I think that my own financial situation as well as my knowledge of the financial markets has lead me to think about this. I've worked for an international financial institution for over eight years. My role was mainly IT based and concerned with improving operations or upholding financial requirements from an operational point of view. In that time picked up a lot of information on the job and also studied for two of the five exams which are needed to qualify as a financial adviser in the UK. I passed one of the two and was close to passing the other.
Unfortunately (for me) there's no correlation between what I learnt and my own financial health. I have considerable debts and enjoy the spending money even if it's not mine. I wasn't always like this. Whether or not I am now working class is a sociological issue but I grew up in a working class family with largely working class values. The exception to this was that my mother encouraged me to read books and I went to a theatre group in my late teens. Until my mother started working when I was aged 14 we were a single income family and my father's income was not large. Basically we had little money. I'm not aware of any debts my parents might have accrued but I don't think it ever went beyond a mortgage and an overdraft. Pocket money ceases to be entirely sufficient as one enters the mid to late teens and I'd had to give up a paper round when I was 12 because of epilepsy. In a rural village at least seven miles away from the nearest town or city it was hard for a boy to found work. Employers always seemed happy to take on girls as waitresses but the opportunities weren't there for boys.
I held a paper round for a few months when I was 14 so that I could go on a French exchange trip. I gave it up as soon as I felt I'd saved enough because I hated the early freezing cold mornings for what was only £5 a week. Even in 1991 that was not a lot of money. As I'd only been saving the money it wasn't like I would miss the income.
Aside from the occasional odd job I wouldn't work again for another few years when I worked on the tills at Woolworths over Xmas one year. I rarely had any money to do anything but I was ineligible for an overdraft and I frowned upon the idea of debt. My parents wanted me to work and didn't have that much themselves so there was no handouts. But, I was comfortable having no money because I lived at home and my food was provided for. I then worked weekends and during the summer of 1995 at a job my Dad helped me get. I had to give the job up when I returned to college. During these late teen years I didn't enjoy having to exclude myself from nights out because I had no money.
One of my then best friends went to University before I did (because I'd been a less than successful A Level candidate). When he came back he spoke of his overdraft and his student loan. That de-stigmatized the idea of debt and being forbidden from doing something simply because you didn't have any money. My parents separated about nine months before I started University so, now paying individual mortgages, they were unable to give me any money. That's not to say they didn't give me anything but I had no income from them and I didn't ask them for anything. What that meant was that I was entirely responsible for myself and away from home.
My Dad knew of my love of music and had warned me about spending all my money on CDs. A few weeks into my first term I hadn't bought anything and thought, "Hey, I'm alright for money". At that time I thought of myself only as working class and was very proud of the fact because I felt that working class people could still achieve something through education. A lot of the friends I made there are still some of my closest friends to this day were from similar backgrounds. We were united in our belief that we should enjoy ourselves and reassured each other that there was nothing wrong with debt, they couldn't reclaim what we didn't have and that we'd all receive enormous salaries upon graduation. There was no immediacy about the latter. This was in contrast to my friends who were from middle class families, received no grant and were therefore responsible to their parents. They didn't spend beyond their means.
The first thing I bought with my Student Loan was an electric guitar and amplifier. When I got a credit card for the first time I bought The Beatles Anthology boxed set (£99.99). I had jobs in my second third years so I was supporting myself to the extent that I gave loans to some friends at the start of term. I struck a balance between earning money and acquiring debt. When I left University I had a certain amount of debt but I didn't regret a penny because I'd had such a good time. That's not to say that it was three years of partying because that's not the case. There were life experiences that I gained in that time which I couldn't put a price on.
I went back to my Mum's upon graduating and slowly tried to decrease my overdraft. After a few months I was even able to pat her some rent. The problem I had that I was back in Wales after three years of a decent life surrounded by friends. Mentally, I felt I was still at University but on an extended sabbatical.
11 months later I gave up my record store job in Bangor and moved in with a friend in York. The decision to move wasn't difficult because I wanted to be nearer more friends and didn't think I could progress in North Wales. I did have doubts in the weeks before I left because I was starting to build up a better social life but I'm not sure how much of this was down to the fact that I was leaving and was on an extended farewell mission. I can remember the night before I left that I was extremely anxious because I had very little cash to my name and didn't have a job lined up where I was moving too. I'd paid a couple of months rent in advanced so I knew could live without being a burden to my housemate.
I soon found office temp work and was paid weekly which made things easy. After 4 months the job became permanent and offered slightly more money. I thought that this was the perfect opportunity to take out a graduate loan. I used some of the money to buy my first PC which I justified as an investment and the rest went on the cost of living well. In retrospect this is a pivotal moment because as far as I'm aware I didn't need the loan. I took it because I could and saw the rewards (a PC) that it would reap.
I continued to live well on credit, enjoying very regular nights out, CDs and DVDs. University hadn't given me huge debts but it had brought about a culture of debt in me. In the following years I have taken out other loans followed by consolidation loans or credit cards. If there was a way to live comfortably and juggle money round then I was comfortable with it. At the same time I had friends were in a similar or, more pertinently, a worse fate than me. Therefore, I didn't see any of this as a bad thing.
I worked hard so that I could pay these debts off. I was rewarded with promotions and payrises but the frustrating thing was that these rises never seemed to be effective for long. I'd soon find myself overspending and think to myself that "I'll just spend less and save next month". It came to a point where I was on a reasonable salary but seeing little in return because I had repayments to make. I can't say that there was a "Eureka" moment and that I'm cured of this habit but I have started to address the problem by spending less than I used to on DVDs and accepting that I can't continue to add to debts and must go in the opposite direction by repaying them and not borrowing money from myself. I thought I'd become pretty good at this but earlier I found a receipt for a pair of gloves that I wear only once a week playing football if it's cold. They cost £15. Away from the shop it seems extravagant.
The main thing I've done to address the situation is to take voluntary redundancy so that I can repay at least one loan in one swift swoop - wiping out monthly repayments, interest on the loan and Payment Protection in the process. As the world economy collapses and I continue not to find a job the risk I've taken becomes more and more real but will ultimately be far more rewarded than playing it safe. I really don't think I'll be out of work for that long.
That's my history, but what of the future? The idea of eliminating money completely had began to occur to me. I looked not only myself but the implications money has for the world. It's an old cliche that "money is the root of all evil" and it's hard to disagree with that when one sees the financial success of Celine Dion or Jade Goody. I'm being flippant, obviously, but so many bad things seemed to succeed because of money. But, so much can fail because of money or the lack of it.
Much of the current recession has been attributed to the Sub Prime market in America. Financial markets have always been cyclical where a period of growth is followed by a period of retraction. I think that this is derivatively and misleadingly called "boom and bust" by the Tories because they apply it only to Labour when it seems to be the economic model which is at fault. Alan Greenspan recently conceded that the only flaw in the model was trust. The idea of a deregulated free market economy was that it would be in the best interests of the people who controlled the money to make more money but it failed to account for the fact that these people might fail or just might not be that good at what they do.
The Enron case showed that it was possible to create the illusion of assets and wealth. The basic knowledge I have of economics has shown me that the economic structure throughout the world is not entirely illusory but elements of it are, if not illusory, only theoretical. There's an old edict that, in times of woe, one should always bank on gold or commodities (because their value is stable unless a huge quantity of gold is suddenly unearthed). This points to the vulnerability of the equities market. In simple terms, an equity or share is the value of a fraction of a companies estimated worth. When companies are first floated on the stock exchange said company's worth is estimated based on its existing assets and projected income which gives the price for each share depending on the number of shares to be issued.
Over the long term, shares for successful companies increase in value which is the incentive to buy them in the first place. Not only that, shareholders are paid dividends (usually) based on the company's performance on the fiscal year. The company is accountable to shareholder because the shareholder doesn't want to lose money so the company acts to increase profitability by either improving sales or reducing their operating costs. The former eventually reaches saturation point and they try to sell a whiter white. The latter usually means a reduction of or an offshoring of the work force.
I wasn't a victim of the latter but I saw it happening where I worked and knew that I would be in eighteen months or so. In a free market economy there is little or no restriction on global trade so companies are free to employ the cheapest workers. I'm not sure what effect this will have on the economies of Western countries once their major corporations are outsourcing throughout the world. A company might become more profitable and be liable to more corporation tax but how does that balance with the revenue generated from income tax?
If one ignores the ramifications of offshoring and looks at the idea of market trading in straight equities it seems to be a sustainable model. But, the market is clouded by the trading of derivatives and futures. Derivatives are trades based on other trades. For example, one can buy or trade the speculated future value of a share (or shares) at a given value:
- Buyer thinks Share A will increase in value and offers to buy buy for a specific amount at a future date (or strike point).
- If Share A is worth more than specified value at strike point then the buyer makes a profit. If it is worth less then he loses money.
These trades are sold on the stock exchange but are effectively bets. These don't reflect the true value of shares, only their speculated upon performance. In that sense they add to the illusory nature of the financial markets because they are not a direct exchange of value. Futures/derivatives, along with other investments such as bonds, mortgages and straight shares can also be traded as funds in many permutations on the stock exchange. Much of this is the market effectively trading on itself. Sub prime mortgages affected the markets because they were underlying assets of funds and few people had considered the fact that they might be a risky investment. Additionally, much of the trading in these funds was done by computers who could calculate risk but could not assess it. That's to say they a computer would not know that a sub prime mortgage is being paid by someone for whom it is is beyond their means and that they are likely to default on it. Large companies either invested directly in these mortgages as an asset or via the stock exchange.
That's not the definitive reason for the collapse of the economic markets but it accounts for a number of the factors. It's all based on money or the appearance of money. Money is important to individuals so that they can buy food and have a place to live. I think the latter is important because aside from the biological need for shelter it is seen as desirable to own one's home. It represents a measurable achievement. Not only can you and others see it with your own eyes but you can live in it and walk around it. A house has become not what le Corbusier called "a machine for living in" but rather a measure of work and reward. One can't easily dispense with this notion or remove a need for decoration so it's hard to remove money from the equation.
Since money became the way to exchange goods I think the only serious attempt to develop a society without money was that of Communism which had as its central tenet the notion that society worked together for the greater good. The problem was that power as exploited so that the majority of people had very little in terms of material goods and, most importantly, food. Furthermore, communism had to be enforced by the suppression of dissent or the use of propaganda. A dissenting voice might suggest that it wasn't fair and that those with ability were being unduly rewarded. Human beings have have evolved psychologically to the extent that they cannot live machine-like in deference to the state. Therefore, despite some of its ideological principles, I don't think that communism, like its cousin socialism, works.
How can I live in a house and not pay for it? How can I obtain food without an exchange of currency and without hunting a cow myself? Can we live in a culture of pure exchange? The problem is, as flawed as the economic model might be and as much as money and avarice lead to much ill will I don't see how an evolved society can exist without a means of trade. Even if everyone could be housed and everyone fed, I don't think that enough people would find that to be enough. I don't know if I would find that to be enough. If I was told that I could eat forever and have a place to live until I died as long as I did a particular thing every day I wouldn't be happy. I need stimulation. I need to feel a sense of achievement and progress. I don't think I'm alone. Until I find the end of money I will continue to live with and without it.
I apologise for any typos and inaccuracies but this was written in a straight two and a half hour session and, right now, it's not the time to think about re-drafting it.
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