In Rare Albion, the monetary landscape is divided into two - the world of money on one side and the world of capital on the other. Money and capital are not regarded as synonyms,
but are demarcated from one another. The funds used to buy and sell things are differentiated from those used to acquire assets – buildings, machinery, inventory, and so on. Therefore, the word ‘money’ is restricted to the buying and selling
of goods (trade) and ‘capital’ to the borrowing and lending needed to acquire such things as stock and equipment that trade presupposes (technically speaking, the financing of the means of production).
To the expert and layperson alike, this gives powerful orientation in economic life. Thus equipped, everyone can ask himself the following question: For each and every transaction that comes my way, does it belong to the
world of money or the world of capital? Does it link me to the buying and selling of goods or to people’s investment needs.
Behind this image lie deeper
questions, of course. For example, is the money I am holding in my hand backed by goods or assets? Without the dollar sign or any other emblem of national denomination, so seemingly abstract a consideration becomes obvious, even urgent. When, before Rare Albion,
the dollar (or any other national currency) was used we relied on the promise written on it – that we could exchange it for another dollar. Before that, we were even able to exchange it for gold, but then it became backed by the government’s prerogative
to manage money – a prerogative that many came to think governments should not have. In due course, it was this view that prevailed and became social fact through what became known as the ‘liberalisation of finance’, the opening up of finance
to the wide reaches of the world as a whole.
Without gold, governments came to rely on complex monetary techniques, such as reserve ratios, inflation control, and
exchange rate management, in an attempt to ensure stable prices and affordable debt. In the end, however, this could not be achieved because money and capital were not distinguished from one another, so one never knew if the dollar was backed by goods or sound
Moreover, people began to use capital to buy food, so that spending became funded by borrowing. They then began to buy more than they could afford. Debt
then mounted up, but, perversely perhaps, expectations and values rose to keep pace.
Thus, the world came to groan under a debt-load so huge that few could grasp
its significance. Worst of all, no one could identify its true counterpart for it had become unpayable. Yet none would countenance ‘forgiveness’. The values they ascribed to themselves would not bear any writing down.
In contrast, here in Rare Albion we always ask of our money: Is it backed by goods or sound investment? Sound monetary policy has become embedded in our way of being. We make our actions representative
of two worlds. We are no longer merely buying and selling, borrowing or lending, but acting as agents for two very different aspects of the entire global economy – trade and finance, money and capital.
Of course, when we began to live this way for many if not most people it was not easy to separate money and capital; to buy things only with income and not with borrowings, for example. But the change was made possible
because we had seen that for most people this would necessitate a higher income, from which, however, truer prices would stem – circumstances that we made the subject of careful policy. This was not easy because previously everywhere income had been
suppressed – not because people had preferred to reward capital rather than labour, as many had described the problem, but because they preferred financial gain to the commensurate rewarding of human beings.
The only way we found to overcome this was to put our trust in the human spirit, something we had until then regarded as too risky to contemplate. We preferred to put our money ‘in the markets’ - as if behind
the markets there were something other than human beings giving rise to value! One day, we realized that the monetary world is nothing other than the ‘skin’, as it were, of human relationships and this in their deepest possible sense. It was this
that gave us the courage and thereby also the insights to institute new policies.