30 June 2009

The "Strong Sustainability" Paradigm

Recently I've been motivated to think about what peak oil and money systems have to do with where we need to focus our efforts for a better future. Here is what I've come up with:

The Strong Sustainability Paradigm

The current economic crisis is not about the conflict between capitalism versus socialism, left versus right or about questions of globalisation versus social justice. The current crisis happens at a time when we start feeling the impacts of climate change and the degradation of the biosphere on a large scale. It has become an opportunity to examine our perceptions of our personal and economic relationships with the natural world. The current crisis gives us an opportunity to move from the business as usual of economic growth to an understanding and adoption of ecological economics.

How can we find a real response to the needs of climate change and challenges of our times? In terms of current popular culture, a fundamental realignment of approach and priority and a culture shift is needed. We need an approach of Strong Sustainability. Changing the conventional order of things, this approach postulates that the economy is a subset of society (humanity) and that society is a subset of the ecology. All activities therefore ultimately need to conform to ecological limits.

Ecological systems operate in cycles and are self-regenerating. Consumption and the use of biosphere services need to happen within the limits of this regenerative capacity.

A successful reorientation is possible and it requires that we adopt a new set of ethics. In the new set of ethics, we leave the purely utilitarian approach behind and adopt a set of ethics that values life and the integrity of all systems that support life above all else.

The Ecology
The success of this approach and the the application of policies can be measured by a set of specific indicators. What must be measured, first and foremost, is the health and quality of the ecology/biosphere. Among the available indicators to measure this are the ecological footprint, biodiversity indicators, air, water and soil quality standards.

The next priority must be the quality of life and the development of human society. There are indicators that can be used for hat purpose, like the Human Development Index, and other Quality of Life measurements.

“The economy is a wholly-owned subsidiary of the environment.” What does that mean? Not only does it mean that economic institutions and systems need to function in accordance with nature, but it also means that economic indicators come in third priority only, after the more important ecological and societal indicators. Since a strong sustainability approach cannot accommodate an ever and exponentially growing economy, a set of indicators must be adopted which reflect the quality of economic activity, rather than just its size and trough put. One such such indicator may be Genuine Progress Indicator (GPI).

Economic Transformation
Following the principle of perceiving the economy as a subset of ecological activities, economic systems, institutions and policies need to be designed in a way that they permit and promote a steady state and ecological economy which flexibly adapts to natural cycles of growth and decline. Economic activity can be steered by ecological taxes, a social safety net that promotes social justice and a raft of other policies. Institutions like the financial and money system and values that are built on the premise of unending growth need to be abolished and replaced with systems that can usefully act within the natural limits of nature.

The financial system needs our special attention because it is the 'operating system' of the economy. The global economic growth imperative is inherent in the nature and integral to our current money system, and as a result one of the main drivers of global warming and environmental destruction. Any challenge to the established economic growth paradigm must not just include the regulation of the financial industry, but extend to a fundamental reform of the money system. Invention and transformation can draw on countless experimental as well as established and proven alternatives to the current financial infrastructure which is based on bank issued debt money with compound interest.

Such an approach is a significant departure from the conventional way of thinking. It will not only provide a new vision for the future, but also require workable ways of transitioning from the current economic thinking to a new economy. Because in current practice economics and financial profitability and safety are the final bottom line, any vision of ecological economics and the policies for transitioning to it must be able to address any economic concerns individuals and the business community might have. We must be clearly able to show that the welfare of people is guaranteed even if we work within the ecological constraints of the planet and the land and abandon the growth imperative, and that overall we will be better off this way, rather than when we keep ignoring the ecological limits.

28 March 2009

Understanding 'Zero'

We have a dire need to expand our thinking around the understanding of money and currency. We also need to escape the box of the perceived need for never ending exponential growth. Using a mutual credit system could give us just about what we need to expand our thinking. Here, the concept of 'Zero' is an essential ingredient. Here it's not about the flow of money, or about having more and more – here it is all about relationships!

(Image from FreeFoto.com)

What does “Zero” stand for?
- Zero stands for the sum of all currency in the system. In other words, if one adds up all the negative account balances and then adds all the positive account balances, one should arrive at zero. This will be true as long as a foolproof accounting system is used where every transaction is recorded on both the credit side and the debit side.

- Zero stands for balance. However, that balance won’t be guaranteed if the Zero point is shifted by giving away “free” Points or if the balance is upset by granting larger credit limits than debit limits. As long as balance is kept, Green Dollars in circulation keep their value.
Zero stands for the dynamic centre. In order for a mutual credit system to work, everyone needs to engage in equal and balanced giving and receiving. There are always enough points in the system for trading. Participants need to trade through Zero at least once per year, or even better, several times per year.

- Zero stands for the fact that relationships are more important than numbers. We’re conditioned in this society that “more is better” and we need to “get rich.” Both propositions are meaningless in the context of a mutual credit system. In such a system we find economic security not because we accumulate, but because we build relationships with other people.

- Zero is also the symbol of a circle, which stands for the community of which the participant is a member. In the conventional economy, we must all fend for ourselves in competition with everyone else. In a mutual credit system, we’re all in it together. When creating the means of exchange (Points, Green Dollars or any other unit), we do so ourselves in a transaction with another community member. What counts are only three positions in relation to the system: we’re either in dedication to the community because we’ve consumed ahead of providing something, or we’re in “recognition” to the community because we’ve provided before consuming. We also stay within the limits that we as a community have all agreed to. The community needs all three, and therefore both dedication (debit) and recognition (credit) are valued equally. The only other necessary ingredient is solidarity with the community: when we seek to trade to fulfil some of our needs and wants, we need to look within our own community first (buy local, so to speak) before going into the dollar economy. A mutual credit exchange suffers seriously if members abandon their solidarity with the community.

- And finally, Zero is our balance when we join and Zero is our balance when we leave. We enter the system at Zero, and the only acceptable way out is at Zero again. Otherwise, a convenience to the individual creates a problem for everyone else in the circle.

Understanding and living the concept of Zero require a culture of “we,” a culture of community. Calling the unit of currency in a mutual credit system a “dollar” is unhelpful, because it tricks us into thinking and behaving according to our mainstream competitive consumer culture. Applying the concept of Zero helps maximise trade while preserving equilibrium within the community and supports functional, fulfilling relationships between individuals and the community. By making everyone a winner, a well-maintained equilibrium increases the quality of life for the whole community.

10 February 2009

What can we expect from Obama?

A declaration of independence from Wall Street

Since we have so much money to bail out banks, why don't we have a fraction of it for education, healthcare and environmental restoration?