Quotes/Werner Democratic Economics

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Richard Werner, New Paradigm of Marcoeconomics

Once the facts of credit creation and its potential are more widely known, democratic processes can be used to decide upon the goals that should be achieved and the most suitable mechanism to achieve them. A clever use of institutional design and credit allocation will allow far more ambitious goals to be implemented than has so far been the case. Not only recessions, unemployment and boom-bust cycles, but also poverty and desitution can be in principle be eliminated.

As an example, an improved form of macroeconomic management can thus take the following form: through democratic institutions, society decides upon overall goals that the economy should fulfil. This may for instance be environmentally sustainable, stable economic growth which gives highest priority to quality of life of present and future generations. To achieve this goal, the democratically accountable credit control mechanism would openly discuss and decide upon a priority ranking for the issuance of credit. Thus research into new environmentally friendly energy sources may be given priority, as well as the creation of green urban spaces and leisure areas. Credit would also then be created to fund such research or investment in such projects. Meanwhile, purely wasteful or environmentally destructive type of activities or activities that affect the well being of the people negatively would not receive newly created purchasing power. The decisions would have to be made in the open and subject to debates and voting.

Other societies may still be in a phase of development where fast economic growth is necessary. In that case, the goals and implementation of the credit allocation mechanism can be set similar to those of Japan in the 1960s. For instance, the role of shareholders could be restricted and managers given more influence over company policy. If a society decides that its population is not growing fast enough - as is the case in many industrialized countries - it could use the credit creating institutions to provide monetary incentives to childbearing families. Every childbearing family could, for instance, be paid $100,000 for each child born, perhaps administered such that withdrawals are only allowed for specific purposes, and then society would most likely be able to achieve its goal of increasing population. Such a policy would not be inflationary: among all inputs into the production function, human resources are bar by the most important.