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The Second Unnatural Power Given to Commercial Banks: The Origin of Money Interest and Its Implication for Sustainability

In: Reconsidering the Privileged Powers of Banks

Author

Listed:
  • Kozo Torasan Mayumi

    (The Kyoto College of Graduate Studies for Informatics)

  • Ansel Renner

    (Autonomous University of Barcelona)

Abstract

This chapter scrutinizes the authority anomalously granted to commercial banks, questioning modern money interest practice as it relates to issues of biophysical sustainability. It contends that money both adheres to and defies the entropy law—money maintains its functionality over time, thanks to institutional arrangement and despite unavoidable material decay. Exploring the works of several influential economists such as Böhm-Bawerk, Fisher, Gesell, Keynes, and Wicksell, the chapter challenges the notion that money should be given a superior position, underscoring the unnatural, institutional reinforcement of its status. With a view toward sustainability, it critiques the norm of discounting for exhaustible resource allocation, exposing the nonsensical nature of the practice and the inequitable implications for future generations. The chapter further details several of Soddy’s and Georgescu-Roegen’s contributions to bioeconomics, underscoring their relevance for understanding the interplay between monetary dynamics and biophysical sustainability.

Suggested Citation

  • Kozo Torasan Mayumi & Ansel Renner, 2023. "The Second Unnatural Power Given to Commercial Banks: The Origin of Money Interest and Its Implication for Sustainability," Springer Books, in: Reconsidering the Privileged Powers of Banks, chapter 0, pages 43-65, Springer.
    • Handle: RePEc:spr:sprchp:978-981-99-6058-3_3
    DOI: 10.1007/978-981-99-6058-3_3
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