One of the many consequences for corporations such as General Electric, Cargill, Proctor & Gamble, and others is that they are compelled to create their own in-house financial operations to play the markets. That�s where the money is.

Over the last several years, the biggest corporations have been increasing their profits by an average of 20 percent a year. This sets a floor under the market�s expectation. Fund managers are becoming increasingly aggressive in demanding such performance from companies. If a company starts lagging in its growth, it may act to replace its board of directors and CEO. The socially conscious CEO is well aware that professional buy-out artists are drawn like bees to honey by a firm that is being socially responsible by such acts as internalizing environmental costs, or by paying union wages, investing in worker training, fully funding pension funds, and paying a full share of taxes. To financial traders, these policies are likely to be seen as inefficiencies to be eliminated, or pools of funds to be raided.

Corrective Action

My key recommendations focus on returning the money system to its proper role of servicing the wealth-creation process. This will require corrective measures that need to:

1) make speculation unprofitable;

2) limit the growth of financial bubbles;

3) increase incentives for cooperation among people and communities;

4) reward productive work and investment;

5) create a just distribution of claims to real wealth;

6) provide incentives for patient and locally rooted investment in real assets; and

7) strengthen the social fabric of family and community.

The purpose of such measures is not to increase global growth and competition. Rather it is to create healthy and prosperous societies that provide economic security and just rewards for productive contribution to their members, that have a strong and caring social fabric, and that live in balance with their environment. The required measures will surely inconvenience corporations and financial speculators, but theirs are not the interests that human societies exist to serve.

There are some specific measures that can be taken. The following suggestions are put forward as possibilities meriting further examination:

* Strengthen Development of Local Currencies - Exempt local currencies from taxation except for taxes by local jurisdictions. This would strengthen a common currency with a mutual interest in productive exchange among its members.

* Introduce Zero or Negative Interest Rate Money�Interest gives money a curiously exclusive advantage as a means of storing wealth. Holding virtually any real asset involves a cost to the holder. Forests, factories, farm land, buildings, and personal skills must be maintained. Technologies become outmoded. Even gold must be stored and guarded. Only those who store their savings in money expect a secure, cost free return with no effort on their part. This gives the money person a considerable and inappropriate advantage over those who engage in real work and investment. A negative interest rate or a holding charge on money, devices well tested in a number of local currency schemes, provides an incentive to keep money moving.

It also encourages investment in real productive assets that continuously create value.

* Limit Debt�In our present monetary system virtually all money is created by banks lending it into existence, i.e., by creating new debt. Because loans must be paid back with interest, it is impossible for all borrowers to pay the bank both its principal and accrued interest unless total borrowing grows faster than old debts must be repaid.

The alternative is for government to create money by spending it into existence for public purposes, such as investment in education and public infrastructure, while placing limits on private and public borrowing.