Chapter 16. Neither heaven nor hell.

The key issue in favour of the second hypothesis -modifying the monetary system- is to see if its practical application is feasible, and to value its dangers and possibilities.

We must not be so naive as to believe that the second option -modifying the type of currency- shows no dangers or is not free of difficulties. In the present complex societies we cannot go back to clay. But the different possibilities offered by a personalized and informative type of currency must not have, as a result, a simultaneous and overall single type of instrument or of universal system. Every reality, every culture in which an anonymous currency is more or less used, willingly or unwillingly, if the second option is accepted, must find which features of the cheque-invoice, and to which degree, are considered necessary to be introduced, with respect to:

the special problems and the profits which are expected from it;

the instrumental technical possibilities available, and the protecting precautions.

In the following chapters we shall study the technical possibilities and the necessary judicial and political precautions. Now we shall shortly describe and evaluate some models and posibilities of monetary change under several specific realities.

To help visualize possible application models, we shall submit four different ones, evaluating for each the degree of: economic information, personalization and liability.

We can call the first model Reagan-Gorbatchev. It was submitted by Donald T. Regan, after having been Secretary of the Treasury in the USA while Ronald Reagan was President. The plan was not applied in the USA, but was partially applied, for different reasons, in the USSR by Gorbatchev at the beginning of 1990. «In order to control the exchange of cash by drugs wholesalers, retailers and hawkers [...], the Treasury should unobtrusively mint new notes of 50 and 100 dollars, of different colour and size than the present ones. With a warning of 10 days, all the existing 50 and 100 dollar notes should stop being legal tender, and everybody should have to exchange his old notes for the new ones. Banks and other institutions should keep a register of cash transactions above 1,000 dollars. Reports would be sent to the tax inspectors with the name and tax identification number.

«This would cause a great panic among those holding great amounts of cash. If the money were legitimate, nobody would have anything to fear. This may create confusion during a couple of months, but which honest citizen would not be ready to suffer a small inconvenience in order to get hold of these lawbreakers? This would hit the criminals where it hurts most, their wallet.

«Three things only could be done with money: to keep it in business, to spend it, or to save it. If it were invested through a bank, this plan could intercept the funds. If the benefits were kept in cash, the change of currency would cause its seizure. If it were kept in the business in 50 or 100 dollar notes, they would loose their value¹».

The model is shrewed, and is a good indicator of the impunity given by the present, anonymous currency. But this model shows the changes which have hardly any impact. After some months, the maffias would reorganizze themselves and everything would be again as before. This model does not offer an information of the whole market, it only wakens the area of hidden and illegal economy. It personalizes and appoints liabilities, but only temporarily.

The second model could be called the electronic purse. It has been worked out by Jordi Domènech, engineer, and it suggests that every person should have his savings recorded in an 'electronic purse', designed to carry out operations directly with anybody else's 'purse' with whom a trade operation is to be carried out: with this system rents could be collected, and products and services could be sold and bought. The model is amazing. Everybody becomes his own bank. There could be financial middlemen who could collect transfers of currency for collective investment. An automatic fiscal collection could be worked out when some very regular or security operations were carried out (periodic copy of the purse information in some given terminals).

Unless the purse had all the operations recorded, this model does not give information on the overall economy. Even if all the operations were personalized, it does not grant on its own any sort of liability, except that, in the case of judicial research, the judge may have access to the purse's information.

The third model, the companies' cheque-invoice, is today already in practice. Most companies carry out their operations among them by means of cheques and current accounts, with a data-processing basis. It would only be necessary to put in one single document the invoice and the cheque of all the operations. This model would avoid the feeling of excessive control, as it would leave consumers to use the already limited, present levels of notes and coins for their ordinary expenses, while they could be compelled to make cheque-invoices for important operations (some luxury items, real estate, investment bonds...). En important and trustworthy economic information could be obtained. The liability-appointing personalization would bear upon important operations and, in exchange, would not cause offence to the sensitive 'freedom' of many citizens who wish to feel, even if only in their imagination, little controlled.

The fourth model, the total cheque-invoice, would imply the exclusive use for all operations of money recorded in current accounts, and the suppression of all anonymous and uninformative currency. It would be a possibility in those societies which had already found the advantages -economic and anti-fraud- of the model companies' cheque-invoice and which decided to invest in the diffusion of the data-processing equipment necessary to extend to consumers the daily use of monetics. This greater economic information and responsibilization of liabilities would call for greater changes in the political and judicial structure ensuring the protection of privacy, while attacking the impunity of crime. These conditions are carefully studied in chapters 18 and 19.

After considering these four possible models, let us see now how their combination, to a greater or lesser degree, may lead to a change of monetary instrument under various present circumstances.

Exporting countries, but with a reduced domestic market.

In the case of a country with a simple domestic market, but with a major export market (for example, certain African or Central America countries), a combination may be made between 'notes with few monetary units' for lower consumption operations and a 'nominal and informative cheque-invoice' for really important operations such as: expensive or de luxe products; wholesalers; all the investment or purchase operations among domestic companies; import-export operations; public administration operations.

We must ensure that the most important, and the most strategic, volume of money movement be under an independent judicial control and at the same time supply information for a joint economic management. For small consumption it will not be too serious that anonymous paper-money be used in small units. It may also be established that this small units be valid only for a certain period of time (one week or one month) and that, in this case, it be supplied to every consumer according to the availability in his current account, through the savings banks operating the public's current accounts.

A mixed introduction (small-change anonymous currency for current consumption, and cheque-invoice for important operations) in a market with the above-mentioned features could avoid the action of maffias and local bosses, hinder public corruption, guard against multinational companies and control the army, while respecting at the same time the customs and the level of education of an important part of population, perhaps not prepared yet to use scriptural or electronic cheque-invoices. These them could be used, however, by companies and the public administration.

Industrialized countries.

A very different case is that of industrialized countries which have very complex and sophisticated markets. In these countries and in most international commercial networks, electronic money is playing the lead. We face here, therefore, an important decision to be taken.

In industrialized countries not only are companies and public administration ready for a general introduction of a monetary cheque-invoice system, but also small shops, services and the general public. In this setting, the telematic cheque-invoice has an effective possibility of implantation, and at the same time offers a consistent and democratic framework thanks to the already widespread diffusion of the different sorts of electronic money which are invading these countries.

The ECU (European Currency Unit) is a completely abstract currency which, at present, has not physical support of metal or paper. Europeans have, with the ecu, a historic opportunity to carry out the economic and political integration of the continent with one single currency, for recording purposes and personalized, thanks to the fact that, at the same time, all the monetic networks are already practically connected. (See annex: A plan against corruption).

International exchanges.

In the field of international trade the introduction of a cheque-invoice would not show any technical problem for its use, neither scriptural nor telematic, because in practice at present it already uses these supports. It is because of the joint inconsistency of the application of the electronic and scriptural money that the greatest and most serious imbalances take place in international trade and financial transactions and operations. The flows of long and short term capital not always correspond to actual purchases or investments. The massive movements of hot money and many of the purchases and mergers of companies produce a divorce between the monetary market and the market of actual goods and serivces. The capital market becomes largely autochtonous and follows its own rules of the game (creation of capital on capital) which endanger and put off balance the real economy.

A new international monetary system could be based on the cheque-invoice. In the same manner as the ecu, an ICU (International Currency Unit) could be introduced which would supply international trade with a monetary unit for the exchanges of real goods and services, without having to accept the dangerous, unstable and speculative hegemony of the US dollar. It appears evident that the creation and circulation of huge amounts of monetary units all over the world -through electronic transfers- with the only objective of speculating, taking advantage of the time differences or of the momentary imbalances of this or that stock exchange, is no good basis for any international economic order. And on the contrary, a cheque-invoice system which only allows to move money if it corresponds to some sort of real operation (goods, services and investments) may be a good basis.

We must study more in depth to which extent it is possible to introduce the hypothetic cheque-invoice monetary system in one or more States or at an international level, and viceversa: if it could be so at an international level without thereby implying any actual State. These questions are important not only to find out the consistency of the proposal but also to orientate and make possible the political decision in one sense or the other. (The international subject will be studied more in depth in a coming essay).

Countries in transition to real capitalism.

The growing acceptance of market mechanisms in the Eastern European countries offers a historic opportunity to avoid bringing into the trading system some of the main malfunctions of the 'capitalistic market economies'. In this respect, taking into account some of the positive contributions of the socialist countries is concerned, we must ask ourselves:

how can we avoid the denationalization and the introduction into the trading system of the land, with the resulting speculation and the burying of investment resources?

how can we promote a longed-for and necessary increase of incomes, not to be used exclusively to purchase consumers' goods -mainly imported- thereby dooming necessary domestic investments to dependence from external debt?

how can we create investment and capitalization instruments to avoid the speculation of stocks and the subtle and dangerous financiering of real economy, which promotes the accumulation of money in a few hands, outside the circuit of real production?

how can we avoid, without further increasing bureaucracy, that the corruption of the old regime be perpetuated under new ways thereby hindering the strengthening of the lawful State?

These questions have a difficult practical reply within the present financial and monetary system. Taking inspiration from Joan Casals (1987²), who suggests the introduction of one single title -quasi-money- for the savings assigned exclusively to investment, side by side with normal money. The possibilities of the cheque-invoice would allow to be applied to this 'money' which strives to protect the investment cycle. One part of the incomes (of salaries, profits and dividends) might be set apart exclusively for investment, in this way the workers and employers would become joint owners of the companies. The much discussed return to the private ownership of the land might find an agreed solution. The state property of the land would change to communal property and, when necessary, the old private owners would be compensated, exclusively with 'money' assigned to domestic investment.

With this system total incomes of the population would increase but it would be avoided that this were used only to increase the consumption as they could only be used for investment. The market would have the actual use of each of the income parts (such consumption item or such investment in a given company). In exchange for this, the macroeconomic values could be indirectly controlled, by modifying the percentage ratio between consumption money and investment money in salaries. Insofar as the personalization of monetary instruments became general, hidden, unlawful or the remaining speculative economy would be curbed.

With the introduction of this monetary instrument reserved for investment it would be easier to separate flows and stocks, and therefore natural resources would be more easily included in the economic system, in order to avoid their present, antiecological, externalization.

In this chapter we have only tried to prove that in the subject under consideration there is a wide number of solutions, and that to apply more or less of them depends on the problems which we want to be face, on the possibilities offered by every reality for its transformation, and also on the risks we may be ready to take and on the ability to introduce political mechanisms to ensure the right performance.

Notes:

¹«Cómo dar buen uso al dinero de la droga», El País, 21.9.1989.
²Joan Casals, «El socialisme sòlid», La Llar del llibre, Barcelona, 1987.