THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Wednesday, March 17, 2021

6. Five Roadblocks to Social Justice: Thinking In Systems

In the previous posting on this subject we concluded our discussion of the “problem” of advancing technology and the presumed inability of those without capital ownership can never be owners.  The solution, of course, is to make everyone potentially “creditworthy,” and use money and credit properly to turn every child, woman and man into a capital owner by qualifying them to purchase self-liquidating capital, i.e., that pays for itself out of future profits.


The basic idea is that everyone can still be productive even if he or she cannot use human labor for some reason.  That ensures that the economy can come into balance.

To recap our discussion up to this point, we have addressed four of the five situations that need to be addressed if we are to carry out a restructuring the social order.  Again, there may be more, but these are the ones we think are key to carry out a just, effective, and sustainable restructuring of the social order:

·      The Misunderstanding of social justice,

·      The “slavery of past savings,”

·       “Currency Principle” versus “Banking Principle,”

·      The effect of advancing technology, and

·      Belief that solutions can’t work as a system.

Today we look at the final “roadblock,” the idea that, while something may work in some situations or by itself, it won’t necessarily work in all situations or in concert with other things.


That, however, is the very essence of what social justice addresses.  Social justice does not look to any individual good, but to the good of institutions and systems: the environment within which people ordinarily realize their individual goods.

Thus, if there is a sound and proven means by which some essential individual good can be realized, but there is an institutional or systemic flaw that prevents that means from being used, the response in social justice is not to discard the means or limit its application to a select few, but to reform the institution or system so that it potentially benefits everyone.

A prime example of this is the institution of money and credit.  As matters now stand, “money” is a very mysterious commodity that somehow permits economic activity to take place.  Noting that very few people now control “money,” some people have invented substitutes in an effort to circumvent the system, e.g., crypto currencies and local barter systems.


Other people have proposed a “moneyless economy,” which, once we understand the essence of money (below), is a contradiction in terms.

Inevitably, however, the substitutes either become controlled by a few people in turn, or are too limited in application to break the monopoly of those who currently control money and credit.  As for a moneyless economy, all anyone has ever done is change the form of money, not its substance.

To reform the money system first requires that we realize that “money” is not a commodity at all, although it has been (mis)treated as such.  In reality, money properly understood is simply a means by which I exchange what I produce, for what you produce.

Money is nothing but a promise, having no value in and of itself, but only because the promise made by the issuer is good.  A silver coin passes as money because people trust the promise stamped on it, that it contains so much silver.  A banknote passes as money because people trust the bank that issued it to deliver equal value on demand or in settlement of a debt.  Demand deposits — “checking accounts” — are used in exactly the same way as banknotes.

Commercial banks perform essential economic services.


(As a side note, all banknotes are backed by some form of debt, whether public, government debt, or private sector debt.  When a banknote is backed with government debt, the government may exchange it for other forms of money, accept it in taxes or other payments, or redeem it by using it to cancel the debt that backed it in the first place.  When a banknote is backed by private sector debt, the issuing bank may exchange it for other forms of money, accept it in payment of some liability owed to the bank, or redeem it by using it to cancel the debt that backed it in the first place.)

Anybody who has something of value to exchange for other things of value is potentially a creator of money.  Two people can do this between themselves simply by making a promise and keeping, as can two or more businesses.  What a commercial bank does is make it easier for people who don’t know each other to engage in economic activity without at times even meeting.  They don’t have to trust each other, just the bank.

(Another side note.  Creating money is the special function of commercial or mercantile banks that do so by lending on promises that have value, for which they receive a fee.  Other banks cannot create money, but only lend out what has been deposited.)

Thus, at least in theory, anybody who can make a promise and keep it can participate in money creation, and thereby become an owner of capital.  There are, of course, an enormous number of details that we haven’t addressed here, but that is the essential process.

Of course, as part of the economic system, money should be open to use by everyone who qualifies.  Due to various flaws in the system, however, that is clearly not the case.  The job of social justice in this case is to restructure the relevant institutions so that everyone can use it to become a capital owner without harming anyone else.

That is the point of the Economic Democracy Act, which has the goal of turning everyone into a capital owner.