Eloquent Cofi: Introduction

The title of this workshop is “Money: top down or bottom up”, but we also called it a workshop about building collective financial power.

So, what is the relationship between money and finance? You could see finance as a mechanism that precedes money. It is about managing credit and debt relationships, and historically this happens before the first coins appear.

I want to introduce here the idea of finance as settlement. Let's say, we have a transaction, somebody makes a payment for a service. Finance has to do with bringing that transaction to an end.

In the Latin of the late Roman Empire – as Amato and Fantacci explain in their book The End of Finance –, finantia meant in fact the 'amicable settlement of a dispute', from FINARE or FINIRE, to terminate, conclude.

Likewise, payment comes from the Latin word 'pacare' which means pacify, make peace. So, we settle a debt-credit relationship amicably.

The interesting thing here is that we are not yet talking about money. Somebody does something for somebody else, or gives them a good, and the other party renders something in exchange. And it does not even have to be symmetrical, between just two parties. We can look at a group of people doing favours for each other, or saving up together, or sharing a resource, or sharing risk. When they agree how to do that, and follow through with their agreement, they settle on something.

So, in that sense, finance has an end as in a purpose, and also an ending, or a series of endings, where things are resolved.

If we look at how the word finance is used today, it is tightly bound to money. And we have in fact a financial market where money itself is a product, where interest-bearing debts are bundled and sold off, and where more and more money is injected into the system and ends up in speculative markets that are detached from the actual economy of goods and services. If we are lucky, we can get something out of that market, say we have saved some money and invest it wisely. But other people will have to go into debt for that, and as a whole, this system is unsustainable.

It can be argued from history and logic that this type of financial system is inherently a cycle of booms and busts. And the way politicians always resolve it is NOT through settlement but through kicking the can down the road, in fact increasing the stress on the system.