Positive Money | Danisha Kazi: making money work for people & planet
“I think people often think the financial system, either in their own country or globally, is just really far removed from them, and they don't really think it has any impact on them. But we try and highlight how it affects our jobs, our incomes, our chances of owning a home, the way that we live…”
In our October Changemaker Network meeting we discussed New Economies: what role does our economic system play in regards to both social justice and climate breakdown? How can we envision an economic system that works for both people and planet? Shedding some light on our current economic system, and sharing insight into what a sustainable economic system could look like, we were joined by Danisha Kazi - senior economist at Positive Money UK. Touching on the 2008 financial crash, diversifying centralised banking, COP26, local economics, and alternative ways our money could be organised, read or watch our Changemaker conversation with Danisha here…
Connecting Individuals, local collectives, and big centralised money systems
“Our main goal is really to look at the money banking system, and to see how to reform it so that it serves people and planet rather than profits and power. We really look at how we can propose ideas that make systemic change. Most of the problems we're seeing, well they're complex, and you can come at them from different angles - what we do is we come at it from the point of view of the money banking system.
What does my job involve? As a Think Tank we're small, but we cover research, campaigning, policy and influencing - we combine all those things together. Our campaigns involve bringing local groups together to do their own actions against the money banking system, but also the central bank and the government. So, we try to mobilise local groups as well throughout campaigns. And that's sort of what sets us apart, I guess from other research think tanks.
The research part that I work on with a team of four people is where we really try to create a kind of evidence base for the sort of actions we want to take and propose the policies that we propose. So we monitor events taking place, look at data and trends, and try to create a robust analysis of what's going on in the world. And a big part of what we do is try to explain what's actually going on in reality and how it affects people's daily lives. We’re trying to link up the actions made by big powerful economic institutions with how they impact everyday people's lives and make those links more accessible to people.
I think people often think the financial system, either in their own country or globally, is just really far removed from them, and they don't really think it has any impact on them. But we try and highlight how it affects our jobs, our incomes, the way we live, our chances of owning a home, things like that…”
CR: That's fascinating. It's really inspiring to hear you speak about mobilising local groups and having that community-focused action and engagement. I think often people think that it’s either what they’re doing with their money, in quite a very individualist way, or it’s very much about systems and governments, and I think between the individual and systemic is community mobilisation. So, that sounds really exciting.
On the Financial Crisis
“One thing about Positive Money is that it really started after the global financial crisis. People wanted to know how money was created, and how banks sort of led us into this massive crisis and recession that affected people's lives very deeply. You know, they lost their homes, they lost their jobs and their incomes. So around that time Positive Money came about to really build knowledge and make it accessible for us to understand how money is created, and how it's diverted into activities that are not helpful for people.
A lot of the money around that time was being diverted into risky financial assets; those risky financial assets as we know were mostly mortgages. You can think of a game of Jenga: once one part of it starts to crumble - once someone starts the chain of events, to default on their mortgage - then the whole thing starts to crumble down slowly. A big part of that is also the government, and the role of states and international institutions, because they set the rules for these banks, and investors, and they have the power to change those rules. So we also focus on the role of those institutions as well.”
What would a sustainable economy look like?
CR: At Positive Money you’re campaigning for a fairer banking system, a fairer money system, and a sustainable and democratic economy. But what would a system like that look like? Because we know what we don't want - we don't want infinite growth on a finite planet. We don't want the current system which is creating global inequality and social injustice. So, what is the kind of vision? What would a sustainable economy look like?
DK: Very much in line with the stuff that you guys are interested in and work on, we really sort of envision: How do we make the money banking system and broader financial system work for people and planet rather than profits? So, we have four main areas that we work on…
Democratising Money
“The first one is democratising money and banking. This links to things like requiring a more diverse ecosystem in the banking sector. Currently, we've got a system where it's very concentrated in big major banks, big investment banks, and high street banks: we all know the big names like HSBC, Barclays... So we look at how we can make that more diverse: we're interested in promoting things like community banks, cooperative property banks, and state led banks.
State led banks are banks run by institutions that are a part of the government and that can direct money towards where it needs to go. One thing is that we currently have a financial system that's not very well regulated. It tends to divert money to where it can make more profits, which tends to be risky assets. If there aren't regulations in place to stop them doing that, then they all keep doing that, because it just makes sense within this system. And it is very systemic; people aren't sitting there planning it in some sort of secretive way, it's just very systemic - it has a motivation of its own.
State banks are a good alternative to make sure we can divert large amounts of money towards things we need, like infrastructure and economy, or people's well being, or schools and health and education. These aren't unusual things: we've had them in the history of our economies for a long time, it's only really since the sort of late 1970s and early 80s that this system of having a concentration of power in just a few big banking institutions has come about.
We also look at how to democratise the money banking system. We've done research and work on why, for example, the Bank of England, and also big international institutions like the World Bank and the International Monetary Fund, are very much white male-concentrated institutions run by the same sorts of people, and there isn't enough diversity in them. When you have more diversity in terms of race, class and gender, then you get people making decisions for a more diverse population basically, rather than, you know, just the 1%.
At the moment, what we find are revolving doors between these institutions: a lot of people from big financial institutions like Goldman Sachs, are often switching between government and back to the banking sector. Again, it's not necessarily a sort of cynical way of looking at it - but we know these things have their own sort of systemic way of being set into place. They have their own system, the wheels get set in motion, and it's hard to change those directions unless we analyse it, point it out, and can say: let's regulate it, let's change that.”
A fair and green Banking System
“The second strand is a fair and Green Bank of England: so, we do a lot of work on trying to make the Bank of England support a green transition. A big element of that is the Bank of England's monetary policies; the policies that they're in control of in terms of the economy are mainly things like price stability, inflation and interest rates. They also do a lot of operations in the financial sector to keep it functioning well and they also regulate the financial sector. We look at all those different policies that they do, and look at how they can green those policies and green those operations.
For example, back in March, the government told the Bank of England - they wrote to the Bank of England - and said you have a new mandate to make sure that you support the government's objectives to help us transition to a green economy. We want to see the Bank of England starting to write to banks and financial institutions, and to tell them how to green their operations: how do they invest more in green activities, green infrastructure, rather than putting their money into damaging activities?
There's just lots of things that the Bank of England could be doing, because they set the rules for the financial sector. They can also tell the financial sector what to do and what not to do. One of the biggest things at the moment is we want the Bank of England to make it harder and more expensive for banks to put money into fossil fuels. The biggest challenge now is that we have to end financing fossil fuels.
A recent estimate that we've been putting out there is that since the Paris Agreement, which was in 2015, sixty of the world's biggest banks have pumped £3.8 trillion to fossil fuel projects: that's a huge amount of money that could be going towards creating green infrastructure, renewables, green jobs. So, we’re making demands that the Bank of England has to regulate this; they have to make it more expensive for banks to do it - which means banks would have to hold more capital if they're going to invest in a fossil fuel project; or, we could just ideally end that completely and bring it to an end, which is really what we'd want to see.”
A Well-Being Economy
“Another strand is a well being economy. This is a new area for us and again it links to the other stuff, which is that we think that the Bank of England and the UK Government should be working closely together to make sure we divert finance money, not just private but also public money, towards things that benefit people's well being. That's things like health, mental health, and nicer public spaces - so that people can enjoy public spaces, rather than just go shopping and spend money on things.
We want to promote this idea that we don't need to endlessly go after growth in our economies, we're already quite well off - certainly in the Global North. We don't need to be constantly looking to increase growth all the time. We could be putting our attention on other things like well being. I think having good jobs is also part of that: jobs that perhaps mean that you have more of a balance in your life with your family, and also looking at precarious employment, and low wages... that's all part of us having better lives.”
New Economic Thinking
“Our last strand is new economic thinking: basically, a lot of what economics is based on is just one school of thought, which is the idea that the free market should dominate. We want to promote the idea that actually there are lots of different ways of looking at the economy, and lots of different ideas out there and different schools of thought. There's things like: racial capitalism, gender capitalism, feminist economics… we want to lead the way in bringing different ways of looking at the economy, not just one way.
So, those are the key strands of how we hope to make more systemic change.”
CR: Thank you so much for so eloquently giving us an overview of all the incredible work that Positive Money is doing. I really love the phrase well-being economy, because I think it feels really relatable. Economy is meant to be about the sharing of resources, exchange of value, that's why it’s a man made system that we've created.
I also love that you mentioned that the current banking system that we have hasn't been around forever. It's not some kind of natural law, or something very ancient; it’s continually changing and growing. I think the more that we realise that it's possible for us to change, the more that we can galvanise ourselves and each other.
COP26 and Economic Changes
CR: Next week, we have COP26 starting, and I feel that in these climate negotiations there's a lot of talk but it doesn't feel like it's getting to the root of the issue, which in my mind a large part of it is the economy and the economic system.
As we turn our attention to COP, what are some of the things that we should be excited about? Are there any kind of actually radical solutions that are coming from governments in regards to the economy? And also, what are some of the red flags that we need to be aware of? Because certain things sound like they're going to be good, but actually, they're small plasters on big gaping wounds.
“Where we’re coming from, we're really trying to highlight the role of banks in funding fossil fuels - in funding climate destruction. We know that, for example, the International Energy Agency has said that fossil fuel use has to end now - we have to stop funding fossil fuels for us to even have a chance of aligning with the Paris goals. The Paris goal in 2015 is to try and keep global temperatures well below two degrees and reports recently show that our current commitments are very much towards the higher end of 3 degrees and above. We're not on track at all - and the window is closing basically.
The point of COP, with world leaders gathering either online or in person, is that they're going to look at what commitments different nation governments will put forward to try and reduce emissions for us to reach net zero by 2050.”
Climate Financing
“Another big element of COP will be climate finance for countries in the Global South. We know that these are the countries that are on the frontline of fighting and resisting climate change: they're hit hardest, the burden falls hardest on them, and they are not the ones responsible for it. A big element of COP is going to be determining what sort of climate finance is going to be offered up by countries to the global south. One thing we do know is that the agreement from 2015 was for $100 billion a year to go to global south countries. And we already know we're missing those targets. So, we need to see much more ramped up commitments on that front. That climate financing is basically to help these countries mitigate against climate change and to adapt to the dangers that they're facing.
So. COP’s all really around commitments: the net zero, and also finance. There needs to be vast sums of money directed into adapting and mitigating against climate change, rather than sort of kicking the can down the road. I think those are the things we're going to be looking out for.
The things we're asking for in terms of what we're doing at Positive Money, and the activities we're doing, is really to end the financing of fossil fuels and to redirect that money towards a green and fair transition. Those will be the key things that we are demanding.
And in terms of red flags? There will be a lot of analysis after and during the two weeks that COP is taking place and I think the biggest red flag will be around finance: what sort of activities are they doing to regulate finance into fossil fuels, and what commitments are they making to put money towards a green and fair transition? The International Energy Agency, again, has said we need to triple global funds towards clean energy, and it's something like over 3 trillion? So. we need to see large sums of money being committed to taking action.”
Economics and Individual Action
CR: Do you have any kind of recommendations for us as individuals? How can we learn more? I mean, you know, until a few years ago I didn’t realise how fundamental the economy was to society transformation. It sounds silly, but we just kept coming back to the fact that you can’t address the ecological crisis, social crisis, mental crisis without addressing the economy. But it's taken me years, and I still don't quite grasp the kind of current economic system we have.
Do you have any recommendations of resources and places to go so that we can learn more, as well as any kind of actions that we can take in our own lives?
“Yeah, I think there's lots of groups nowadays that are trying to make this stuff more accessible to people. Obviously, please check out Positive Money and our resources, because we put a lot of videos out actually, often on Twitter, to try and explain what's sort of going on and we try to break it down as simply as we can.
I think there are other big organisations that are doing lots of activities. If you find what aspects you're interested in, then you can look up those organisations, and follow what they're doing: see what campaigns they're running and look at the resources they have. That's really important, just follow your interests and what inspires you because that's what you'll take action on.
I think one of the major areas that sort of lacking is for people to look at different economic ideas out there. So there's groups like Rethinking Economics that are really useful and that try to explain that there are different ways of looking at the economy: it's not just the one way that we're told by governments and central bankers. They always say that “there isn't any money” or that “the debt is too high”, for example, or “we don't have the money to pay for things.” Just moving away from what the mainstream says in these big institutions tells us one thing, and if we look at economics from the margins, from different perspectives, that can tell us something else.”
Local economies: cash, currencies, and purchasing power
Hannah Bowman: I wanted to ask a question about what you think regarding some of the other kinds of actions that we can take. Sometimes it feels like we can do stuff with our purchasing power and buy local and try to strengthen local economies, which is really cool but it sometimes feels quite limited. I wondered what you think about kinds of localised currency? Where I live there was a localised currency for quite a long time, which has just been shut down because it kind of became too difficult for people to use. But it had a big following for a long time.
There are also things like switching to alternative local banks that don't invest in fossil fuels... or using cash… I’m just wondering, are there other things that we can do to at least feel like we're kind of part of something a bit bigger in terms of economics?
“It's a really great question. I think one thing we're doing within one of the strands of our work is protecting cash. For a lot of people, especially people on very low incomes, it's very difficult for them to use electronic resources, such as cards and things like that. We're also starting to look at the importance of a central bank digital currency as a payment system. If you go on our website you'll see some information about that.
But in terms of local economies, I think buying local is a really important way for us to support a green transition, because then we're not funding these exploitative supply chains, that involve a lot of transport and distribution and that can be both damaging to the environment and also involves really low wages and precarious workers in different parts of the world. So, buying locally is a really good action to take.
Then I think, maybe working with your people in your local community around things like setting up local banks, or credit unions and things like that. Definitely, moving your money away from the major investment and high street banks towards fair banking practices is really valuable.
I think, on the individual level, there are lots of things we all can do, and we all try to do. But I think it's also about teaming up with the bigger actions where we demand that big powerful institutions actually do take action for us as well - it’s really important. So, combining what we do at the local level with taking action at the national and international level, that’s really important.
Consumers have power in that respect as well, not just in terms of the micro-choices they make, but in terms of making collective action with others. A lot of organisations have campaign groups and mobilise people to take action to demand that the government and the Bank of England should do more to invest in a fairer and green transition. I think that stuff is as equally important as the sort of micro-level decisions that we make.”
On Digital Currencies
Shiny (Changemaker): I had a quick question for you and this is regarding the advent of digital currencies that's creeping slowly but steadily in these spaces. How should we approach that? Are we to support it? Because we really don't understand how it operates as we kind of tackle regular economic upsets - so what's your positive take - or negative take - on the blockchain as such?
“We're sort of in the early stages of building our thinking on that, but really what we would argue for is that we need a public payment system, a digital public payments system. The control of any digital currency should be in the hands of state institutions. We do have concerns about lots of different private providers, because the tendency of these private providers of digital currencies is for it to be more like an asset: it tends to just get a lot of money pumped into it, the value of it goes up very suddenly, and then it also goes down very suddenly. So, it has a tendency to be more like a financial asset, rather than what we need it to be, which is to help people make payments that they need to make.
We also worry about privacy and the use of data by these institutions, by groups like Facebook and their own kind of currencies. That’s why our argument really is going towards: it should be state-led and public payment systems, so that we can ensure it's regulated, to ensure that it protects consumers, and to ensure that it protects against privacy and data issues. Across the world, central banks at the moment are actually looking into digital currencies right now and looking at how to develop them and provide them. So, one issue that we're concerned about is the extent to which they might lean on private companies to help deliver those digital currencies.
We want it really to be in the hands of people, rather than the infrastructure providing a digital currency, and the data, being in the hands of private actors.”
This conversation took place within one of our monthly Changemaker Network meetings - join the network and meet us at the next one here!
Positive Money is a not-for-profit advocacy group based in London and Brussels. Positive Money's mission is to promote a fair, democratic and sustainable economy through reforms of central banks and alternative monetary policy tools. Find more of their work and resources on their website here.
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