In time entrepreneurs would regularly be selling shares to gain the money needed for their enterprises but they were then liable to discover that if they put the interests of their employees before those of their shareholders their enterpise could be taken over by some rival offering shareholders a better deal. (See Sustainable Economics vol. 9 no 6 p. 151 col. 3 esp. last para).

Meanwhile, long before share dealings played the important place in economics that they do today, borrowing money became increasingly attractive to those who wanted to get ahead of rivals in the fight for control of wealth-creating resources�hence the growth of paper money and other forms of bank-created money which we have been studying in detail. Banks became the trusted agents of these developments, - keeping accurate accounts and gaining a reputation for reliability, in effect 'holding the ring' in the developing cut-throat economic free-for-all.

When first studying these developments I assumed the repayment of interest on loans to be a key factor in stimulating economic expansion but I now realise that the issue is far more complex. If the driving force of the money economy is the need to make sure that in any critical situation one has more money than one's rivals then borrowing becomes very attractive for those who can persuade lenders that they have a money-making project.

The payment of interest became a price worth paying when loans provided the opportunity to get ahead of rivals in developing some new source of profit. During the agricultural and industrial revolutions loans were readily available for those aiming to produce more goods with the same amount of labour. and the agricultural revolution forced surplus workers to migrate from the countryside to the towns providing competition for jobs there, helping to keep wages down.

Raising wages to enable those in the existing market to buy the extra produce seemed at first to defeat the object of making employers as much money as possible so new markets had to be found. At first this was not a problem. Existing markets, such as India, already supplying us with luxury goods, could easily be persuaded to take our manufactured goods in exchange, if necessary by bribing compliant rulers or using force to replace those who resisted change. Any disruption of existing local manufacture would be considered unimportant.

With the support of military backing this approach worked well until the supply of new markets began to dry up. Now the solution was to create more demand in the EXISTING market; but giving workers more buying power by paying higher wages conflicted with the need to pass on as much as possible to shareholders, so now CUSTOMERS had to be encouraged to borrow, - hire purchase, credit cards, loans of all sorts. One effect of this was that while suppliers received the borrowed money the customers paid the interest! Besides this goods made as cheaply as possible to undercut rival suppliers had the added advantage of needing to be replaced sooner. If they could be made in low-wage economies so much the better.

To summarise the argument so far:

1. Economic expansion has been going on since the introduction of farming.

2. At first it was limited (eventually) by the ability to consume.

3. Widespread use of money changed the situation. Economic power now depended on having MORE money than others. So it was the NATURE OF MONEY which motivated the creation of ever more money. We have mistakenly assumed that lending at interest has been the CAUSE of runaway economic expansion when it would seem more accurate to see it as an undesirable RESULT of the urge to borrow in order to expand more quickly than others..

This does not mean, though, that our efforts to understand and explain the mechanics of money creation have been a waste of time. Without this understanding it would have been impossible to recognise what needs to be done to rescue our environment from destruction by cut-throat competition. If economic expansion is to be curbed it remains essential to limit the growth of the money supply�but to attempt this in isolation from other reforms would be futile.