of a small rent-seeking elite. Without interest, the need for redistributing income might abate.
Bullshit jobs
For most of history, most people worked a few hours per day on average, but they were dirt poor. The Industrial Revolution changed that. Factory owners wanted labourers to work long hours to increase production and their profits. That is still how the economy operates today, even though we don’t need to. In ‘advanced’ economies, only a third of the people do things we truly need. The remaining jobs are pointless bullshit jobs. These occupations range from trading securities to taking orders at a fast-food restaurant. Once resources are gone and the Earth is a wasteland, these jobs will be gone.
For most of history, most people worked a few hours per day on average, but they were dirt poor. The Industrial Revolution changed that. Factory owners wanted labourers to work long hours to increase production and their profits. That is still how the economy operates today, even though we don’t need to. In ‘advanced’ economies, only a third of the people do things we truly need. The remaining jobs are pointless bullshit jobs. These occupations range from trading securities to taking orders at a fast-food restaurant. Once resources are gone and the Earth is a wasteland, these jobs will be gone.
Working is doing something useful for others or society. While doing our jobs, we consume energy and resources, so if our jobs aren’t useful, they aren’t work, but entertainment. We drive our cars to heated or air-conditioned offices. We work hard, so we believe we deserve a holiday and consume energy and resources for relaxation. If we axe all the pointless jobs, we can divide the remaining work, relax more, so we don’t need to waste energy and resources on holidays. The anthropologist David Graeber estimated that at least one-third of all jobs are pointless.1 In advanced economies, it is probably two-thirds.
So, which jobs can we do without? Graeber mentions a receptionist at a publisher in the Netherlands. She had nothing to do except for taking up an occasional telephone call. Another employee could have done that alongside other tasks. Without a receptionist, no one would take the publisher seriously. And so, the publisher needed a receptionist. It made economic sense. But we can do without the publisher and over 99.99% of the books ever published. Graeber vastly underestimates the inefficiency of the modern economy in terms of the energy and resources it consumes relative to our needs.
In our economic system, a job has economic value when someone pays for it. I could hire you to dress as a rabbit and hop on the street. Perhaps that brings a few smiles to a few faces, so who is to tell this job is pointless? Okay, the cost of making the rabbit suit could have saved a few children from starvation, but that has less economic value. And that is precisely the problem. Think of consultants, managers, salespeople, lawyers, and financial advisors. They don’t make anything we can eat or use to keep our bodies warm, and a small percentage of what they consume could feed those who still go hungry.
These highly peculiar views come from a belief that money is the supreme measure of value and that we need to engage in a rat race to produce and consume as many non-essential items as possible to prevent businesses from becoming unprofitable, as that would collapse the economy. In other words, we commit suicide because economists believe that negative interest rates are impossible. And so, they keep on telling us, like Jacobse and Van Es, that if we just work harder and waste more energy and resources, so that the capital owners can make more money, everyone will become rich.
And so you can see the extent to which usury controls our thinking and makes us do stupid things. Things will collapse, and when they do, Earth will be a wasteland, and money will be worthless. Choosing to do nothing and be on the dole while you can work is not as bad as transforming energy and resources into waste and pollution by working in a non-essential bullshit job. Being a leech is less harmful than being a destroyer. And so, a UBI can help us to make the transition from a wasteful and destructive economic system to a sustainable one that centres on providing for our needs.
Income guarantee
A UBI can become expensive, most notably if the payment is sufficient to live off. An income guarantee is cheaper. Why hand out money to people who have enough? And there should be an incentive to work. Existing welfare schemes often make it financially unattractive to take on a low-paying job. A simple example can explain what an income guarantee scheme might look like. Assume there is an income guarantee of € 800 per month and a 50% income tax.
gross income
tax
net income
€ 0
+ € 800
€ 800
€ 1000
+ € 300
€ 1300
€ 2000
– € 200
€ 1800
€ 3000
– € 700
€ 2300
€ 5000
– € 1700
€ 3300
The income guarantee gets settled with the income tax, so you receive money when your income is low. If your gross income is €2,000, you pay €200 in taxes, and your net income is €1,800. There is an incentive to work as you gain financially from doing a job. When the income guarantee is sufficient to live on, there may be no need for minimum wages, making the job market more efficient. If the income guarantee replaces existing welfare schemes, there may be limited additional costs.
Denmark has an income guarantee, combined with a duty to seek employment if you are unemployed. It makes the Danish labour market flexible. Corporations can adapt their workforce to market requirements. Employment security, education and generous benefits compensate for the lack of job security.2 Denmark has a functional social contract and a competent government, which are prerequisites for such a scheme to work. The Danish state offers free childcare, so parents face fewer obstacles to working.
An income guarantee can improve workers’ bargaining position, even when it is not sufficient to live on. If the income guarantee is €500 and the living wage is €1,000, someone doing a cleaning job can work fewer hours, taking labour out of the market, which can result in higher pay to attract workers. An income guarantee might affect employment and income as follows:
Machines will do unattractive jobs that machines can do cheaply.
Those who do unattractive jobs that machines cannot do will be paid well.
Attractive jobs that machines can do cheaply fetch poor pay.
For other attractive jobs, the pay is hard to predict.
Latest revision: 21 October 2025
Other images: Monopoly game.
1. Bullshit Jobs. David Graeber (2018). Simon & Schuster. 2. Danish Employment Policy. Jan Hendeliowitz. Employment Region Copenhagen & Zealand, The Danish National Labour Market Authority (2008). https://www.oecd.org/employment/leed/40575308.pdf
The Plan For The Future 