In Rare Albion, we have made giving a kind of science. It is undertaken without sentimentality, not, of course, because this is wrong – on the contrary – but because two things can
result if we are not crystal clear about the nature of giving. First of all, giving can become an instrument of power – of self-aggrandizement on the part of the giver, and of beholdenness on the part of the recipient. Second, and more seriously, those
who rely on gifts to finance their activities may thereby be excused or excuse themselves from the rigour of financial awareness. They may become dependent on the say-so of others rather than develop financial awareness of their own, the absence of which,
however, can often be the ‘cause’ of financial problems.
More seriously still, is the fact that the stabilizing function of giving - that is to say, the conversion of capital
into money - is not then recognized. Nor is the opportunity for further leverage that this provides. When something new but ideal rather than physical in nature comes into the world, a type of money is needed that is neither money nor capital. This is what
we mean by ‘capital converted into money’. It is crucial to understand that stability in finance entails balancing money and capital by converting excess capital into money through the financing of new ideas – ideas which then go on to have
a beneficial effect for humanity generally but that in their genesis merely incur costs for the one who has them.
We thus make a distinction between two very different aspects of economic
life - ideas and goods - without either of which a healthy economy would not be possible. But, like money and capital, these are not the same things. Ideas, such as research and education, entail no immediately saleable result, while their economic effect
falls broadly on society as a whole so that no one in particular is the beneficiary: the discovery of penicillin, for example, or the provision of good basic schooling for children. The production of goods or services, on the other hand, is such that, while
there is a lead-in period which needs to be capitalized, there is a saleable result, such as a car, and the beneficiary is quite specific – the buyer of it. In Rare Albion, therefore, the financing of ideas is not done by lending.
It is not that ideas do not produce a return. But the return is to society. One only needs to add up the cost of a dysfunctional educational system to see how big the return to society (and thus indirectly
to all of us) a good education really is. Here, in line with the principle of enlarged egoism, we foster education and culture by consciously writing down debt. Not simply out of generosity, but by deliberately transferring capital from one party to another
and then converting the capital into revenue so that it can be used as money. This is not an arbitrary or abstract exercise, however. It takes place in terms of clear financial planning.
Rare Albion financial plans are our way of recording what takes place between people. Because our finance, both as regards money and capital, has electronic form, financial planning is crucial because it gives definition and meaning to what can otherwise become
Moreover, this is how we keep our financial markets tame. We do not tax finance or use external capital controls of any kind. In finance, external constraints simply encourage
the getting round of regulations. Here, we use an inherent approach: we match capital to the means of production, to what people need to have in order to produce goods or services. Thus, we curtail our investment behaviour before its effects become detrimental.
When we began this policy we were accused of being utopian and of having a naïve understanding of human nature. But we felt that somehow, somewhere, someone had to prefer affordable prices and lower, but stable (and stabilizing) rates of return to capital.
The habit of preferring unearned to earned income could not continue indefinitely. In the end, the gap between have and have-nots would have become untenable.
The wonder is that this type
of financial culture requires no special institutional structure, no global governance treaties, and no complicated financial regulation. We like to think of ourselves as having been among the ‘first movers’ in this field. Our joy is that the impossible