<<tillbaka
Skriv ut denna sida

ENGLAND

TIMEFACTOR ECONOMI - "DEUS EX MACHINA"
a real ecological economy by Karl Gustafson
Translated into english by Ulf Sedenius. Languagecontrol Dana Hofford

"Humanity faces gigantic problems today
which can seem to be practically insoluble.
On the one hand, there are enormously wealthy people
and on the other, abysmally poor people living in slavery.
The wealthy are living on the toils of the poor,
the earth's resources are being depleted and
the environmental pollution is increasing.

The world's various monetary systems and economies
risk collapse as only a small percent of all the money
in circulation corresponds to real production,
the rest is speculation."

Karl Gustafson

Brief English summary: Ecological Time-Factor System
(A summery made by Johan Sandvall, economist)

These 32 pages is taken from Karl Gustafson´s book about a new economical system that conform to the ecological system - This is a very important text. Please read it!

The authors foreword
A human is undeniably a natural creature, obliged for survival to adapt to the laws of nature. I sincerely hope my book will stimulate the reader to undertake his own efforts to find the reasons of today’s social problems and their link to economy. After that, we could undertake solving today’s unsatisfactory state of affairs, starting a dialogue about motives, reasons and effects.

Understanding and accepting, though, are entirely separate matters. The old economic games are so well-established, that people even get awarded the Nobel Prize in economics for economic game theories. Whether economics is objectively fair or not is, on the contrary, not at all questioned. By the term ’fair’ we here have in mind neither politics nor law, but that human views and acts correspond to the natural laws that made life possible. Economics actually is (or ought to be!) a measuring system and a method for facilitating the exchange of goods and services. Its aspect of value-bearer is more questionable.

A measuring system must not shift and change the way today’s economics does - every minute, every second, all year long. Under such premises, nothing could be planned, foreseen or calculated unless you happen to be the one deciding which rules and basic measuring values are to be valid every moment.

Thus we have an economic crisis which together with contemporary politics contributes to a struggle between various interests. In contemporary world economics, a king-of-the-hill mentality reigns which is about as far as you could get from social responsibility, human dignity, ethics and morals, good citizenship, accountability and sustainable planning.

K. GUSTAFSON


WHAT IS TIME TAX?
First some definitions: Terms like Time Tax and the Time Tax system may sound peculiar but that is precisely what it is all about. The term ‘Time Tax’ denotes more specifically a time-factor tax. A ‘factor’ is the term used for something which is multiplied or divided by something else, in this case by a variable (an hourly wage). Thus we may very well speak about time-factor wages (the normal pay we receive today: working-hours multiplied by the hourly pay) and time-factor tax (abbreviated time tax) which is new. The two expressions thus summarize the proposal for a new taxation system called the Time Tax system. For the first time in history, the same principle could be applied to both wages and taxes.

If our taxes are calculated in the same way as our wages, i. e. a certain number of tax hours multiplied by our hourly wage, then we’ve introduced hour-taxation, which is the foundation of the taxation system presented in this book.

What’s characteristic of natural laws and natural law equivalents is that they work regardless of whether you understand them or not. Regarding the Time Tax system, it’s enough that you accept as reasonable that taxation should be calculated according to the same principle as wages: pay by the hour and tax by the hour.

In my opinion, we ought to exchange the old word ‘tax’ for a new one ‘social fee’ to emphasize that a tax is subjective and arbitrary in a class society without legal protection for the individual. The term ‘social fee’ describes better what it is all about: an annual fixed fee measured in time, to cover our common commitments. This taxation period should be equal for everybody. In this way we get a ‘social fee’ burdening everyone fairly. Everyone contributes the same number of hours to the common good. It is only the hourly wage which differs.

In the new tax system there is just one single fee, the time tax, which I consequently want to give the name ‘social fee’. All other taxes would be removed except certain environmental taxes for a time.

TIME TAX – A SOLUTION TO THE INJUSTICE IN CONTEMPORARY TAX POLITICS
For the ‘social fee,’ everybody pays the identical number of hours multiplied by her or his hourly wage, as many hourly wages from the time everybody has in equal quantity, i. e. 24 hours a day and a 8-hour working day (In the new Time Tax system, the work day could immediately be shortened to 7 hours.)

With respect to the taxation, the time-factor becomes the constant (the number of tax hours) to be multiplied by a variable (the hourly wages) to determine the time tax (the ‘social fee’). Everyone being taxed the same amount of time is the fairest way to contribute to the common good.

In calculating wages, category the time-factor has been in use for a long time and is considered quite natural: for two hours of work we receive twice as much as for one hour. The pay per hour variable reflects the measure of our competence or, more correctly, other people’s estimation of our goods and services through the market mechanism of supply and demand. The consequences of this simple reform of the tax system would lead to the most astounding effects in our whole economy.

The fundamental principle of the Time Tax system is, in short, that nobody should have to work longer than anybody else to pay his or her tax. This is feasible without the state having to lose its taxation revenue, something which could easily be validated.

A NATURAL SYSTEM IS PRECISE
One of the cornerstones of economics - the tax system – could acquire the same regularity and conformity as in other scientific systems with fixed rules and therefore equal conditions for all. The only thing we need to do is to introduce a natural constant (the time-factor) as a value-base. This is moreover a human value-base working as an absolute corrective within the Time Tax system. In this way, the measuring system for taxes is to some extent analogous or even equal to natural law.

By transforming the old tax model into a natural tax system, nobody will pay either more or less tax than anybody else – as calculated in time. The amount of money you pay will be simply according to your hourly wage. This is a proportionate tax but only applied to the ordinary time of work, at present 8 hours a day. After a particular individual has fulfilled his Time Tax of, say, 4 hours a day, any extra work would be tax-free. This means better self-financing, a lower need for loans and falling interest rates. Since unemployment will quickly disappear, the state will receive a still greater tax revenue than before. The tax burden could therefore be lowered.

OVERTIME WORK
In the Time Tax system, overtime work would be wholly tax-free with 100 % of wages going to the worker. In Sweden at present, overtime work is equivalent to 1,870 hours a year but is intended to be reduced to 1,600 hours.

For the low-paid worker, today’s tax pressure plus all the visible and hidden interests and charges is equivalent to more than 7 hours of the working-day’s 8 hours. With one hour of tax-free overtime per day the low-paid worker would right from the start be able to increase his purchasing power by 50 % – 100 %. Later on, the hidden interest included in rents, and prices for goods and services could gradually be abolished as people’s purchasing power and self-financing capacity grows. Tax-free overtime would have its greatest impact in the initial stage of the time tax system reform, gradually and spontaneously diminish off when basic needs and security are met.

The urge for a higher quality of life would be afterwards directed towards reducing the number of working-hours, which could as well work as an efficient regulator of the business cycle. Looking at total annual state revenue, this means that ones tax would gradually fall once one has paid ones time tax compared to the present system.

SHIFTING ONE’S TAX ON OTHERS

Shifting ones taxes on others is an old, well-known injustice which no ideology or political party earlier has so far bothered to correct. The situation is described in earlier editions of the ”Svensk uppslagsbok” and the ”Nordisk Familjebok” [Swedish encyclopaedias]. In later editions, the entry has been removed. Look yourself for words beginning with “skatt” (tax). Tax shifting would be immediately eliminated by the time tax system.

Tax planning which in practice is only available for those with high incomes, is a privilege having nothing to do with tax incidence, but may make the situation even worse. At the same time, many other faults in the old system could be rectified. The new economy would be stable: inflation nil, tax planning impossible, self-financing improved with increased purchasing power for all. Low interest rates would yield new companies and new investments. Unemployment would disappear and thereby the cost for benefits. All need for transfers in general would diminish. The tax burden would lessen due to an increased number of tax payers yet tax revenue would still increase and people’s quality of life would improve due to less stress and psychosomatic illnesses. The system is valid globally.

SIMPLIFIED INCOME TAX RETURN
The Time Tax system advocated here would be more than 95 % self-regulating. The only thing needed in connection with declaring income tax in the new system would be simply to state your hourly wage and how many hours you have worked (the later being done automatically).

Each wage earner declares his or her hourly wage in the beginning of each year and receives an hourly wage card from the tax authority as a receipt of the income tax return. Nothing else really needs to be done. The income tax returns are public documents and an hourly wage calendar covering all taxpayers is drawn up for each tax region. Computers process all the information and the result is a dramatic improvement in people’s quality of life and better state finances and solidity.

On the basis of the tax returns, the Department of Finance calculates the country’s mean hourly wage and how many mean hourly wages must be exacted to cover the state budget, for example, 724,5 hours per person and year. These calculations can be done in a few seconds by computer. The entire population obtains immediate information about the state of the country’s finances and economic status in terms that everyone can understand.

Using the time factor as the basis for calculation will greatly facilitate understanding the situation. Everyone would be able to relate the figures to their own life situation in a whole new way compared to today’s and can gain insight into their own expenditures they may have during the year. In this way, everyone can plan their personal finances and devise sustainable plans for investments etc.

The hourly wage card mentioned above is the key to employment. No wage earner can take out a higher hourly wage than he or she has submitted for the work he or she normally does. If one has several jobs, one may have an hourly wage card for each job (A, B, C etc). Each card is however only valid at a specific working place. No other card may exceed the A-cards hourly wage, the A-card belonging to the place where one works the most hours.

It’s not possible to cheat in the system, speculation is made more difficult, everyone may keep his fair share of the result of his or her work, interest rates fall, investments increase, unemployment is no more and everybody may retain an equitable part of the outcome of his work, the tax pressure diminishes at the same time as the revenue from taxation nevertheless would still grow due to more people at work, the public debt could be paid off, the number of working-hours could be considerably reduced, etc. In conjunction with new legislation on ownership, everybody wanting to would have the possibility of becoming joint-owners at their places of work and in this way improve their living conditions.

Could this all be true? Check it out yourself! It’s not true because I say so, but because it can be confirmed by causal scientific methods.

CONTROL POSSIBILITIES
Time accounting is the most efficient existing control method, since physical presence is necessary and the measuring system is neutral, impossible to manipulate, globally valid and aligned with nature. If deemed necessary the hourly wage card could be equipped/loaded with several identification possibilities, e. g. classical identification data, fingerprints and handprints, DNA identification, voice analysis, biometric analysis, iris control or other practical and safe solutions.

Some people have expressed concern that the Time Tax system, with the control possibilities that could be applied in the time tax procedure could lead to a super-controlled police state. To me this risk seems extremely small and is already present to a much greater degree in society today being often a consequence of a weak social spirit due to a dissatisfactory state of social affairs caused by large fiscal demands and strains on the individuals. And it’s precisely this unsatisfactory state of affairs the Time Tax system is intended to abolish.

Of course, it will be most preferable to avoid controls entirely and that every individual demonstrated self-discipline, honouring his commitments, and discovering that it pays being constructive than destructive. This situation will be most likely to arise in the Time Tax system since its consequences are so attractive to ordinary people. It simply pays better being honest than breaking the rules. The control possibilities outlined here are simply possibilities not necessities.

There is the possibility that certain individuals remain antagonistic towards the state. If, however, the business declares the time tax to the state, no individual time accounting to the tax authority will actually be necessary. It will be quite sufficient that time accounting be administered internally by the business with tax payments corresponding to their working hours and the number of employees.

All the business income is deposited in a tax-free account in a savings association from which all employees and even executives of the company get their wages. When wages are paid out, the current time tax is also deducted and paid to the state. This time accounting is the control instrument both for business bookkeeping and for the tax authority. Since the hourly wage declaration is a public document, everyone has access to the company’s status in this respect as well as the employees’ hourly wages. In addition, tax revenue comes in simultaneously with the payment of wages. The tax authority knows how much tax which can normally be expected from all the companys’ employees, as well as each individual’s portion of the entire tax amount. This could be concluded from the time report which must be consistent with the declaration and the calculated final amount. Absence due to illness and other valid reasons are time-calculated and the BNG will correct the economic position in accordance with the amounts valid for each individual. (BNG = basic need guarantee, see below)

ILLEGITIMATE WORK NO LONGER POSSIBLE
Many people are unable to make ends meet from their work, particularly if they have low wages. The low-waged individual is deprived of more than seven hours work out of eight if you take into account all visible and invisible taxes, charges and interests. One is expected to manage with the remainder but it is not enough for a decent living. Many people have therefore discovered that if you take illicit work under the table{=without declaring your earnings} you can considerably strengthen your purchasing power. Illegitimate work is usually carried out for lower hourly wages, but nevertheless makes a considerable contribution to your finances. A person employing illegitimate labour has considerably lower expenses yet gets a job done he otherwise couldn’t afford. Work under the table is not limited to the ordinary labour market, since it will not ever be done for an ordinary price. The illegitimate worker does improve his capacity to make a living, hence isn’t obliged to apply for public assistance. For this reason the state has lower expenses.

In the Time Tax system, the employer neither could nor may hire labour without a wage-by-the-hour card. Wage-earners, too, aren’t allowed to work without such a card. All the receipts of the company enter a tax-free savings association from which money is withdrawn when needed for wages or investments. These withdrawals are automatically accounted for and Time Tax is paid in connection with the payment of wages. (The savings association could function as a ”factoring company”, at self-cost.) Illegitimate work is rendered impossible because the employer can not order a wage payment from the above-mentioned account without it being matched to an employee’s hourly wage card.

Should someone still manage to somehow make a wage withdrawal from the account without being tallied to an employee, it would automatically be considered a wage-withdrawal for the employer himself with concomitant tax payment. All the sides would lose on this. The employer himself would most certainly have the highest hourly pay in the company, so his withdrawal from the account would be the largest possible, without coming to his/her benefit. The result would be the same as if the employer took money from his own pocket to pay the wage under the table, but since tax for this money has already been paid, there would be no reason at all for anyone to get upset, except the employer, of course!

There is nothing to be gained for the individual working illegitimately either. As he doesn’t get any time registered for himself on his hourly wage card, his possibilities to reach the tax-free zone (where he will have completed his taxable hours for the year and then may earn money entirely tax-free) will be reduced. Illegitimate work will come to an end.

All this will be visible to the tax authority and if conditions differ from what was calculated, the authority might effect an audit. Should conditions differ from the expected the computer gives a signal. Every wage-earner’s pay per hour is registered in the computer, his hours of work are reported daily and the outcome will be an amount already known. If this differs from the norm, the computer will give a signal. It’s as simple as that!

EMPLOYERS AND THE SELF-EMPLOYED
Normally the employer/executive doesn’t have the prerequisite to benefit from tax-free work; so it’s no use having over-time hours registered on him. His compensatory privilege is that he himself decides the size of the hourly wage he pays Time-Tax for. Whether the business executive should be paid for overtime work which he then pays tax for or not depends on the nature of the work and is a matter to discuss. An important reason not to use such a system is that overtime work by business-leaders is a phenomenon associated with the present system leading many business owners to stress themselves to illnesses and premature death. This is especially true for small entrepreneurs and self-employed who are often the victims of heart attack, stroke, gastric ulcer or other stress-related illnesses caused by overwork as a consequence of today’s insane economic game and tax plundering.

The combination of down-sizing, reorganisation, new investments, recruiting and non-payment of overtime pay will hopefully keep the manager or business leader from burning himself to meet an untimely death. An industrialist is of much greater benefit to society alive than dead! As a consequence of the unreasonable demands today’s system, including requirements for statistics and bureaucratic paperwork, small enterprisers and small-scale farmers are forced to work much longer hours than the standard work day quite unnecessarily. Many business managers tamper with the books since the financial outcome does not yield a standard of living corresponding to the work-input, which, quite naturally, is the very driving force behind constructive ambition and enterprising.

In the Time-Tax system, economic relationships will be reversed. Through the increased degree of self-financing, desirable investments can be made which can reduce the work-load of managers. The managers can in turn consolidate their companies and work ordinary hours like the other employees yet, at the same time, attain increased productive capacity. They won’t have to deal with tax collection and other bureaucratic work which they do for the state for free and which simply inhibits production. Enterprisers live a most unhealthy life which makes bad economic sense both for him and society at large. A better economic climate for businessmen would allow them a qualitatively better and longer life which in turn would benefit both the enterprises and society.

Once the Time-Tax system has been established, the work load for enterprisers will lessen to the same extent as bureaucracy diminishes. Planning will become more reliable and easier to overview. To this can be added increased solidity, increased common equity and falling interest rates.

To compensate for the non-payment of tax-free overtime pay for small and medium-size enterprisers, they will have other advantages, such as the right to write off investments with concurrent tax exemption in accordance to established rules. The enterpriser can to a large extent decide his own wage and withdraw the amounts he may desire from the company account. When withdrawing money, he will have to pay tax like everybody else, but as long as the money remains in his account, it won’t be burdened by tax.

The company as a corporate body does not pay tax but is merely intended to provide its customers with goods and/or services and its co-workers with livelihood. The company’s task is to be a money-maker, producing capital for wages and investments. With the introduction of the Time-Tax system, large-scale enterprises may need special legislation. But when large monopolistic enterprises get exposed to heavy competition (an effect of the new system), the conglomerate companies in time will be broken up into smaller units and the special legislation will become superfluous.

INDEPENDENT BUSINESS OWNERS
In today’s economy, artists, writers and other so-called independent business owners as a rule have a very uneven income. In the Time-Tax system, this situation will be radically changed, because everybody will be receiving a surplus from his job that will yield greater room for culture in his budget than he can afford in the old economics.

But how are these independent business owners taxed in time-factor economics? All income has to pass through the untaxed personal account from which the cultural worker withdraws money for his living expenses and gets Time-Taxed according to the principle: total annual withdrawal divided by normal working time (1,600 hours). In this way, you will get the hourly pay you accorded yourself for the year and the annually fixed mean hourly wage will constitute your Time-Tax. Income which is not withdrawn for consumption will remain untaxed. In that way, artists can spread their uneven income over several years and an incidentally large income will not have to be taxed at their full value during the same year (somewhat similar to the so called forest- accounts).

Some people may have the opinion that artists’ working time isn’t limited to eight hours a day. It might periodically be much longer. But isn’t this an effect of today’s economics and perverse tax system that doesn’t accept the manner of work of cultural workers who in despair over their disfavoured conditions are forced to live on the hunger line, desperately trying to compensate their generally paltry income by working extra? Thanks to the model described above, artists and independent business owners can calm down and will be able to live their lives in much more harmony, applying themselves towards what they know best. It’s a shame for a proclaimed democratic society, with room for all, to reject the importance that artists and writers have in a civilised society.

Just how limited a view those in power had for artists in the 1970’s became evident when the government commissioned the tax authority to require artists to declare how many paint tubes, brushes, pigment, turpentine, linseed oil etc. they used, how many panels they had bought and still possessed, how many grounded and half-finished paintings they had, how many ready ones they had sold etc. As if cultural work was a conveyor-belt factory job! Taxes, fees and interests are so high for ordinary people, that they cannot afford to buy works of art, books or to visits theatres. Theatres, in turn, don’t get sufficient income to make ends meet, and are thus forced to live on state grants which ultimately is burdening the tax-payers. Objectively speaking, Swedish cultural policy remains a mystery.

A NEW AND FAIR KIND OF OWNERSHIP
As a supplement to the Time-Tax, new legislation on ownership can be introduced in course of time. The Time-Tax system will in itself make property relationships in society more just and democratic as a consequence of people’s increased self-financing capacity giving them the possibility to start their own enterprises or become owner in companies where they are employed. Many will likely take that chance, since this will give them a possibility to influence their income and get a fair share of their job input together with participation. This furthermore gives them a greater possibility to influence the enterprise in other ways as well. New legislation governing ownership will, however, considerably accelerate this development.

When the individual is given ownership to the result of his own work, Time-Tax excluded, this will considerably strengthen self-financing. This might happen as the individual working in a specific company is given the statutory right to joint-ownership if he/she so wished. The growth of capital will remain within the company which can rapidly expand to its optimal level and get consolidated at both qualitatively and quantitatively high productivity levels, as well as in a high life quality for its joint-owners. In conjunction with such a legislative change, the Time-Tax system leads to a transferring of the ownership of the means of production to all the co-workers individually. This differs from the communist idea that the means of production should be transferred to the the state. It also differs from today’s so-called corporations where the owner of the majority of shares owns both of the means of production and the proceeds and the workers live under feudal-like conditions in the way work is related to the state in a socialist society.

In a social system where the means of production are possessed multi-individually by those working in the company, there will be a deepened commitment for the development of the company and its profitability since the increased profits will be restored to the workers, not to uninvolved profit-maximising owners on the outside. Contemporary company structures have the opposite effect: if profitability doesn’t fully correspond to the greed of the owners, they can simply close the firm down, depriving thousands of employees of their jobs with tragic consequences. In a multi-individually owned company, this simply will not happen.

It is also possible that customers and clients, especially of distributive companies, can acquire an increased legal and economical status through the possibility of joint-ownership. This was the old cooperative idea in England (Robert Owen, in the 1820’s) Such a scenario would be desirable for many reasons especially in that it provides the opportunity to preserve strong local communities. Companies providing for a community in various ways would then not just be removed or folded, and thereby impoverishing the community. Local communities constitute cornerstones of a sustainable recycling society with their locally produced essential commodities and minimised energy losses due to transports. They moreover guarantee a society that isn’t as vulnerable as today’s centralised one.

A COMPARISON BETWEEN THE OLD AND THE NEW TAX SYSTEMS
In several compound words the notion ‘system’ is often used improperly and erroneously. But when it comes to the natural sciences and the technology arising from them, no doubt is ever expressed over the fundamental fact that natural laws function automatically, even if we may still have questions regarding details. Regardless of how much or little we know about natural systems, they function optimally to favour the emergence and continuance of life, as long as man doesn’t add elements like greed, unreasonable power ambitions etc.

This was realized in France, curiously enough, as early as the 1790’s. They chose to standardise all spatial measurement systems to the metric system where a meter was supposed to be one ten millionth part of the Earth meridian quadrant (the distance from the north pole to the equator). A more accurate value base than that wasn’t necessary at the time. But the interesting thing is that they actually understood the necessity of value bases for people’s activities, in this case physical measurements. All of the other units of measurement in the international SI, (Système International d’Unités) today derive from the metric system. The SI is an example of a genuinely nature-analogous system with value bases linked to natural constants.

The SI has proven that we are able to create nature-analogous systems for the physical structure of society. We can then apply them to our specific needs. When building structures, we all have to pay attention to the unconditional link between cause and effect, that is to say causality, to prevent unforeseen side effects. To guarantee our survival, we must gain knowledge about the causality in natural systems through observation and investigation and try to emulate them to the best of our ability.

A NATURAL LAW ANALOGOUS TAX SYSTEM
Is a social system really capable of self-regulation? Well, let me remind you that the laws of gravity, the rotation of the planet and its orbit around the sun, the laws of inertia and strengths of materials, the strong and the weak nuclear forces (that keep atoms together), the magnetic and electromagnetic forces and all the other natural laws do regulate themselves. If we should construct a tax system (one of the cornerstones of economics) based analogously on natural laws, then the causal reactions will resemble those found in nature. In other words, there will be a built-in and automatic control mechanism in the system.

In the Time-Tax system, relations will be equitable. No person has more than 24 hours a day at his/her disposal. In our society, this time is generally divided into 8 hours of work, 8 hours of daily routine and leisure time and 8 hours of sleep. Hence the fundamental principle of the Time-Tax system: nobody shall need to work longer than anybody else to pay his ‘social fee’. The state will not lose anything on this.

JUSTICE FOR ALL
Is it really possible to attain justice for everybody in society? Most people believe it isn’t. But why shouldn’t it be? What is there to make it impossible? Just because this ideal has not yet been realized doesn’t mean it is impossible. In all times, new discoveries and inventions have undone old conceptions and superstitions. If you take a close look at the inequities in society, it’s rather easy to find the causes. But as long as we just look after our own interests, positions of power, privileges and fight with each other to gain advantages without consideration for the living conditions of others, it won’t be possible to attain justice for all. All humans, animals, plants, other kinds of life and substance were created through objective natural laws and their living conditions must be in accordance with these. These objective facts cannot be influenced by human will and action.

If life is to persist, the order in society must be in harmony with the laws of nature and life. An objection may be then that all this is tantamount to survival of the fittest. But this is not true! “Survival of the fittest” isn’t a natural law but a subjective evaluation (sometimes called the “law of the jungle”). Natural laws favour life. Otherwise we simply would not exist. Since injustices these days are innumerable, this proves that the legislation in place today is contrary to nature. We have laws favouring particular interests: making the rich richer and the poor poorer and destroying nature, the environment and conditions for life in exchange for short-term profits.

The normative laws in place today do not follow the conditions of natural descriptive laws. This is the case in many fields, not least in taxation. Physical time belongs to the objective sphere since no political decision can affect its duration. Regardless of what people try to do with it, time keeps on ticking along in accordance to natural law! Time is originally linked to the rotation of the globe around its axis and the changes of the seasons are linked to the orbit of Earth around the Sun and the inclination of the earth axis against the ecliptic.

Look at it like this: All people have 24 hours/day at their disposal and the time is completely integrated into people’s lives. We get tired from 8 hours of work, we need 8 hours of sleep to keep fit and healthy and we need 8 hours for daily routine and leisure to be able to live a decent life. We also need the light of the Sun so that the hormones, enzymes and signal substances in our autonomous nervous system continue to maintain equilibrium in our vital functions: in our mental capacity and the metabolism of our body. We also need darkness which by way of neurotransmitters (melatonine) gives us the rest our body needs in order to survive. Generally speaking, this applies to everybody. But life is also governed by a number of individual physical, biological and psychological value-bases which, if we stray from them, may have dangerous consequences for our vital functions.

But has legislation taken this into consideration? Not at all! Like slave-drivers, they try to squeeze as much profit as possible out of citizens and confiscate 90 % of the result of their work for strengthening their own positions and privileges. Even if technology certainly has relieved people from a lot of physically strenuous jobs, we still have less time now for social life than before. Isn’t that peculiar? Such a trend may make us suspect that the more technology develops, the less time people will have to live the way they want to.

So, physical time is always the same for everyone. This being the case, it follows that everyone should pay tax according to the principle: a certain number of hours multiplied by each tax-payer’s hourly wage. Or in short: the same number of individual hourly wages for everyone. With this simple and self-evident change in the tax legislation, there will be thousands of repercussions leading to the greatest possible justice for all.

TIME-TAX WILL STIMULATE THE ECONOMY

In the new economy based on the Time-Tax, wage-earner’s disposable income, purchasing power and self-financing capacity (tax-free overtime included) will be considerably higher than in today’s system. This will reduce the need both for social transfer payments and public credit needs, which will reduce both the national deficit as well as wage-earner’s needs for credit. With demand for loans dropping, banks will be forced to lower interest rates. This will give new impetus to the wheels of industry, the economy will gather speed, competitiveness and export capacity will rise thanks to falling manufacturing and capital costs, the trade balance will improve, the foreign exchange currency reserve will be reinforced and the national revenue will increase since the tax base is broadened. All this will happen in spite of a diminished tax burden. As the Time-Tax system is established, we will also be introducing incentives to work in that it will pay to work.

THE TIME-FACTOR MAKES ECONOMICS UNDERSTANDABLE
The ambiguity which characterizes contemporary economics has its origin in the lack of an economic value base functioning as an absolute corrective. Contemporary economics is simply impossible to understand because of the lack of invariable rules. Economics is like the game “Old Maid” except that the rules are constantly changing during the game. No measurement systems which are designed subjectively can be understood by a rationally thinking person. This paves the way for non-productive individuals becoming billionaires by speculating in shares and currencies which in actual fact, it is tantamount to parasitizing on those who are carrying out a real work. It is worth noting that speculation is not a real work, but a game using work-free values where the participants in the game are not creating these values themselves. The designation for this kind of economics is crematism, a term Aristotle coined himself, it is said.

Regarding interest, even those who don’t have any loans are obliged to pay it, due to the fact that the prices of all goods and services include interest added in the many intermediary stages of the production of the good or service. This interest is a hidden part baked into the price which is ultimately paid for by the consumer. In the price of goods, the interest component averages around 30 %; of services, around 50 % and the interest component of apartment rents lies between 35 % and 86 %, depending on the year of construction. The higher percent applies to new construction. The average interest component in rents is 56 %.

If interest rates could be forced down to 0%, prices could be reduced by half. This will be possible using the Time-Tax system. Purchasing power will double simply due to the absence of interest. The lower tax burden brought about by time-calculated tax will additionally strengthen the individual’s bread-winning capacity. For this, a new law should be made guaranteeing the right of the individual to the result of his own work (wages) minus the time-tax she/he has to pay like everybody else.

By using an objectively fixed measuring system, also ordinary people could understand the national budget.

The Time-Tax will abolish the shifting of tax onto others, nowadays visible in the fact that low-wage earners pay more tax than those with high wages, measured in time. This means low-paid workers actually pay the taxes that the highly paid manage to avoid. If we really want these positive effects and economic justice – well, the only thing to do is to, in a democratic way, call for the introduction of time computed tax (tax per hour = Time-Tax).

OVERTIME RESTRICTED
A fundamental principle in the Time-Tax system is that once wage earners have fulfilled their part of the social fee, they don’t have to pay additional income tax on any overtime work. The number of working-hours to be Time-Taxed is assessed each year by the ministry of labour being based on the size of the state budget, the hourly wage returns received and the calculated average hourly wage. The huge upswing in enterprising generated by a time-factor based economy will increase the demand for labour and practically eliminate unemployment; no one need fear not finding work. If the company where you normally works has no need for your overtime, you can take an extra job somewhere else - totally tax-free.

For reasons of health and, to some extent, depending on the state of the market, overtime work is regulated and limited. The uppermost limit for overtime in a single day is 4 hours. For example, for a given year, allowed overtime may amount to 115 hours (= half an hour per day of work). These hours can be taken out variously with the limitation that in a single day, one must not exceed 4 hours of overtime work. You may then work overtime at your ordinary job, which would be the most common occurrence, or you could work extra somewhere else. In the latter case, you are issued an extra hourly wage card, where the hourly wage does not exceed that declared on your first card. All working hours must be time-declared, even though they are tax-free, partly to be able to keep a check on the state of the nations economy and partly so the employers are able to make corresponding deductions for wage payments from the company’s wage account.

The practical importance of overtime work will be most evident immediately after the transition to the time-tax system, when all forces will be needed to consolidate the system and to bring the economy into balance both with respect to the state’s need for revenue the people’s justified need for life quality.

THE MORE YOU EARN, THE LOWER THE PERCENTAL TAX
After completing a normal day’s work within the various Time-Tax categories, at most 45 % will be deducted as Time-Tax after which any other income will be untaxed. With increased income from overtime, the total tax in percent will decrease. That is to say that tax will diminish in relation to your annual income the more money you make, if your increase in income originates from overtime work and other work not Time-Taxed. This will be the first time in history that low-waged workers will pay less tax despite a higher annual income. In spite of the apparent paradox, things will still be completely fair since everybody will be paying exactly the same amount - as counted in time.

BNG – THE BASIC NEEDS GUARANTEE
In cases where a wage-earner is unable to work full-time due to illness, parental leave, sabbatical leave, studies or any other valid reason, a basic need guarantee is paid out, that is to say an allowance to cover our basic needs.

The BNG can be divided into two functions:
1. A short-term bonus system which you fund yourself and which is part of the social fee.
2. A long-term system which becomes relevant when somebody is absent for a longer time due to illness etc. In this case, the BNG-insurance system will compensate for that. Upon recovery, you will have to replenish the short-term security fund to the stipulated level. The size of this amount is a matter settled by negotiation but which, in the flourishing economy of the future, can be more generous than today’s subsistence level. Normally, the BNG would be related to the individual’s hourly wage which means the BNG compensates for loss of income due to absence with valid reasons.

Everybody sustains his own bread-winning obligation
A precondition for receiving your basic needs guarantee is that your leave of absence is valid, due to illness, pregnancy, parental leave, studies etc. This can certainly be understood as a limitation of your personal liberty or, to express it more exact , a bread-winning compulsion. But really, it’s simply a matter of solidarity. If you choose to live on maintenance allowances instead of working, you are, of course, forcing others to maintain your livelihood. The so-called “citizen’s wage” that some propose is thus not compatible with a time-factor economy which will require that everyone must work with exception for those who for various valid reasons are unable to do so. This means every citizen fit for work has a maintenance obligation for himself and needs to find a suitable job. In a time-factor based economy, this will not be a problem however, as there will be an abundance of work opportunities available in all occupational branches.

Nowadays people often get depressed, paralysed and incapable to take action as a result of the soul-destroying assembly-lines of large-scale operations or due to unemployment caused by company down-sizing. This is a quite normal reaction generated when an expectation is denied fulfillment or, more specifically, when the reward for an effort, sacrifice or privation does not meet expectation. If there never is enough reward for all sacrifices made, you lose the will to live.

Expectations may vary in relation to the political pressure the individual is living under. Lowest on the scale, we find the slave whose desire to survive forces him to do the work demanded from him up to the limit of physical breakdown. Uppermost on the scale, we find the slave-owner whose demands for profit make him extract the highest possible yields from his “production units” up to or past the limit of the individual’s capacity. In the situation where the production units consist of human individuals and where the supply of slaves is superabundant, e. g. war prisoners/concentration camp inmates, the demands can be pushed beyond the capacity of the production units and their deaths will be no impediment to satisfying the demands.

In the world of unbridled capitalism, the demands for profit can be pushed to the utmost limit without consideration to the individuals since they have been replaced by robots and the individuals have became unemployed. In both cases, the survival of the individuals is of no interest to the owner of the means of production who is likely to abandon people and let them perish. This phenomenon arises in both capitalist and totalitarian societies.

The opposite to this is a non-hierarchical and fair society where the line of policy is about improving people’s standard of living, not enriching those in power and capital interests at the citizens’ expense. This goal can only be achieved in a society where the people themselves are their own leaders and the owners of the means of production. Such a society has never previously existed but is possible in an economy based upon the time-factor. All societies that have existed up to now have been founded upon the subordination principle, i. e. leaders governing the obedient, and this social structure has consolidated for thousands of years. So it will take some time to compensate for all the inconveniences caused by such a social order and to educate free individuals to take responsibility for themselves and acquire insights into the essentials for life. For quite natural reasons, unemployment will cease after the establishment of the Time-Tax system, since initiatives and investments from then on will viable and create innumerable job opportunities in society. Then people can find their proper professional role and feel satisfied that their work pays off.

In the next step, demand will continue to increase due to falling prices and through the opportunity for tax-free overtime for the wage-earners. This will create opportunities for other companies to sell their products and recruit labour. This will in turn increase the tax base of the state and the pressure of taxation can be alleviated. The wage-earners’ degree of self-financing will grow which will mean a lessened need for bank loans which in turn will lead to lower interest rates. This will encourage new investments leading to lower production costs and prices will fall even more. This is tantamount to a greater purchasing power for the same money. This looks like the opposite of inflation, i. e. deflation, but it is not. The fall in prices will be due to a reduction of the interest part of the price and to lower capital costs.

RISK OF OVERHEATING
It isn’t possible to endow currency itself with a stable value in the same way as with physical measures. The gold standard did function pretty well as long as the value of gold remained stable. Today gold is losing its exclusivity retaining only a practical/technical value, primarily in plating metal in electric circuits due to its resistance to oxidation. As money does not consist exclusively of bank-notes and coins, but equally as securities and to a much greater extent as figures in a computer, we are obliged to choose a different path. That’s why we need to make the regulations of the monetary system unambiguous which is possible by using the same method for tax as for wage related to working-hours. One is paid in relation to the time worked. Taxes – the social fee - ought to follow the same principle.

The economic system and the money in circulation must correlate with real production and man’s physiological value bases. These are largely similar: we all get tired from work, we all need sleep and we all need time for recreation to manage with the strains society imposes on us. All this must find place within the day’s 24 hours. That’s why taxes levied must be in relation to time so that everybody pays the same number of hourly wages in tax. Time is the only thing that is equal to all, hence equally important to every one of us.

When purchasing power increases, there might be a tendency towards inflation. In the Time-Tax system, however, the increased purchasing power arises from increased actual production and therefore, money and goods stand in balance to each other. We may have to take corrective measures to counteract overheating of the economy – which in the first place should be a question of reducing time of work.

The correct policy is that we must move with the utmost caution to avoid too hasty changes. This will, moreover, save us from deflation tendencies. Little by little, we will arrive on par with world market prices. If we want to, we can, through increased automation, press world market prices and become the most efficient industrial nation in the world.

HOW TO BECOME A BILLIONAIRE
Most people have little or no idea as to just how much a billion Swedish crowns (SEK) is. To make it conceivable at all, I usually use the following description: If a person is making so much money that, after paying taxes, interest, fees, mortgage and all other living expenses, he can still save a million SEK a year - well, this person has a rather good income, hasn’t he? For such a person to amass a billion SEK, he would have to work for one thousand years! It goes without saying that nobody can make a billion SEK by his own work. It has to be done some other way, that is to say by speculation. Speculation always means money is redistributed from those who carry out actual productive work to those who don’t. In Sweden, we have several billionaires.

WHY A SHORTER WORKDAY?
As I have described earlier, profits may remain within one’s own company and can be used for investments up to an optimal level of capacity. This brings a possibility to reduce time of work which constitutes an increased quality of life per se but can as well be used for many other things: recreation, personal improvement, social life, cultural activities and many other interests. Reducing time of work can be of interest for psychological reasons as well. Recent experiments have shown that reducing the time of work within the health-care and engineering sectors need not affect productivity at all, on the contrary, since employees there neither stress nor overexert themselves as much as earlier productivity can increase. A reduction of working time will yield improved mental and physical health, psychosomatic diseases lessen as do absence due to sickness.

Besides, the actual time of work minus general illness absence amounts to less than 1,600 hours, so there is no practical difference in the real amount of work carried out. We figure that people’s absence due to illness will decrease because of their shorter time of work since since the opposite occurs with long working hours.

An interesting secondary effect in this context is that psychosomatic disorders will diminish when the stress level goes down and people start feeling better, recovering their hope for the future and their ability to plan their life financially and socially. Psychosomatic disorders today stand for some 80% of total health-care costs. By psychosomatic, I mean people who respond with physical illnesses as a consequence of mental stress with burned-out syndrome, often provoked by in¬creased demands and strains, like unemployment, bread-winning problems, family problems, divorce, housing shortage, existential angst, career hunting etc.

The psycho-social strains lead to a reduced immune defence whereby one’s body cannot respond with healing as is normally the case and the initial ailment releases a host of secondary diseases. The health-care institutions are becoming overloaded with work and budget cuts made by politicians excaberate the effects, i. e. people wind up with even more troubles and complications and the crises get worse.

INCREASED WELL-BEING FOR EVERYBODY
From the above we may conclude that the health situation in the country will improve dramatically with the introduction of the Time-Tax system. Full employment and an expanding industry yield economic security resulting in social well-being, hence a stronger immune defence. In such a situation, existence gets a deeper meaning for every individual who can then plan his life and develop his specific abilities. Happy people are less likely to misuse alcohol and narcotics and the self-destructive impetus can very well be changed into constructive development. The increasing well-being arising within the majority of the individuals will give them access to an increased creativity that earlier remained untapped. This will release an enormous quantity of new activities, favourable to the s stability of the society.

With a developed and consolidated Time-Tax system, working time will successively shorten down to a level giving people more time for social relations. We may easily state that the work burden imposed upon today’s human being is unnatural. Not even the inhabitants of the hunting and collecting societies of ten thousand years ago were working as much as modern man does.We haven’t evolved a greater capacity of work in this very short period of time, but rather still exist at a level it takes millions of years to reach.

The enormous increase in production which modern technology has achieved ought to lower our working hours to a biologically healthy level. However, just the opposite is true: modern technology has lead to a still greater (!) work burden. This state of affairs, evidently, conceals a serious systemic error.

This systemic error, once again, is the previously mentioned lack of a value base in economics. The causal chain of events resulting from integrating the time-value base into taxation will yield a shorter time of work, among a thousand other things. Then not only will material well-being improve, but psychosocial relations will as well. In contrast to today’s system of burdening people over their natural capacity pushing us into stress, heart disease, gastric ulcer, depressions, neuroses, psychoses, psychosomatic diseases and, last but not least, an ever increasing social dissolution inflicting contemporary society with divorces, criminality, drug addiction and other destructive conduct as a consequence.

HOW DO WE INTRODUCE THIS SYSTEM?
A simple way to introduce the Time-Tax system might be using a method with gradually increasing time intervals during the work-year within which the Time-Tax model is practised. These periods can afterwards be compared to the remaining annual time of work where the old system is applied. The first year, we can start with two months, the second year with four and so forth.

Or, the first year we can start by introducing the new taxation exclusively with respect to income tax freezing all other taxes which is probably the easiest way. Every coming year, we can then include some of the other taxes or let them fall away as State revenue grows and its expenses diminish. Then we can introduce the Time-Tax system in 6-12 years with everybody being given time to phase out unfavourable arrangements and adapt to the new system. This method will give plenty of room for outcome studies, corrections, phasing in and, to a corresponding degree, winding up the old economic disorder.

The proposition presented above is perhaps far from universal but it contains the key ingredients necessary for the change to be workable within a reasonable length of time. Many acute problems may arise related to the defaults of the old system, but these would be, fortunately, of a temporary nature.

A SHORT SUMMARY OF THE TIME-TAX SYSTEM
1. All taxes but Time-Tax are abolished. Preventive taxes on e.g. alcohol, tobacco and some pollution may remain.

2. The impediments to the business world drop off. It will be easier to start enterprises and recruit new staff, which will reduce unemployment.

3. Time-Tax implies that everybody contributes the same number of working hours for paying their taxes. Purchasing power will grow after the introduction of a time limit after which no taxes are levied. Today’s shifting taxes to the poor will cease. Besides, tax planning schemes will become impossible.

4. All hours of work outside of the Time-Tax base, that is to say, all overtime is tax-free. In this way, production costs are not affected (Exception: Ordered overtime may in certain situations be replaced by a wage increment).

5. People may retain a greater part of the outcome of their work than earlier and can save the surplus enabling a higher degree of self-financing of consumption, investments and education. Thus the need for loans will diminish.

6. The lending by the banks will diminish by an amount corresponding to how much people have been able to save. Interest rates will need to be lowered to attract new borrowers. If there aren’t any other possibilities for loans, the state can be obliged to assist with interest-free risk funds for constructive projects creating jobs.

7. When the rate of interest begins to fall, it will be cheaper to invest and create new jobs. Unemployment can be abolished. The tax base starts growing whereby both the burden of taxation and the hours of work can be lowered.

8. A lower rate of interest will diminish the state’s interest costs on the public debt (14 billion kronor for every percent). At the same time, the borrowing needs of the state will sink at same rate as costs for public subsidies, unemployment etc diminish and there is a corresponding growth in people’s income.

9. With full employment the state’s revenue from taxation increases and the public debt can be paid off. This will dramatically sink the rate of interest and reinforce the currency.

10. New investments at lower capital costs will bring prices down, favour new enterprising, increase production capacity. Exports will increase yielding more export-income, better trade balance and larger foreign currency reserve.

11. Import needs will diminish, quality will increase and competition will stabilise prices.

12. Substance abuse, social criminality and psychosomatic illnesses will diminish.

13. There will be no housing shortage, low rents, increased housing ownership and joint-ownership of companies.

14. In the new social model, efficiency will increase. This will yield: resource economising, re-circulating. production, a recycling society with an end to environmental destruction, a high quality of life, new technology and many new ecological inventions.

15. Time-Tax ceases after your retirement: retirees don’t pay tax.

16. The basic needs guarantee (BNG) will replace all social benefits.

The items selected above represent just a tiny portion of the thousands of improvements that would result with the Time-Tax system. To effect a real change, a platform for a new politics needs to be created – a politics planning for the long term with the ambition of creating justice for everybody in society. Whoever is for such an initiative not only helps himself to better conditions of life, but also everybody else in society.

IS IT POSSIBLE TO CHEAT THE TIME-TAX SYSTEM?
Example: You report a lower hourly pay to the tax authority than what it actually is, the fraud benefiting both the employee and the employer – or so you think. We then have to consider the rules governing the companies. All company income has to be invoiced through the savings association and deposited into a untaxed savings account from which everybody in the company gets his wages according to time put in and from which all withdrawals for valid investments are made tax-free.

Accounts of time worked by each company employee is registered by computer and sent daily to the tax authority (and the savings association) both of which are connected with the company savings account. Time accounts require physical presence and, if needed, identification controls with personal codes that can be made as rigorous as possible. When money is withdrawn from the account, it is matched to the time accounts of each person in the computer of the savings association.

Possible though quite improbable could be that the enterpriser uses his own pay wages as a gift. But if so, Time-Tax will already have been paid from that money, so the employer will have to book this withdrawal upon himself. The employer has no reason to pay anybody from his own pocket since this will raise his own tax without giving him any benefit whatsoever. Of course, the person who received the money in such an improbable manner hasn’t delivered a time account for himself, which the tax authority would wonder about if no absence due to illness has been reported. This kind of absence must of course be accounted for and confirmed by the doctor etc. Keeping a fraud going with so many parameters intermingled becomes quite complicated, really not worth the trouble.

Of course, you also might ask why you would want to cheat despite making much more money than earlier. If high taxes engender tax evasion, higher wages and low taxes ought to result in a correspondingly diminishing inclination for fraud, especially if the tax burden in general has diminished.

There is no impediment to running the old and the new systems parallel to each other. We in the new system will be happy if you in the old one want to pay more tax than necessary. This will lower taxes even more in the new system. If the enterpriser nevertheless somehow manages to pay the wage-earner money without a time receipt, that money must stem from some kind of illegal activity.

This would remain outside the controlling possibilities of the Time-Tax system. The time-factor system is valid when money is still used as a means of payment. If fraud has been discovered, the ultimate obstacle will then be that money could stop being valid as a means of payment and that credit cards will be the only valid purchasing method. If this were done, we may have rendered private criminal activity impossible but at the same time opened the door for extensive economic criminality plus introduced totalitarism. Losing one’s freedom is to high a price to pay for restraining unnecessary fraud.

TIME-FACTOR ECONOMICS PAVES THE WAY TO NEW POSSIBILITIES
You should not forget that a Time-Tax society offers so many more possibilities to make money compared to the social order we have today. Why risk losing this just for the pleasure or the thrill of committing a crime and thereby perhaps spoiling your future possibilities to fulfil dreams you once had about making a career within your special field? The shape of our future remains tied to what people decide to do in the present. As I have pointed out earlier, the Time-Tax system offers the fantastic possibility of governing our future by means of personal initiatives and commitment. There is no need to spend time regretting all the injustices you suffered in the old system and and which anyway cannot be undone.

In today’s system, you are visible in a tax return calendar where anyone can look up your earnings from the previous year. This could prove tempting for certain criminally bent people. In the Time-Tax society there is no such calendar and nobody can know how much money any one person has earned. Moreover perhaps it’s wise to keep one’s money available in savings associations to avoid the risk of scattering your money. The tax return calendar at use in the new system will contain just a single item, namely the wage per hour. How much money you have will not be evident. And this information, in my opinion, is nobody else’s business, not even the state’s - if it wants to call itself democratic. If you have fulfilled your obligations as do all the other citizens, then you have fulfilled your social obligation - and that’s enough.

Sometimes it is argued that prices should vary in accordance with people’s income. This in my opinion is quite incomprehensible. It’s more reasonable to try to narrow the gap between high and low wages instead. Currently, some hourly wages are too low in relation to the work done, whereas other ones may be too high. Various kinds of products have fixed costs that must be accounted for in the price plus that there ought to be a reasonable profit if there is to be any motivation for the production. All prices over or under this level are not justifiable. Moreover, we can not turn a blind eye to how we individuals interact on the so-called market by means of supply and demand. Competition with equal terms for all will keep both costs and prices down - in stark contrast to today’s monopolistic market which has the opposite effect with all the ensuing negative resulting problems this leads to.

The biggest price-raising mechanisms stem from today’s taxation, fiscal charges, inflation, interest rates and profits, both visible and invisible. They are the most tangible obstacles to a democratic economic development, hence the urgency in eliminating them. Another price-raising mechanism is the greed cultivated in the old system: profit maximisation - low quality at the highest price possible. All these negative phenomena are efficiently counteracted by the Time-Tax system. We thereby have given a positive kick-off for an economics based on real production and for the economic infrastructure in the country leading to an increasing purchasing power and welfare and, not least, economic security for everybody – where none can rightly complain of being inequitably treated.

Dynamic effects imply chains of causal effects arising whenever risk capital becomes a personal property that can be staked in new companies, projects etc. It must be stated that the capital-intensive investments of the old industrial society couldn’t possibly be generated by the common people and small businesses. Today, however, sophisticated technology is cheap and available even to small enterprises and modest investments. Conditions now exist for an entirely new industrial structure quite different from those valid in the beginning of the 20th century. The same thing is, of course, true for politics.

However, man himself has not changed much during the last 50,000 years, a fact we must take into consideration. Man’s cognitive resources are fast becoming insufficient for the demands of the new era. Hence the importance of adapting technology to man’s preconditions, not the other way round as is the case today, if an existential catastrophe is to be avoided. The retrogressive power-hungry psychopath of yesterday, a result of the law of the jungle, must give way to the constructive and inventive discoverer. Here we can talk about a real paradigm shift. Even after an introduction of Time Tax there will be room for politics but it will have to be founded upon common-sense, freed from special interests, that is to say a politics that follows the conditions dictated by nature.

NOTE: People generally regard bank interest as the price of money, but this is not correct. The term interest conceals the fact that a money-owner’s primary interest is making an profit. The lender does this by demanding a rent for this money. Hence we actually don’t borrow money but rent it. The proof can be seen in the following: If we buy something, we pay a price upon which we become the new owners of the goods or service. This is the most common kind of purchase. But when we “borrow” money in a bank or similar “lending institution,” we have not become the new owners of the money. We have to pay it all back (amortisation) and pay for it (interest) the same way as we would rent e. g. an apartment, a festive evening gown or the venue for a party.

FIXATED VALUE BASES
Money is a means of exchange and the basis for a measuring system of values within production, distribution and consumption. Exactly as in other physical measuring systems with value bases like the meter, kilogram, liter and second, the value base in the economy must remain stable from one day to the next, preferably over millennia, to be reliable. Imagine yourself what might happen if the meter wasn’t stable and changed length continually and unpredictably! It would be virtually impossible to build anything at all! The same thing is of course true for the other measures within their areas of use.

If the state has the responsibility of supplying money to society and keeping its value stable, its value cannot be allowed to flutter about as it does today. This is a systemic error in economics and can be corrected by introducing the invariable time value base into the tax sector. This would allow us to attain stability in the economy and by simple means keep the value of money at a stable level.

A FAULTY MEASURING SYSTEM LEADS TO FRAUDS, THEFT AND THE STRIPPING OF REAL PRODUCTION
The manipulations of the economy has gone too far. Lending at interest can exist because of people’s poor self-financing capacity. If this capacity could be strengthened it would in turn lead to falling interest rates and speculation will become less profitable. It would be attractive to make money through work as working would then be profitable.

In today’s economy, it’s the other way around. You can never become rich simply by working, it just doesn’t pay off. To get rich, you have to turn all your energy and focus on speculation. Of course, this is not viable in the long run. “If everybody buys shares, nobody will have to work” is not a good proposition. Since the year 2000 more than half of the Swedish population are entangled in share speculation on the outcome of others’ work, by means of the share fund saving campaign. In due course, this will end in a serious set-back and all the small savers will be hit by stunning losses as usual. The new Social Democratic retirement system is founded on share speculation as well. One can certainly wonder how this tallies with the old socialist theses on the sanctity of work and the wickedness of speculation.

GLOBAL DOUBLE-CURRENCY SYSTEMS
One solution that could prevent an international economic collapse would be that all nations create a non-convertible parallel currency for domestic transactions only. Later a separate international currency for common use in trade, export and import in an area can be created. Today the American dollar, in use both domestically and internationally, can as a central currency not only procure self-assumed privileges but also interfere in the internal affairs of other nations resulting in large-scale unemployment among other things. Don’t forget the Vietnam war, when the dollar sank all the way to the equivalent of 2:70 SEK (Swedish kronor) and the economically connected oil/petrol crisis in 1973. In the future, the euro can replace the dollar’s role and Sweden will then jump out of the frying-pan into the fire.

The EMU doesn’t accomplish any rational unselfish goal, it’s just moving the cause of the problems to other geographic areas and to new profiteers. In this connection, it is worthwhile mentioning that the Swedish National Bank (Riksbanken) pulls in some 6 billion in interest to the public treasury the amount of which would go to the new Euro-bank, if Sweden should join the EMU. The danger of a currency war between the dollar and the euro would become imminent. Having parallel currencies would, on the contrary, become a socio-economic boost for the whole world and would lead to much conflict resolution.

After consolidating the new economic model, the double-currency system can perhaps be dismantled with an abiding and mutual respect for the internal economic affairs of every country. There is always the possibility of returning to the double-currency system if there are signs of economic unrest. I am of the opinion that all peoples and national formations shall be free and sovereign. They must also therefore have the right to control their own monetary systems and economic affairs without being dominated by foreign currencies and currency speculators.

BALANCE AND EQUILIBRIUM
Many people ask what will become of inflation after introducing the Time-Tax system. This is a complicated subject to which I shall try to reply without a guarantee of being exhaustive (albeit you’ll find a more complete version in the book). Basically one can say that, as the tax system is directly linked to an incentive wage system, speculation problems would disappear, due in part to the change in ownership conditions and to extremely low interest rates. For this reason, the amount of money in circulation will for the most part always correspond to real production. To deal with inflation, only minor adjustments of the quantity of money will be needed.

This will be considerably facilitated after the Time-Tax system is introduced, since the differences in income between people will be greatly reduced with capital being more evenly distributed over the whole population. Today some wages are too low and others too high in relation to the work performed and to the individual’s competence. An unceasing struggle over money is going on in society with the employees standing for real production being the constant losers.

VARIOUS REASONS TO BORROW MONEY
An example for hyperinflation can be obtained if we look back at Germany during the Weimar republic (1923). A postage stamp or a matchbox could towards the end cost billions of marks. No less than 39 paper-mills and 1,783 printing presses were running day and night to produce paper money. Finally this crazy dance of inflation turned so wild that the dollar on the Berlin stock market rose by 613,000 marks a second. When people received their wages they immediately rushed out to turn the money into goods that just kept rising in price from day by day, and in the end, hour by hour. Towards mid-November 1923, the government put an end to the insanity, stabilising the dollar rate to 4,2 million marks, a rate that was exactly 1 billion times as high as the original parity. They introduced a new transitional currency in 1923, called the Rentenmark, defined to a value of one billion paper Marks. In 1924, the Rentenmark was replaced by the Reichmark of equal value.

The classical example of inflation arises under danger of war, (not seldom conspired by the financial interests of those who make money on the war,) when a precipitated mobilisation requires immediate expenses. This is one of the most dangerous economic conditions a state can experience. Moreover, inflation affects for the most part the indigenous population. When purchasing “necessary” items (weapons!) on the international market, you’re obliged to use “real” money which has to be borrowed from abroad. In all ages, this has proven to be quite easy, since there have always been plenty of speculators ready to lend money for conflicts and wars being a most profitable business!

In both cases, it is the ordinary people who wind up paying for it all through taxes, deteriorating money value and interest – and with their lives. The indebtedness of the state caused by politicians can force a country to abstain from natural resources like mines, forests and infra-structural resources like water distribution, traditional and nuclear energy etc. to foreign private interests. In connection with Germany’s reparations for war damages, creditors took German assets like the railways and the customs service as pledges. Even the central bank was put under foreign control.

In connection with warfare, delivery impediments quickly arise which diminish the stock and selection of products; a scarcity of goods arises. When money starts competing for the meagre supply of goods, the black market phenomenon arises.

A SOLUTION TO THE PROBLEMS?
By integrating a value-base into the tax sector of the economy, the Time-Tax system acts firmly against all the phenomena described above. The outcome of real production is equitably distributed whereby it balances and corrects the mechanisms of the whole system. The money supply is kept in balance with the availability of goods, the interest rate pushed down towards zero by means of the increasing degree of self-financing in society. This in turn increases investments which effectively counteracts monopolies and the concentration of capital made possible through the mechanics of compound interest.

Often war originates from a causal chain of events where among other things an impoverished trade and industry, unemployment, starvation, a lust for revenge and a deliberately incited hatred against designated scapegoats, e.g. ethnic groups, starts a conflict turning into war. But since the Time-Tax system eliminates unemployment and inflation, yields good wages and low taxes, a high demand and an expansive enterprising, both starvation and discontent and a host of other conflict-provoking conditions will disappear!

Attempts to provoke revolutionary fervour will all fail. In this way, the Time-Tax system has also conflict-inhibiting effects which in itself is of great interest.

PART 2 = KLICK HERE to get the rest of this text