Download in whose interest - My Illinois State

Lucille L. T. Eckrich, Illinois State University
(Draft; not to be quoted without permission.)
IN WHOSE INTEREST?
TEACHING ABOUT MONEY
IN FOUNDATIONS OF EDUCATION COURSES
While this paper should be of interest to all philosophers of education in our day, it is
especially addressed to those of us who teach students preparing for K-12/13 public school
teaching. These students are either undergraduates—usually juniors or seniors—or in postbaccalaureate certification programs, and all of them generally have to take one foundations of
education course. No matter what the title of our particular foundations courses, we each face
tough decisions about both what to include and, whether consciously or by default, what not to
include. This is because the philosophy, history, and sociology of education and schooling cover
such sweeping territories, and most of our students have but one course in which to address
them. The purpose of this paper is to make the case that we should be doing more in our courses
to engender our own and our students’ critical literacy about economic life and relations.
In what follows, I first share pertinent results from my analysis of syllabi of foundations
of education courses taught by members of this Society. If these results are representative, many
of us agree that socio-economic concerns have a rightful place in our courses, but none of us is
equipping students with economic literacy. Next, I explain what I mean by critical economic
literacy through articulating a critique and ensuing reform of our monetary system that is, in fact,
gaining ground today. Finally, I highlight why I think these economic matters deserve a central
role in foundations of education courses not to mention in our service and research projects.
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The Foundations of Education Syllabi Clearinghouse
In 2002 members of the Philosophy of Education Society (PES) were invited to create an
electronic clearinghouse of foundations of education syllabi to serve as a public resource for
teachers and scholars in our field. So far, 38 PES members, representing about 8% of the
membership, have contributed 60 syllabi to this clearinghouse.1 These syllabi are primarily for
undergraduate, post-baccalaureate, or master's level courses required for elementary or secondary
teaching certification. While analysis of these syllabi evinces very worthwhile courses, it also
reveals very little attention paid to helping preservice teachers to analyze and understand the
nature of the political economy through which we all attempt to make our livings, live our lives,
and realize our values, educational and otherwise. Only three syllabi (5%) engaged students
explicitly in political economic analysis and in only two of these (American Politics and
Education, and Comparative Politics and Education, both taught by the same person) was this an
overarching and main focus. The other syllabus was my Social Foundations of Education course
in which I only began last spring to include a few readings and class sessions through which we
analyze the monetary system amidst which we subsist. Four additional syllabi each mentioned
economics in their course description or objectives, but their schedules of topics did not include
serious attention to it.
On the other hand, many syllabi paid some attention to socio-economic concerns. Half
(30) addressed diversity issues, which often entail economic implications, and 11 of these syllabi
specifically named class identity. Eighteen syllabi (30%) attended to what they call social justice,
which for many is a short-hand label for matters that include attention to the systemic sources of
injustice. Sixteen syllabi (26.7%) required reading all or part of Freire’s Pedagogy of the
Oppressed, which was by far the most widely used text; 13 (21.7%) used all or some of Kozol’s
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Savage Inequalities; and six other syllabi (10%) included one of Joel Spring’s texts on the
history of U.S. schooling. While Freire, Kozol, and Spring do not offer economic theory per se,
their texts communicate critical perspectives on the nature of contemporary political economy.
Another topic considered in 11 (18.3%) of the syllabi was school finance. Given the disparity in
the distribution of wealth in our political economy, depending on local property taxes for the
bulk of public school funds, as most states in the U.S. do, results in a parallel disparity in per
pupil spending across schools. This makes school funding policy a relevant topic for professors
who espouse equity, equal educational opportunity, and the social change necessary to achieve
these. Finally, 12 syllabi (20%) addressed education for economic purposes in their examination
of the functions of schools, and eight (13.3%) somehow attended to Marxism and education.
In sum, if we count all of the above described components as attending to economic
matters, 50 out of the 60 syllabi (83.3%) do so in at least one of these ways. In my view, this
suggests a concurrence among the 32 professors who taught these 50 courses that economic
considerations are germane to foundations of education courses. Although these 32 comprise
only 6.7% of the PES membership, these results still make me hopeful that the proposal of this
paper will fall on interested and open ears. However, what I am proposing is to go much further
and deeper into economic theory, analysis, and practice than virtually all of these syllabi appear
to do. Of course, syllabi do not reveal what actually transpires in classrooms, and it may well be
that some of these and other PES members are already doing what I am proposing. If so, I hope
to learn from you through your reactions to my paper. But if you sense that you are not working
with economic matters in your courses as explicitly as the times we are living in warrant, I hope
you find in my paper some reasons, encouragement, and resource to help you to do so.
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Critical Economic Literacy and Monetary Transformation
In this era of so-called globalization, many agree “it’s the economy, stupid.” And yet, few
among us question the nature of our monetary relations. Rather we relate to money like we do to
the air we breathe. It is part and parcel of our everyday lives, but most of us do not think much
about how it functions (or perhaps dysfunctions). We take that for granted and act as if money
always has been and always will be as we experience it today. In fact, however, money—one of
the most ingenious and constructive, even if as yet suboptimal, inventions of humankind—has
had a long and varied history, one which I trust is not over. Although beyond the scope of this
paper, tracing its evolution is not only interesting but very useful for helping us to understand the
nature of our monetary system today.2
Traditionally money has mainly served two functions: as our most liquid or universal
means of exchange, and as a store of value. But money cannot simply “store” value because it is
a temporal and relational good. As the Belgian finance expert, Bernard Lietaer, puts it, “money,
or currency, is an agreement within a community to use something as a means of exchange.”3 No
matter what we use as money, its value or purchasing power reflects, as best it can, the average
productivity of the community or society whose name it bears. Thus, the future purchasing
power of any money we save depends upon the long-term viability of the economy of which we
are part. The problem with our monetary system as it has evolved thus far is that it “offers its
liquidity services for free to all those who have money, while at the same time making those who
lack money pay a premium to obtain those services.”4 From micro and short-term perspectives,
this is a double negative for all those who lack money and a double positive for those who have
more than they need. From the macro and long-term view, however, this bias in our system is
“dehumanizing” for all who are party to it5 and counterproductive for the economy as a whole.
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Let me try to describe this counter-productive systemic bias in terms more familiar to us.
Besides our cash and coins on hand, checking accounts and their accompanying debit cards are
our liquid assets. To the extent that we live from paycheck to paycheck, we have no balance to
speak of and thus have little if any liquidity premium to pay for, assuming we do not overdraw
our account. In fact however, people who say they live paycheck to paycheck, as well as many
who seem able to save something, are not even doing that well if they have borrowed for durable
goods such as homes, cars, appliances, machinery, or tuition not to mention for perishable goods
like food, clothing, medicine, or other supplies. Given the interest built into our monetary
system, the prices they end up paying for these goods are significantly higher than those paid by
people who can afford to buy them straight out, the list prices for which, it should be noted, are
themselves already inflated on average 30-50% in order to cover their producers’ interest costs.6
In contrast, to the extent that our current expenses are lower than our paycheck, the
balance in our checking account gradually goes up. While we can see that we do not need that
purchasing power now, most of us also know we will need it someday and thus we hold on to it.
Doing so feels costless to us personally, because there is no charge to us—or to anyone—for
holding money under our existing monetary relations. In fact, however, it is quite costly. By
keeping our money out of circulation we are in effect destroying it, for withheld purchasing
power lacks the one quality—liquidity—that makes it money. By withholding our money we are
preventing the endless series of transactions that would have been facilitated by it were it in
circulation.7 The damage thereby done to the economy is costly and comes back indirectly to
haunt us as future transactors who erroneously assumed that the purchasing power of money—
not to mention the vitality of the economy it exists to serve—remains intact while it is withdrawn
from circulation.
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Of course, instead of maintaining a high balance in our liquid checking accounts, we
could and most of us in fact do shift some of our excess money to less liquid savings accounts or
their related bonds, stocks, and mutual funds. On its own account, this makes good economic
sense for us and for others. On the one hand, we need to save if we want to distribute our lifetime
income optimally, and doing so ourselves is arguably more efficient and effective than creating
and maintaining a social security system to do so. On the other hand, while we prefer not to use
our surplus funds at present, there are others who can make good use of it in the meantime,
thereby both better meeting their own and other transactors’ present and future needs and
vitalizing the economy that we necessarily depend on for our own future transactions. These two
reasons alone arguably suffice for us to lend to credible others what we save for our future
selves. Nevertheless, for reasons that are intriguing and surely debatable, the vested few among
our early modern forefathers built interest and compound interest into our monetary system.
Such interest serves as a lucrative bonus for all who have some surplus and as extortion for
gaining access to that surplus for all who lack some means of consumption or production.
This institutionalized interest is inefficient because its marginal value—that is, the value
of each additional unit—to money holders gets less and less the more money they accrue while
the marginal value of the loan money itself, not to mention any premium on top of the principal,
to those who presently lack the money they need is already higher than it is to those holding the
money. Were it not so, the latter would be spending that money themselves. In this way, the
system is sub-optimal. Those who already have more money than they need get even more, the
marginal value to them of which gets less and less, while those who have less than they need
must either pay more than the others for it or do without and remain less productive than they
want to be. To the extent that money remains withdrawn from circulation, because transactors
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are unable or unwilling either to spend it or to afford the premium to borrow it, the long-term
vitality of the economy is compromised.
Such an economy is, in fact, unsustainable. This is because it requires endless growth
and, due to compounding (i.e., paying interest on accrued interest as well as on the principal), it
grows exponentially (in contrast to a natural or linear growth pattern).8 “This explains why we
are in trouble with our monetary system today. Interest, in fact, acts like a cancer in our social
structure.”9 “Overcoming these insufficiencies of traditional money would increase not only the
economic efficiency of the free market system but also its fairness and its social justice.”10
Fortunately, such social transformation is within our reach, both cognitively and politically.
The ideas for this transformation go back at least one hundred years to the writings of
Silvio Gesell, a German born successful merchant who immigrated to Argentina in the late
1800s. Gesell’s ideas were attempted during the depression and influential on Keynes, a major
architect of post-1944 international monetary policy.11 But they have only started to germinate
more widely in the past ten or twenty years, as the unsustainability of the course we are on has
become increasingly clear to more and more people. This germination has given rise so far to
4000 local or regional currencies in communities around the world.12 These “complementary
currencies” help to connect the unused human resources and the unmet human needs that go
wanting in the dominant economy. Experience with these complementary currencies is also
fostering in participants new understanding of money, its functions, and its dysfunctions as
currently constituted in the dominant economy. And this may pave the way for more systemic
monetary change along the lines Gesell advocated.
The basic idea at the core of Gesell and his successors’ more “neutral” money system is
to replace interest with a circulation fee.13 Margrit Kennedy, a German architect who came to
7
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this monetary critique after finding her interests in ecologically sound architecture unrealizable
given our existing money system, explains the process as follows:
Instead of paying interest to those who have more money than they need and in order to
keep money in circulation, people should pay a small fee if they keep the money out of
circulation....The community or nation which issues ‘new’ money in order to help the
exchange of goods and services charges a small ‘parking’ fee to the user who holds on to
new money longer than he or she needs for exchange purposes. This change, simple as it
may seem, resolves the many societal problems caused by interest and compound interest
throughout history.14
To avoid paying all or any of this fee, those with excess new money can transfer it into savings
which, while not interest-bearing, would not depreciate. These savings can be loaned interestfree to those in need, who would still pay whatever bank processing fees and risk premiums the
loan market bears. Likewise, anyone who overdraws his new money checking account would
also pay a fee, which he could avoid by either selling goods or arranging to borrow interest-free
the money he needs. Such transparent banking teaches fiscal accountability, encouraging
transactors to give up “their irresolution” and rewarding them “for their decisive behavior by
being relieved of liquidity costs.”15 Banks too would have to pay their central or regional bank a
fee for any positive or negative interest-free balance they have, fees they could avoid by either
transferring those funds to or borrowing them from their reserve bank.16
This, then, reflects the contents of what I mean by critical economic literacy. Surely, in
the process of problematizing with our students what they are doing when they borrow or lend
money and buy or sell goods, we will encounter other theoretical descriptions and explanations
for what is going on. Such alternative theories are a welcome part of critical economic literacy.
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Indeed, the veracity of the analysis that I have just laid out will be disconfirmed if it does not
provide as or more sufficient explanations for the phenomena it exists to explain than those
alternative theories do. But, with all due respect to today’s economists, I believe their discipline
has spent the past 100 years largely engaged in a project of rationalizing and justifying monetary
relations as they are, and taking up tangential inquiries thereof, rather than recognizing them as
historically and socially situated. This has left a critical gap that architects, constitutional law
scholars, educators, geologists, ecologists, community activists, and people of myriad
occupations have felt the dire need to address. Just as prior to the twentieth century, economic
inquiry was within the purview of philosophers, especially moral philosophers, such as Adam
Smith, David Hume, Thomas Aquinas, Aristotle, and Plato, it may now be time for philosophers
to take up this object of interest once again. In the final section of this paper, I lay out why I
think it is appropriate, if not necessary, for philosophers of education to lead the way.
Benefits of Critical Economic Literacy among Preservice Teachers
The benefits of engendering critical economic literacy among preservice teachers are
many. First, it provides us the content and context we need to read and understand anew the text
that more of us use in our classes than any other: Paulo Freire’s Pedagogy of the Oppressed. For
instance, our students struggle with the dichotomy Freire poses in dividing people into either
oppressors or oppressed. They generally see “others” as oppressed while not wanting to identify
with oppressors either. Most of them do not recognize that their interests lie with those of the
oppressed, among whom they and we most likely number. Nor do they realize that they “house
the oppressor within themselves” and help to reproduce their own not to mention others’
oppression when they strive to be more like and with oppressors than to be like or with the
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oppressed.17 Throughout Pedagogy of the Oppressed and all his subsequent works, Freire never
let go of the claim that systemic economic causes were at the root of the oppression that defines
our epoch.18 But the nature of these causal forces remained a black hole in his work. It is left to
us now to chart the uncharted economic territory toward which his still relevant works direct us.
A second benefit of encouraging students’ critical economic literacy is that it will fortify
them to understand, cope with, respond creatively and appropriately to, and educate others about
the irreversible energy crisis that we are now facing. As an increasing number of geologists,
energy experts, and thoughtful people know, we are approaching if not at the global peak of oil
and natural gas production that was first predicted by Marion King Hubbert in the 1956.19 Once
the peak occurs—which most experts agree will happen sometime between 2006 and 201520—
the gap between our as yet ever increasing demand for energy and the rapidly decreasing supply
of these sources will escalate precipitously. What is crucial for us to recognize is that, as Hubbert
himself insisted, there is a direct link between the pace if not purpose of our energy exploitation
over the last century and our monetary system.21 What both have had in common is exponential
growth. But whereas such growth is necessary in our monetary system as currently constituted, it
is “impossible for the matter-energy system to sustain exponential growth for more than a few
tens of doublings, and this phase is by now almost over.”22 In short, unless we transform our
monetary system, human survival and flourishing on this earth is in jeopardy. And unless we
educate ourselves and our preservice teachers to think critically about money and commerce, we,
they, and their students will not have the know-how to engage responsibly in that transformation.
A third benefit of helping our students to gain critical economic literacy is as dismal and
crucial as the second. Being economically literate will enable them to grapple better with the
sources, meanings, and implications of the public and private debt growing especially in the U.S.
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Debt has been rising dramatically for national, state, and many municipal governments, as well
as for public and private corporations and individuals, over the past couple decades, at the same
time as there are more millionaires and billionaires than ever before. There are a slew of related
problems that future educators should prepare for. First, the number of under-funded public and
private pension fund systems in the country is increasing with Illinois’ state retirement systems
and its United Airlines Company topping the lists.23 These monies are public and private
employees’ deferred wages. What will happen when what was legally contracted turns out not to
be there? Second, the already inequitably and inadequately funded public schools become even
harder to fund when states and counties face growing debt and budget deficits. Third, the
increasing unemployment and underemployment of our workforce makes it harder for
everyone—including teachers and the parents of their students—to find decently paying work, to
make ends meet, and to realize their values, educational and otherwise. Finally, the number of
corporate and personal bankruptcies, in light of the growing debt, will continue to rise. All of this
creates a climate in which fascism can more easily take root and spread.
Although I am sure there are others, I want to highlight just two more benefits of raising
economically literate teachers. We all know that socio-economic status is the variable that
correlates most closely with school and educational achievement. I am convinced that teachers
who have gained some objective clarity about the systemic sources of economic disparity will be
less likely to fall into “blaming the victim” and condescending practices with lower income
students, and more able to educate children from disparate economic backgrounds in ways that
help them to uncover the ties that bind and divide them so they can change their worlds in ways
humanizing for all. In other words, critical economic literacy can be an educational antidote to
the No Child Left Behind methods of merely socializing students to pass some test.
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Finally, in light of the still small but growing world-wide and bottom-up movement
toward monetary transformation and economic sustainability which is now underway, there is
more fertile territory than ever before in which we and our students can grow our critical
economic literacy and to which we can, in turn, contribute. For instance, I am working on an idea
to create a complementary currency at the county level which local school districts could use as
partial payment for personnel and supplies and which the county would hopefully eventually
receive back again as property taxes.24 While I am not aware of anyone yet trying this in the
U.S., there are related efforts in piloting stages in communities around the world, and thus there
is a growing network of resource people with whom to work in its development.25
The task that I am inviting you to join me in is not an easy one. It requires serious
intellectual effort to uncover and rethink deeply held monetary assumptions that we never
realized we had or that we have consciously accepted and operated with for lo our many years. It
requires even more time and intellectual effort to equip ourselves for teaching and dialoguing
with our students and others about these monetary matters. And besides knowledge and knowhow, it takes courage and conviction, and again time and energy, to put our thoughts into action
perhaps through creating and/or participating in complementary local or regional currencies. But
difficulty is not something that philosophers usually shy away from, and difficult is not all it is. I
think this task is the most optimistic, exciting, energizing, and fulfilling opportunity that we will
ever have. Its possibilities are epochal in proportion yet doable only one professor, one class, one
county at a time. Hopefully each one of us will become one such professor. Only then may we
possibly bequeath to our students and theirs a life that warrants the name “postmodern.”
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Endnotes
1
Lucille Eckrich, Foundations of Education Syllabi Clearinghouse. (Illinois State University, 2003). Available on-
line at: http://coe.ilstu.edu/lteckri/phyedsyll/
2
Chown, John. A History of Money: From AD 800 (New York: Routledge, 1994). Author (1998) pp. 62-72.
3
Bernard Lietaer, The Future of Money (London: Century, Random House, 2001), 41. Ravi Dykema, “An Interview with
Bernard Lietaer,” Nexus: Colorado’s Holistic Journal, July/August 2003, ¶10. On-line at:
http://www.nexuspub.com/articles/2003/july2003/interview.htm
4
Lucille Eckrich, “The Inefficiency of the ‘Cult of Efficiency’: Implications for Public Schooling and Education.” Values and
Ethics in Educational Administration 2, no. 4 (summer 2004): 1-8.
5
Paulo Freire, Pedagogy of the Oppressed, M.B. Ramos, Transl (New York: Continuum, 30 th Aniversary Edition,
2000/1970).
6
Margrit Kennedy, Interest and Inflation Free Money (Okemos, MI: Seva International, 1995) 23-25. On-line at:
http://userpage.fu-berlin.de/~roehrigw/kennedy/english/
7
Dieter Suhr, “The Neutral Money Network: A Critical Analysis of Traditional Money and the Financial Innovation
‘Neutral Money’,” (Paper presented in Brussels, 30 April 1990), section 3.3. On-line at: http://userpage.fuberlin.de/~roehrigw/suhr/nngengl.html
8
Donella Meadows, Jorgen Randers, and Dennis Meadows, Limits to Growth: The 30-Year Update (White River
Junction, VT: Chelsea Green, 2004).
9
Kennedy, Interest and Inflation Free Money, 21, emphasis original.
10
Suhr, “Neutral Money Network,” section 1.1.
11
Silvio Gesell, The Natural Economic Order, P. Pye, Transl (London: Peter Owen, 1906 & 1911/1958). John M.
Keynes, The General Theory of Employment, Interest, and Money (San Diego: Harvest, 1964/1935). Dieter Suhr,
The Capitalist Cost-Benefit Structure of Money: An Analysis of Money’s Structural Nonneutrality and its Effects on
the Economy (Berlin: Springer Verlag, 1989).
12
Lietaer, Future of Money. “Interview with Bernard Lietaer.” Kennedy, Interest and Inflation Free Money.
Kennedy, “Regional Currencies: A New Path Towards Sustainable Abundance.” (Paper presented at Local
Currencies in the 21st Century, a conference sponsored by E. F. Schumacher Society, Bard College, New York, 25
June 2004). Edgar Cahn and Jonathan Rowe, Time Dollars: (Emmaus, PA: Rodale Press, 1992). Edgar Cahn, No
In Whose Interest?
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14
More Throw Away People (Washington DC: Essential Books, 2000). Thomas Greco, Money: Understanding and
Creating Alternatives to Legal Tender (White River Junction, VT: Chelsea Green, 2001). Agnieszka Komoch, “Are
Complementary Currencies in Europe Entering the Mainstream?” (Paper presented at Local Currencies in the 21st
Century, conference sponsored by E. F. Schumacher Society, Bard College, New York, 27 June 2004).
13
Suhr, Capitalist Cost-Benefit Structure of Money; “Neutral Money Network.”
14
Kennedy, Interest and Inflation Free Money, 37, emphasis original.
15
Suhr, “Neutral Money Network,” section 5.3.6.
16
The contents of this paragraph come largely from Eckrich, “The Inefficiency of the ‘Cult of Efficiency’”, p. 3.
17
Freire, Pedagogy.
18
Donaldo Macedo, Introduction to the 30th Anniversary Edition of Freire, Pedagogy, 13-14.
19
Richard Heinberg, The Party’s Over: Oil, War and the Fate of Industrial Societies (Gabriola Island, BC, Canada:
New Society Publishers, 2003). On “Hubbert’s Peak,” see 87-92. See also “The End of Suburbia: Oil Depletion and
the Collapse of the American Dream,” (A 2004 film available from: http://www.endofsuburbia.com/)
20
Heinberg, Party’s Over, 92-121.
21
M. King Hubbert, “Two Intellectual Systems: Matter-energy and the Monetary Culture,” a summary by Hubbert
of a seminar he taught at MIT Energy Laborator, 30 September 1981. Quoted in Heinberg, 91. On-line at:
http://www.hubbertpeak.com/hubbert/monetary.htm
22
Ibid.
23
2003 Wilshire Report on State Retirement Systems: Funding Levels and Asset Allocation. Retrieved June 21, 2004
from: http://www.wilshire.com/Company/2003_State_Retirement_Funding_Report.pdf
24
Eckrich, “The Inefficiency of the ‘Cult of Efficiency’”, p. 6.
25
Komoch, “Are Complementary Currencies in Europe Entering the Mainstream?” Greco, Money.