1 Introduction
The economic depression following the 2007–2009 fi nancial collapse is not
over yet, and quite likely it will still take some years before the world economy
in its present structure gains more stability and growth – if ever. In fact, the
expected recovery from the fi nancial meltdown may also need a new defi nition
of the essential indicators of future economic output. Meanwhile, post-collapse
depressed economies of many countries continue to take their lot of human
suffering. While in the immediate aftermath of the collapse much of suffering
was caused by bankruptcies and lost jobs and/or properties, now it additionally
takes the form of the imposition of austerity programs and budget cuts. What
is, however, deeply disturbing about all this suffering is that innocent people
have had to shoulder the consequences of greed and the gambling urge of many
fi nancial institutions. The fi nancial collapse was not only about wiping out tril-
lions of dollars of so-called wealth. And it was not just a few bad apples that
caused the crisis. At the heart of it all was an insatiable desire for money that
has now spread its roots from an individual to an institutional level.
One of the upshots of the sudden worsening in the conditions of many people
in the aftermath of the fi nancial collapse was an outburst of popular anger, which
quickly spread over the media. Perhaps the most visible expression of it were
the “Occupy” movements seen in various cities around the world, which turned
into a symbol of protest against the gambling of fi nancial institutions at the
cost of the public. While some of the money pumped into the banking system
has been or will be returned, it is hard to imagine that the suffering caused by
the collapse will be acknowledged. Financial institutions did not apologize for
their role in the buildup to the crisis and the suffering they caused, and banks
did not express gratitude to the public for saving them. On the contrary, banks
acted if they were entitled to be saved.
Although the edge of the popular anger has primarily been aimed at the
fi nancial industry, governments cannot easily dismiss their “contribution” to
the crisis. Over the past few decades, lax oversight of fi nancial institutions and
cheap money policies, mingled with big money poured into the lobbying of
big power, have become an explosive mixture of “democratic” decision making
and crony capitalism.
Undoubtedly, banks as well as politicians would like to put the recent crisis
to rest and move on. Yet economic fi gures, and perhaps more importantly a
deep popular dissatisfaction, do not allow the post-collapse dust to settle so
easily. And it might turn out to be benefi cial for humanity that the dust of the
collapse has been kept in the air. The reason is that after such a huge crisis, it
is important to continue debating not only about who was responsible for the
collapse and how to repair the present fi nancial system, particularly its oversight,
but also to look again at the present economic system in its entirety. Ultimately,
the causes of the crisis that began to loom in 2007 were much deeper than mere
miscalculations on the part of overseers of fi nancial systems or the misbehavior
of some greedy fi nanciers. This does not mean that prior to the crisis there
were no voices critical of those ills and problems. Works of Hyman Minsky,
Joseph Stiglitz, Charles Kindleberger and Robert Aliber, Michael Rowbotham,
or Stephen Zarlenga can serve as noteworthy examples of such a critical stance.
Unfortunately, these and similar voices were drowned by the feverish rush to
unprecedented riches that had engulfed entire economies.
Amidst the multiplicity of critical perspectives taken in the aftermath of the
2007–2009 fi nancial tsunami, one can also detect a sense of injustice emanating
from some discussions addressing the crisis. For example, in Casino Capitalism ,
Hans-Werner Sinn points to the problem of gambling and speculation as provid-
ing almost guaranteed profi ts. According to him, while casinos normally offer
games “with a negative mathematical probability to win,” the banking system
managed to create a business model in which gambling almost guaranteed huge
private profi ts “run at the expense of society.”
Ellen Hodgson Brown, on the
other hand, hints at the problem of injustice ingrained in the debt money system
that dominates the modern world and appears to unnecessarily enslave many
people.
In these and similar works, however, despite the sense of injustice they
emanate, the real treatment of the issue of justice remains rather fragmentary.
The aim of this study is to focus primarily on the questions of justice as they
affect modern money and banking systems, and to treat the interplay between
money and justice in a more systematic way. The main argument driving this
work is that lack of justice in the present monetary and banking systems should
be considered among the factors affecting instability in modern economies. About
three decades ago, Hyman Minsky (1919–1996) posed his by now quite famous
hypothesis of fi nancial instability. In plain contrast to the dominant mainstream
approach assuming that economies were constantly seeking equilibrium, Minsky
claimed that they actually were inherently unstable. The core of his argument
was that in euphoric times, banks tend to lend freely, causing a rapid growth of
bank credit, but with a sudden change of circumstances, banks can drastically
reduce or even freeze lending, leading to economy-wide collapses. According
to him, this pattern was at the heart of the instability characterizing modern
economies.
The main argument of this book builds on Minsky’s conviction of
inherent instability of modern economies, but focuses on lack of justice ingrained
in the current money and banking systems as one of the components affecting
the instability of world economies.
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