The Solution – Labour-based Currency

Having established the fundamental problem of our current economic system, we will now present the essential principles of a viable solution – labour-based currency – and how this system would be practically be implemented. If you have not read our original essay, and don’t understand the problem of debt-based finance, then I recommend you first read Part 1 – Understanding the Problem.

Under a labour-backed fiat currency model, the money supply is expanded via the government’s expenditures for the maintenance and developing of a particular public projects, be it in the form of social and emergency services (e.g. public transportation, garbage disposal, welfare, ambulances, fire control, police and all other typical government sector related jobs) or state infrastructure (e.g. roads, energy plants, water sanitation, government housing). 

All payments the government to workers and collaborating private enterprises (e.g. some materials [wood, concrete, wire, etc …] to build infrastructure may need to be acquired from a private source, which is fine) is made in the form of a receipt that can be cashed in at the state-run national bank. What should be remembered from all this is that the money supply can only be expanded at the behest of the government’s ability to provide jobs to those who do not own a business or work within the private sector. The private sector will only ever be able to utilise money that the public sector produced. 

Regarding private enterprise in and on its own, the state still plays a regulating role by encouraging more business to thrive in areas where the generation of privately produced essential goods and services (e.g. foodstuffs, clothing and hair salons) is deemed to be insufficient and by discouraging business in areas where there is deemed to be a surplus of unessential goods and services (e.g. makeup, perfume, iPhones and entertainment television). 

Since all government services to a nation are monetarily compensated by the government’s own means (i.e. the state produces the money it needs to spend), income tax becomes irrelevant, even for those working in the private sector. Since the government also regulates private enterprises enough insofar as how much they can produce and limiting them to a single facet of goods or services production, company tax also becomes unnecessary as a means to prevent unchecked expansionist urges (as if company tax ever served to cap aggressive business practices and wealth hoarding in the first place).

Under a labour-backed currency model, the government does not own the economy; rather the government directs the economy. Nonetheless certain key services for the maintenance of a modern state must never be privatised in order to prevent the private sector from eroding state authority over a population. This includes essential services such as water sanitation, media, postal delivery, electricity, public transportation, disaster relief, armaments production, both reserve and commercial banking, security and healthcare.

Accepting the reality that some nations lack the raw materials and means for producing certain finished goods to become truly self-sufficient, it becomes obvious that international trade is still necessary. The solution to minimise exploitation during such an exchange is to enforce – although never through an international body – that trade between nations be conducted in a fashion whereby the essential goods and/or resources of one nation are exchanged only for the essential goods and/or resources of another nation on terms reached by both trading parties. 

Because money creation is relevant to government efficiency in hiring the citizens of a nation to play a pivotal role in maintaining and building-up the existence of their state, a given currency based on this model is freed from the hostile control of international finance which insists that the currency of one (x) nation is inferior to currency of another (y) nation – either because X has less gold reserves (as if people can eat or build houses out of gold) or simply because an established power group simply says that X’s money is of less value (this representing the so-called ‘modern’ system of ‘floating’ currencies) – and that the former is destined to be economically exploited by the latter.