Preface by Yoland Bresson

The Relative Theory of the Money written by Stéphane Laborde is part of the great french tradition of economic science works produced by engineers like Dupuit, Cournot... up to our only Nobel price winner of the discipline : Maurice Allais.

But all sciences build a specific language and I fear that economists, as the honest citizen of the century, don’t grasp all the interest of this theoretical input without a « translation ».

The « Universal Dividend system », which the author proposes, is a monetary system in which the money is uniformly distributed between all the actors, individuals of all age or sex, any one of them receiving an equal part.

Nearly all of us already practiced such a system ... by playing Monopoly™. Indeed, each player receives at the beginning the same amount of money, and at each turn by passing through the start, they gain some money, each one receiving the same amount. One turn is the base period, theoretically identical for all, except for the hazard of the game, the dice throws ... the turn passes more or less fast and the money gains then differentiate between players. Note that the equality of the monetary donations does not prevent the appearance of winners and losers according to their individual choices and the opportunities of randomness.

Nowadays, in our reality, the repartition of the monetary supply does not correspond to such a system. It is created and distributed under the form of debt through the banking system, which answers the demand of money from the citizens by lending them far more money than they detain themselves, in return of an interest rate higher than the one they have to support themselves by supplying from the Central Bank, as first and last emitter. The country has at disposal this monetary supply called M3.

One should well distinguish between the monetary supply - which is an available stock of money, all the time present, fixed except additional monetary creation - from the income flows in money that individuals capture through economic activities and exchange: the monetary supply generates the flow of the revenue, which is the sum of the year, traditionally evaluated as GDP. This link which appears trivial is in reality very subtle, as we shall see it later.

So the author seeks to answer to the following question : which rule of monetary creation should we adopt, and at which rhythm must monetary supply grow, in order to institute a system with Universal Dividend, where the monetary supply’ density – meaning its distribution among individuals – would be uniform in space and time ?

It supposes a stable population in number with a given life span. That is, it admits a zero demographic growth : there are as many births as deaths and no migrations. In this case, the life span corresponds to the duration at the end of which there is no one from the old generation left. The population is totally renewed since the setup of the new rule ; the density is now uniform for everyone, whatever the density prevailed at the origin. The Universal Dividend system, the one we have to remember, where each receives an equal part of the monetary supply, is completely realized.

The answer is what the author calls « the Optimal Universal Dividend » : the monetary supply must grow annually with a « c » factor, of course inversely proportional to the life span – meaning the duration of the renewing of the population or the time to set the system in place completely – and that money surplus must be equally and unconditionally distributed between all population members. This « c » factor is equal to more or less 5% for a life span of 80 years.

How to deduce the unconditional amount to attribute not in monetary supply, but in monthly income flows, an « existence income », here totally conform to its definition : income attributed because one exists, as member of the community, and not to exist ?

If we calculate, as the author does, for Europe, 5% of the M3 euro mass divided by 330 millions of Europeans citizen, we obtain 1515€ per person. What does that mean ? We must create 5% of additional money this year and distribute it next 1st of January by giving 1515€ to each European citizen and not create any more money during the whole year 2011.

Doing it again on the 1st of January 2012, 5% more ... and so on each year so that in 80 years everyone would detain an equal part of the M3 of the time. This method would only be applicable : if it exists only one money emitter, the ECB for example, creating the additional euros whether in notes, whether by crediting account of the all individuals and by imposing the “100% money”, as Maurice Allais wanted, so the banks could not lend more than what they have in deposits.

Such a setting would correspond to an institutional bigbang. A monthly attribution of income, an existence income, seems to be a less traumatising instauration for our institutions.

How to go from monetary supply to income?

If we simply divide the 1515€ in 12 months, we implicitly suppose that monetary supply takes exactly one year to generate a total flow of revenue equal to itself. It’s by the way how I defined the « economical Unit of Time », a single norm in which the pass from the mass to flows can be expressed everywhere without distortion. Indeed, depending on the country or the times or circumstances, expansion, recession, a particular monetary supply circulates faster or slower, supporting more or less frequent exchanges, assorted with monetary values more or less high. In one civil year the sum of the flows can then value three time the monetary supply. The economic unit of time does not correspond to the real time unit. With a GDP that would be equal to 3 × M3, the economic unit of time would equal to one quarter and one semester if the GDP equals 2 × M3.

In reality, GDP is included between two and three times M3. So the 1515€ should be divided by 4 and 6 months to give the monthly income. We obtain for Europe approximatively 300€ per month and per person of Universal Dividend or rather existence income to stay in conformity with the economic language : a dividend is given one time, in principle, extracted from a stock, the monetary supply in this case, an income is a regular flow issued by monetary exchanges.

It is remarkable that Stéphane Laborde theory joins the one of the value-time until measure, since its universal dividend for Europe reaches from the bottom existence income issued from time-value which gives today around 350€ for France.

These two theories, “Relative Theory of Money” and “time-value” converge to build the foundation of a new paradigm, a new vision of economy. Based on them, the architecture of a new social organization – more respectful of the equality which we should imagine – could be elevated. I have personally been tempted to propose one, taking establishing consequences of an existence income or a system with universal dividend, to follow the author, by publishing « Une Clémente Économie » (in french). But this essay is nor exclusive nor definitive. The « Relative Theory of Money » offered to the Libre Community of cybernauts is an invitation which is addressed to it, in a total sharing of creative ideas, to imagine, then to concretize another world.

-- Yoland Bresson