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Occupy Zurich: Why America Should Abolish Interest

Occupy Zurich: Why America Should Abolish Interest
Mon, 4/9/2012 - by Ed Sutton

Photo: Herbi Ditl. V-Love, Occupy Paradeplatz, week 4.

I have been living in Switzerland, near Zurich, for almost five years Last fall, when stories of Occupy started bubbling up in the international news media, I regretted my decision to expatriate for the first time. I was thrilled to hear that there would be a demonstration in Zurich as part of the October 15 international call to action, and I've been occupying ever since.

On Re-occupy Day here in late March, after a series of uneventful spats with police at other potential "campgrounds," Occupy Zurich pitched its tents in the quiet confines of a lakefront park adjacent (and belonging) to the world-famous alt-culture locale, the Rote Fabrik. Good timing—a series of events co-organized by Occupy Zurich at the Rote Fabrik has been in the pipeline for some time. And now that it’s underway, we’re right there in the front yard.

So, a few days later, I attended a two-hour lecture at the encampment delivered by Berlin School of Business Professor Bernd Senf, followed by a GA-style discussion that went long into the night. Without going into exhaustive specifics of Senf’s presentation, I'll simply say that he got to the heart of what is wrong with today’s global financial system, in a direct and almost painfully obvious way. Using historical accounts and simple hand-drawn charts, Senf explained just how fundamentally flawed and unethical everything we take for granted as day-to-day economic interactions really are.

At risk of simplifying Senf's already-pared-down message, I’ll summarize the talk in three points. First, nearly all "normal" bank activities—using your money to lend out to others, lending more than is physically on hand, creating money—are things that we as depositors (not to mention as societies) never agreed to and that don’t withstand even the most basic moral or logical scrutiny.

Second, the very concept of interest on loans and deposits is wholly impracticable over even relatively short periods of time. It leads inevitably to the kinds of disastrous debt spirals that we have been seeing. It’s very simple: there are two sides to a balance sheet. Period.

Third, economic "growth" is disastrous and we need to stop it—and stop taking it for granted as a positive means of measuring and measuring-up.

I would not be so bold as to claim that a radical, fundamental economic critique of this sort is entirely absent from American discourse. Some economists go out on a limb by publicly discussing the transformative changes that are necessary if we are to salvage our crumbling economy—and thus our livelihoods, the environment and all else. But when was the last time you heard anyone near the mainstream propose doing away with interest? I’m pretty sure even the folks in the abolish-the-Fed camp don’t go there. Calling growth into question seems to be more common now (though still pretty jarring) on both sides of the Atlantic, so there is progress. But my experiences in recent months leads me to believe that this fundamental critique doesn’t have the center stage that it deserves in the U.S.

The This presumption was validated when I asked Senf if any of his books had been translated into English. He said no.

In January, I was interviewed in Davos by Lauren Lyster of Russia Today’s Washington bureau at the OccupyWEF igloo encampment, which Occupy Zurich helped realize. At the time I hadn’t heard of RT; I didn’t know the slant of her reporting and was generally getting fed up with the media circus that had sprung up around us and our cold yurts. I gave her melba-toast answers and only about six words of our conversation got broadcasted. But after the camera was off she struck up a more spirited conversation with me and eventually even asked if I thought that interest itself might be one of the central flaws in today's system. Yes, of course, I said. All the interest that appears somewhere as wealth must appear somewhere else as debt, and if both grow exponentially...

“You sound like an Austrian economist,” she said.

Austrian. Not American.

A month or so before that, I might have misinterpreted her comment as derogatory; after all, the only Austrian economist I had heard of until recently was Friedrich Hayek. And given his "Austrian school" fingerprints all over the catastrophic neoliberal policies of the last quarter century, well...but that’s not who she meant. There’s a new Austrian school.

One of its more outspoken members, Franz Hörmann, participated in a panel discussion (again organized in part by Occupy Zurich) at the University of Zurich in December. He had the audience of more than 500—by no means all students or Occupistas—in stitches as he laid bare the lunacy of prices. The act of assigning value to objects is absurd, he argued. We even assign a value to goods that will never be sold. Why? And even if something is sold at a certain rate, how and why does that become a market value? You could just give somebody money to buy your thingamajig: super, you just “made” a market price. By his understanding, it’s all arbitrary.

In November, Hörmann also appeared on Swiss TV as part of a roundtable discussion on alternative currencies, in which he made similarly entertaining and scathing arguments against money as such. I couldn’t believe the words were coming out of a television.

Now, if televisions across the Atlantic could air voices with similar critiques of a system that has gone belly up, we might start making some headway

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