Money and Sustainability: Reviews1. Resilience
"So here we have it. The austerity versus Keynsian spending debate is about as useful as arguing whether the earth is flat or sitting on the back of a pile of turtles. Neither will provide sustainable interventions to our converging crises while the debt-based money system remains the only significant game in town. Money & Sustainability is as long as it has to be and no longer. Its 200 page analysis details the adverse impact of the current financial system on sustainability as a root cause of boom and bust cycles. It requires short-term thinking and unending growth, concentrates wealth and destroys social capital. The authors first ‘make explicit’ the prevailing economic paradigm and contrast this with an ecological economics approach.... The underlying narrative here, of how a fantasy world (or model of economic reality) has come to be taken as read and treated as gospel by a whole generation of economists, academics and politicians, is short and to the point. It deals brutally with two of the main faults in this paradigm: the treatment of non-monetised entities (notably the environment, non-paid activities and cultural and spiritual traditions) as irrelevant externalities; and the erroneous assumption that money is a passive neutral element : an ‘innocuous facilitator’. The first of these has received a fair amount of air-time lately though the summary here is concise and helpful. The second is described via consideration of a monetary ‘blind spot’ comprising three layers. Although dual or multi-currency societies have existed, appreciation of how they have operated is not widespread and mainstream economics generally ignores them, assuming a single, monopolistic hierarchically-issued currency. The communism versus capitalism ideology war has layered on top of this assumption (embodied in both ideologies) a blanket of comparative debates and analyses, further obscuring the single currency hegemony. And on top of this, a layer of institutions, central banks, and academics have pickled and preserved this monetary orthodoxy. The book reminds us that no matter how entrenched, repeated and defended, this structure is still just a paradigm – a particular view of reality – and alternative paradigms exist." Read the full review at resilience.org 2. Read Hazel Henderson's review of Money and Sustainability 3. Reviewed by Christopher Roper, Chairman, Trucost plc
"Very occasionally a book appears that I want to buy in bulk and press into the hands of everyone I know and love or wish to influence. This is such a book. Anyone who reads the newspapers is aware that our financial system is badly broken, and that western governments only response is sell public assets, cut public services and throw people out of paid employment. However, Bernard Lietaer, who has been a currency trader, central banker, and professor of finance, and his colleagues do a fine job of explaining exactly what it is that is broken and why, and offer some ideas as to how to fix things. Their main argument is that we have to break free from a monopolistic monetary system centrally controlled by bankers, be they rapacious capitalists or high-minded civil servants. If anyone doubts that the system is irretrievably broken, they provide a chilling statistic: between 1970 and 2010, there have been 145 banking crises, 208 monetary crashes and 72 sovereign debt crises, or 425 systemic failures, with an average of 10 countries getting into difficulties each year. The 23 countries involved in the 2007-08 banking crash represented more than half the world’s demand and output. These crises are not the simple result of human greed or incompetence, but built into the system, with the inevitability that further crises are just around the corner, at a time when the world needs a stable and equitable financial system that can invest in a post-carbon economy, provide productive jobs for the next generation, and deal with the needs of a rapidly ageing population. Another fascinating chart shows that only 2% of the US$4 trillion foreign exchange transactions every day are based on real exchanges of goods and services. All the rest are speculative, bets on currency movements. One day’s transactions on these markets are the equivalent of the entire annual output of China or Germany changing hands. Little wonder that the owners of this casino are opposed to the so-called Tobin Tax on financial transactions. As Keynes put it, “Speculators may do no harm as bubbles on a steady stream of enterprise, but the position becomes serious when enterprise becomes the bubble on a whirlpool of speculation.” Their solution is to take the creation of money back from the bankers, through complementary systems of payment and exchange that are controlled by communities of individuals, families or enterprises, with support from central and local government where necessary. It’s hard not to like a book that offers a solution to Greece’s crisis that is “elegant and simple. It would work and the necessary (Open Source) software is available now”. “Current monetary orthodoxy says that 100% of the Greek economy must be either in or out of the Eurozone. Everybody knows that eitheroption will entail even higher unemployment and more misery. But it doesn’t have to be that way! The core principle of complementary currencies, as set out here is that they run alongside the main currency, increasing resilience and flexibility for the entire socio-economic system. Here’s our systemic solution in a nutshell:
Although it may seem like a pipe-dream to persuade our rulers to relinquish the system that has served them so well for so long, there are many parts of the world where complementary currencies are taking hold. I am looking forward to reading People Money: The Promise of Regional Currencies, to be published by Triarchy Press later this summer. Bernard Lietaer is again the lead author, this time with Margrit Kennedy and John Rogers . This promises to be a “handbook for anyone who wants to develop a regional currency and for anyone who wants to learn how local currencies can transform the lives and well-being of local communities. This is the fortieth anniversary of the Club of Rome’s first report - The Limits to Growth, which rang a loud bell for many of us growing up at that time. One of its co-authors, Dennis Meadows is quoted on the cover of Money and Sustainability: “We will never create sustainability while immersed in the present financial system … I used not to think this. Indeed I didn’t think about the money system at all. I took it for granted as a neutral and inevitable aspect of human society. But … I now understand, as proven clearly in this text, that the prevailing financial system is incompatible with sustainability.” 4. Reviewed by Henri de Ruiter
The instability of the monetary and banking system Since 1970, there have been 425 systemic crises, according to the IMF; an incredible number. By showing these facts, the authors argue that the current crises have a structural cause. Moreover, our monetary system is fundamentally badly designed. Our financial system leads to short-term thinking, is focused on growth, concentrates wealth and devalues social capital. It has only one solution for the current crisis: privatization of everything. This call for privatization can be heard in Greece, but also in other countries like the United Kingdom. According to the authors, this is just a short-term solution... the current monetary system leads to crises and is therefore incompatible with sustainability. Complex flow systems So what exactly is sustainability? And how must we design our monetary system to make it sustainable? This is where the book starts to be very interesting. According to the authors, research shows that every complex system can be defined by the ratio between efficiency and resilience. . The theory is simple: too much efficiency comes at the expense of resilience; too much focus on resilience comes at the expense of efficiency. In principle, this can be applied to every system: organizations, ecosystems, and so on. Generally, if organizations become more efficient, this is good. But, when organizations become too efficient and thus too big, this comes at the expense of the resilience of an organization. When there is any disturbance, the system cannot adapt. When a predator specializes in catching one type of prey, he becomes quickly very good at it. However, if this type of prey extinct, so does the predator. Therefore, sustainability is the optimal ratio between efficiency and resilience. The current monetary system with one currency (“monetary monoculture”) is too much focused on efficiency. As a result, financial transactions can take place quickly. However this also results in a rapid spreading of a single crisis. The whole system will collapse. This is what we have seen in the last couple of years. Resilience is hard to find. Wellness Tokens Therefore, we must reform our current system. So how could our current system become more sustainable? The authors propose to diversify the available exchange media (currencies) and the agents that create them. In short, in place of a monetary monoculture, we need a monetary ecosystem. An example may help. Suppose we want to reform our health system in order to encourage healthy behaviours instead of only curing diseases. Thus, we want to reward healthy behaviours. In the current system, the government could consequently decide to subsidize healthy behaviour. Citizens ‘earn’ money because of their behaviour. But, people could spend their earned money on others things, not related to their lifestyle. For instance, they could buy a television. There is another possibility. Suppose the government issues “Wellness Tokens”. These Tokens can be earned by having a healthy lifestyle, for instance, if you go to the gym on a regular basis. However, you can only spend your Tokens on objects that promote a healthy lifestyle. You could pay your gym with Tokens, but not your television. In short, Wellness Tokens reward and encourage healthy behaviours and thereby reduce long-term medical expenses for society. Solutions for the current crisis Complementary currencies will buffer the monetary system. Moreover, when designed in the right way, these currencies can promote long-term thinking and enhance the social capital. The authors introduce nine examples of these complementary systems, including the Wellness Tokens mentioned above. Another example is the issuance of Civics: a proposal empowering a city or region to fund civic activities without burdening their budgets. These activities could provide the labour component for social, educational and ecological projects. Unorthodox This book is very inspiring because of its unorthodox character. The current monetary system with one single medium, is indeed so predominant, that I would not have thought of a financial system with different currencies myself. Hence, this book opens new perspectives and mental frameworks. Suddenly, I see possibilities for new media everywhere: our health care system, regions, businesses, and so on. The report is easy to read, even for someone without any economic background." Read the full review at henrideruiter.com 5. Reviewed in Basic Income News
The book recognises that the current monetary system has to continue much as it is; it identifies problems with the current system, and argues convincingly that plural currencies at a variety of levels (local, national, and European) would be a partial solution to many of the current difficulties and would reduce the risk of future crises; it studies and evaluates existing experiments in alternative currencies; and it makes feasible proposals on the basis of those evaluations. This is a good book on how limited economic reforms could make a real difference to both our global society and its environment. Read the full review |
|
|
|