Posted: Nov 05, 2016 8:42 pm
Evolving wrote:There's an article in the Guardian today advocating "positive money":
https://www.theguardian.com/global-development-professionals-network/2016/nov/05/how-a-new-money-system-could-help-stop-climate-change
As with a lot of this stuff I think there's some very important points and also (as far as I understand) some misinformation.
The question is what to do about it. How can we redesign the global economy to bring it in line with the principles of ecology? The most obvious answer is to stop using GDP to measure economic progress and replace it with a more thoughtful measure – one that accounts for the ecological and social impact of economic activity. Prominent economists like Nobel Prize winner Joseph Stiglitz have been calling for such changes for years and it’s time we listened.
But replacing GDP is only a first step. While it might help refocus economic policies on what really matters, it doesn’t address the main driver of growth: debt. Debt is the reason the economy has to grow in the first place. Because debt always comes with interest, it grows exponentially – so if a person, a business, or a country wants to pay down debt over the long term, they have to grow enough to at least match the growth of their debt. Without growth, debt piles up and eventually triggers an economic crisis.
The first paragraph I've quoted here, I think is actually far more important and accurate than the second. Debt and the way interest expands the money supply isn't "the reason the economy has to grow", it's the reason we have inflation. But inflation does not equal GDP growth. In fact specifically GDP measured in real terms is a measure of the production of the economy adjusted for inflation. And consistent levels of inflation are a useful tool for stabilising the economy through the reduction in value of hoarded cash and reducing the size of debts. While we need to focus the economy on sustainability, efficiency, cutting down on resource consumption and creating a circular economy in terms of the physical impact we have on the world, that doesn't necessarily have to link to the quantity of money. It also is a good idea to heavily regulate and democratise the creation of money to stop that power being used to unjustly capture wealth as the banks currently do. But doing so isn't the be-all and end-all of fixing the economy and making it work sustainably for people and the planet. I'd also say that, even if you have the majority of money created by the government that still doesn't stop it functioning as debt. As soon as it is spent or lent or used in the economy it has both a debit and credit entry on the balance sheet and something is always expected back in return. Money as we know it is debt. Unless you want a 100% gift economy where everything is either given or shared without payment. Or perhaps a vote based system where everyone gets an equal say each day in what they need from the economy and, so far as we have the resources to provide, that dictates who gets what.
Sorry that was just a random string of consciousness and probably not at all accurate either.
But it's good to see alternative economic ideas in the mainstream media since the neo-liberal orthodoxy has been far too strong for far too long.