Friday, June 15, 2012

Overcoming the crisis through ecological consciousness and civic virtues: A manifesto

This manifesto originated with a diverse group of French, Swiss, and Belgian academics and practitioners. A version in French on, entitled "Manifeste pour une sortie de crise par l'écologie et par le civisme", has already been signed by almost 2,000 citizens around the world. You can see the list of initial signatories below, after the text itself. We are now launching the text into the English-speaking world, in hopes that it might serve as a mobilizing platform as the Rio+20 summit gets underway.
Please support this manifesto by signing it on the official webpage and, equally importantly, please send this URL whizzing through your social hives and your Internetworks! Thank you so much! So here's the text:
There is no doubt that what we are witnessing today is an economic and ecological debacle. It stems mainly from the fact that our political institutions have lost control over large-scale collective choices. The ideology largely dominating today’s political arena displays an almost religious faith in the self-regulation of markets, and it marginalizes the democratic sphere. Even as we speak, the consequences of the lack of local and global regulation are already starting to make themselves felt dramatically: Inequality is soaring and the limits on natural resources, as well as the vulnerability of the ecological equilibria that make our lives possible, are being consistently ignored. We are calling forcefully for consciousness and solidarity to awaken at a world level. We are calling for a deep ethical shift in every one of us.
On the occasion of the Rio Summit’s 20th anniversary,
– We are calling on everyone to recognize the deep connections between economic and ecological issues. A world market has been constructed and developed, with the objective of scaling down protections and regulations. This has only further deepened wealth disparities. The political, economic, and financial elites have captured almost all of the produced wealth, thus condemning peasants and farmers in the South to misery and many populations in the North to social decay. While the past three decades have been a time of substantial growth in produced wealth, they have also evidenced an unprecedented rise in inequalities.
At the same time, another catastrophe in the making might soon force badly degraded living conditions upon the majority of our planet’s population. If—according to a highly plausible scenario—temperatures rise by 4 degrees Celsius, the adaptive capacities of many regions of the world would be exceeded. This would lead, among other things, to a sharp drop in agricultural and foodstuff production worldwide. Scarcer resources, an increasingly hostile climate, and an unstoppable rise in sea levels will hardly facilitate economic activities.
– We are calling on everyone to act in order to counterbalance the short-term focus of globalized finance. It is high time to counteract our decision-makers’ short-termist approach to environmental and development issues. To do this, we need to reinforce the international community’s capacity to enforce regulation and, at the level of nations, we need to counteract political powerlessness. We cannot avoid noticing that on a planet where trade and commerce have become ultimate ends, priority is almost always given to the smallest common denominator when it comes to social and environmental problems. Goods circulate and are consumed without so much as a thought being given to the working conditions of those who produce them or to their global environmental impact.
– We are calling for a condemnation of cynical opportunism in matters of climate change. The increasingly precise regional data supplied by climate models make it possible to devise cynical adaptation and investment strategies. Thus a small number of market actors believe they can reap a profit—at least for a time—from ongoing environmental changes by shifting their investments as new ‘opportunities’ arise.
– We are calling for a decrease in physical flows and for an end to the unbalanced overexploitation of the South’s natural resources. North-South relations cannot boil down to having the middle classes in developing countries envy the lifestyles currently prevailing in rich countries. The physical limits we have reached—scarce land, falling supplies of other minerals as well as of conventional fossil fuels—impel us to open different horizons. It is imperative that we orchestrate quickly a reduction of the physical flows on which our economies rely, starting with the North and its expensive lifestyles. We have to put an end to the unbalanced overexploitation of natural resources in the South, which keeps the majority of the world’s population from satisfying its essential needs (water, energy, and food).
– Finally, we are calling for a reinstatement of public decision-making power in order to overcome the crisis through ecological measures. Provided it respects the basic principles and rules of democracy, political decision-making is the sole avenue towards circumscribing and enacting a notion of common good which has also become globalized. Political decision-making will make it possible to put into force a number of measures that are indispensable if humanity wishes to succeed in the transition toward a just and equitable, frugal and sustainable economy.
What most urgently needs to be done is
– to enforce environmental and social rules within the World Trade Organization, in order to affirm social well-being and the respect for the limits of the biosphere as foundational principle of a sustainable world economy;
– to develop binding national and international financial norms in order to put an end to the abuses of the financial system and to reorient it toward the financing of the real economy;
– to take concrete steps to embody our solidarity toward the victims of ecological crises and toward the populations suffering from extreme poverty, which implies—among other things—implementing the Green Climate Fund whose design was called for during the 2009 Copenhagen Summit, along with innovative ways of financing the Fund and of controlling the allocation of its funds;
– to mobilize public money creation in order to finance the ecological transition and the adaptation to a natural world that is changing very rapidly, but also to put an end to the debt crisis and to return to balanced public budgets in the area of current spending;
– to shift the fiscal burden from work and investment toward the extraction of resources, so as to establish a genuinely ecological fiscal policy that creates incentives for lasting behavioral changes;
– to reform the teaching of economics and endow our universities with path-breaking research programs on new economic and social models compatible with a decreasing and equitable consumption of resources;
– to use the education system to transmit values of civic virtue and of respect for human beings and for nature, which are indispensable preconditions for a good personal and social life.
Faced with the alarming drifts of a society that has become more and more individualistic, we are calling for a renewed role given to political decision-making, within the strict limits of democratic control.
To support this manifesto, please go here.
This manifesto was signed initially by the following individuals, before it was put on the Web on May 25, 2012:
Yohann Ariffin (political scientist, University of Lausanne, Switzerland)
Christian Arnsperger (economist, FNRS and University of Louvain, Belgium)
Floran Augagneur (philosopher, Sciences Po. Paris, France)
Guillemette Bolens (anglicist, Vice-Chancellor of the University of Geneva, Switzerland)
Nicolas Bouleau (mathematician, Ecole Nationale des Ponts et Chaussées, France)
Dominique Bourg (philosopher, University of Lausanne/vice-président Fondation Nicolas Hulot/ Switzerland)
Baptiste Campion (media scientist, University of Louvain, Belgium)
Isabelle Cassiers (economist, FNRS and University of Louvain, Belgium)
Gauthier Chapelle (biologist, scientific director of Biomim-Greenloop, Belgium)
Jean-Christophe Charlier (CTB, Belgium)
Jean Cornil (former federal MP, Belgium)
Alain Dangoisse (Maison du développement durable, Louvain-la-Neuve, Belgium)
Felice Dasseto (sociologist, University of Louvain, Belgium)
Rodolphe de Borchgrave (Cadmos, Belgium)
Maurice de Borman (attorney, Association Wéry, Belgium)
Thierry De Smedt (media scientist, University of Louvain, Belgium)
Christophe Derenne (director of Etopia, Belgium)
Eric Duchemin (environnementalist, director of the online journal "Vertigo", University of Quebec, Montreal, Canada)
Marc Dufumier (agronomist, AgroParistech, France)
Benoît Faraco (political sciensist, Fondation Nicolas Hulot, France)
Augustin Fragnière (environnementalist, University of Lausanne, Switzerland)
Benoît Frund (Vice-Chancellor of the University of Lausanne, Switzerland)
Michel Genet (economist, director of Greenpeace Belgium)
Paul Geradin (ICHEC, Belgium)
Jean-David Gerber (geographer and political scientist, University of Lausanne, Switzerland)
Gaël Giraud (economist, Ecole d'économie de Paris, France)
Pierre Henry Gouyon (biologist, Museum National d'Histoire Naturelle, Paris, France)
Alain Grandjean (economist, co-founder of Carbone4, Fondation Nicolas Hulot, France)
Thierry Hance (biologist and environmentalist, University of Louvain, Belgium)
Gérald Hess (philosopher, University of Lausanne, Switzerland)
Marek Hudon (economist, Solvay Business School, Université Libre de Bruxelles, Belgium)
Nicolas Hulot (president of the Fondation Nicolas Hulot, France)
Jean Jouzel (climate scientist, IPSL/CEA, Paris, France)
Alain Kaufmann (director of the Interface Sciences Société, University of Lausanne, Switzerland)
Etienne Klein (physicist and philosopher, CEA, France)
Pietro Majno (surgeon, Geneva University Hospital, Switzerland)
Dominique Méda (philosopher, Paris-Dauphine University, France)
Jacques Mirenowicz (director of La Revue Durable, Switzerland)
Cécile Ostria (director of the Fondation Nicolas Hulot, France)
Déborah Philippe (sociologist, University of Lausanne, Switzerland)
Cécile Renouard (philosopher and economist, Centre Sèvres and ESSEC, Paris, France)
Philippe Roch (former director of the Office fédéral de l'environnement, former secrétaire d'Etat, Switzerland)
Adèle Thorens Goumaz (philosopher, national adviser to the green party Verts/VD, Switzerland)
Alain Tihon (Spin out sprl, Belgium)
Nicolas Van Nuffel (CNCD-11.11.11, Belgium)

To support this manifesto, please go here.

Wednesday, May 16, 2012

"Money and Sustainability: The Missing Link" by Bernard Lietaer, Christian Arnsperger, Sally Goerner and Stefan Brunnhuber

Just out from Triarchy Press

Money and Sustainability: The Missing Link
by Bernard Lietaer, Christian Arnsperger, Sally Goerner and Stefan Brunnhuber

A report from the Club of Rome
to Finance Watch and the World Business Academy

Axminster (UK), Triarchy Press, June 2012
216 pages – £24.00 – $30.00
(initial offer price: £16.00)
ISBN 978-1-908009-75-3

See table of contents below


Our money system systematically undermines sustainability initiatives and objectives. It is also the structural cause common to all financial and monetary instability. These systemic problems are first explained – and then elegantly resolved by the practical innovations proposed in this book.

Our money system IS the "Missing Link."

We tend to assume that we must have a single, monopolistic currency, funded through bank debt, enforced by a central bank. But we don't need any such thing!

In fact, the present system is outdated, brittle and unfit for purpose (witness the eurozone crisis). Like any other monoculture, it's profitable at first but ultimately a recipe for economic and environmental disaster. The alternative is a monetary "ecosystem," with complementary currencies alongside the conventional one. This is more flexible, resilient, fair and sustainable. Societies worked like this in the past. So can we.

Pioneering new research from the Club of Rome

In 1972, the famous first Report for the Club of Rome – The Limits to Growth – showed how an economic system that demands infinite growth in a finite world is fundamentally unsustainable. This new Report explains our present monopolistic money system and the flawed thinking that underpins it. It spells out the catastrophic problems – environmental, socio-economic and financial – that we will continue to experience unless we make radical changes. Finally, it sets out nine practical proposals, which can be implemented now, to run alongside the current money system. This book is essential reading for policy makers, business leaders and economists, anyone concerned about sustainability, those working in the field of monetary systems and anyone with an informed interested in the future of the planet.

"We will never create sustainability while immersed in the present financial system ... I used not to think this. Indeed, I did not 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."
– Dennis Meadows, co-author of The Limits to Growth

"... we are witnessing the dismantling of the state as guarantor of public good. Almost everything is for sale in most EU countries. Austerity is imposed at all levels ... We dare hope [the book] will inspire many a decision maker and opinion leader to change course."
– Mark Dubrulle, President, Club of Rome - EU Chapter

"The book contains powerful arguments that need to be listened to, digested and acted upon … it points to new ways of reforming our financial system, to pioneering ideas and to potential solutions. The call for alternative thinking and innovative strategies is timely and necessary."
– Ian Johnson, Secretary General, Club of Rome; formerly Vice President for
Sustainable Development at the World Bank



Foreword by Dennis Meadows (can be read online; click here)

Executive summary (can be read online; click here)

Chapter I: Why This Report, Now?
1. Identifying Structural Issues
2. Offering Pragmatic Solutions
3. The Importance of Timing

Chapter II: Making Economic Paradigms Explicit
1. Dealing with the Natural World
2. Dealing with the Monetary System

Chapter III: Monetary and Banking Instability
1. The Emergence of a "Global Casino"
2. Systemic Crises: Frequency, Types and Geographical Spread
3. The Sovereign Debt Squeeze
4. A Solution: The Privatisation of Everything?
5. Conclusion

Chapter IV: Instabilities Explained – The Physics of Complex Flow Networks
1. The Misclassification of Economics
2. Complexity
3. The Physics of Complex Flow Networks
4. Lessons from Nature
5. Application to Monetary Systems
6. Towards a Structural Solution?
7. Conclusion

Chapter V: The Effects of Today’s Money System on Sustainability
1. The Pro-Cyclical Tendency of Money Creation and Flow: ‘It Never Rains, but it Pours’
2. Short-Termism: Why the Future is Discounted
3. Compulsory Growth Pressures: On Debt and Compound Interest
4. An Unrelenting Concentration of Wealth: the Poor vs. the Super-Rich
5. The Devaluation of Social Capital: Why Competitive Behaviour CAN Overpower Cooperation
6. Money as an Attractor
7. Conclusion

Chapter VI: The Institutional Framework of Power
1. Semantic Traps
2. The "Chicago Plan"
3. The Official Paradigm
4. The Fiat Currency Paradigm
5. Comparing the Two Paradigms
6. Conclusion

Chapter VII: Examples of Private Initiative Solutions
1. Doraland: Creating a "Learning Country"
2. Wellness Tokens: Overcoming Market Failures in the Health Care System
3. Natural Savings
4. C3: "Commercial Credit Circuits" for Small and Medium-Sized Enterprises
5. The TRC: an Initiative for Multinational Businesses

Chapter VIII: Examples of Governmental Initiatives
6. Torekes: A City-Initiated System to Encourage Volunteering
7. "Biwa Kippu": Funding a Regional Environmental Project
8. Civics: Funding Social, Cultural or Civic Activities
9. ECOs: Declaring War on Climate Change
Pulling All the Strings Together

Chapter IX: Beyond the Limits to Growth?

Appendices (available online only, click here):
Appendix A: A Primer about Money
Appendix B: Climate Change
Appendix C: Mapping Paradigms
Appendix D: Complex Flow Networks
Appendix E: A Chinese Insight
Appendix F: Wealth Concentration
Appendix G: Kondratieff and the "Long Wave"

Sunday, January 1, 2012

... And now for a bit of philosophy: On economics as a science of prosperity

Happy New Year to everyone!

Since I suggested two posts ago that 2012 might be the year of Ecological Economics, and since I have claimed that Existential Ecological Economics ("EEEcon") is the only genuine way ahead, I would like to offer you some reflections which encapsulate what I, as an economist, find most important philosophically speaking. Since the ushering-in of the New Year is sometimes an occasion to do some soul-searching and some realigning, here are a few simple thoughts on how economics could be made into a more relevant science for the challenges we face -- both at the environmental and at the anthropological level.

After these few posts on economics as a scientific discipline, I'll go on exploring Next-Step scenarios, with a substantial part of the effort being devoted to discussing the work of other scholars and practitioners in the area of sustainable development and the "green economy." The idea is not to go on philosophizing forever. I do believe, however, that reflecting on method and science is an integral part of ushering in the Next-Step Economy. That's why I want to make occasional discussions of economics, ecological economics, and EEEcon part and parcel of this blog.

And now, on to those reflections...


Economics is a science of infrastructure. Its sole social function -- but it is, of course, an important one -- is to work out the conditions under which everyone can access the required goods and services to live a full life. Period. By infrastructure I mean here not just investment goods and equipment (which is what the word means in common parlance), but whatever resources are necessary to underpin, or support from the inside ("infra") the search for a full life. This includes both annual income and accumulated wealth, i.e., flows as well as stocks, private as well as collective.

This means that scarcity has to be overcome in all relevant existential dimensions, to whatever extent necessary for full access to be ensured for each and every human being on earth. But the way to overcome scarcity -- the mechanisms by which "tradeoffs" are going to be made through the adjustment of economic variables -- is a matter for political choice, not a technocratic issue at all. Technicians, among which most of today's economists, have no entitlement in determining these mechanisms. As technicians they can only follow the guidelines established by political decisions. Now it may be that, perhaps, there is a "congruence" mapping linking certain types of "fullness" of life to certain types of scarcity-overcoming mechanisms. To that extent, and that extent only, is the economist allowed any critical claim. But if so, then competence in the philosophy and anthropology of economics is required. Most economists nowadays do not have that competence. This implies that most of today's economists have no entitlement to express preferences as to what kind of scarcity-overcoming mechanisms are to be politically chosen and implemented. However, once such a philosophical and anthropological competence is developed -- as I believe it ought to be -- an existentially and ecologically informed institutional economics can become a discipline that constructs and promotes normative arguments about which scarcity-overcoming mechanisms are preferable.

Data about the "happiness paradox" show that there is indeed a level of economic infrastructure (goods and services) below which the search for a full life is deeply impaired. Let's call this level the happiness threshold. (We'll change that name in a moment to something better.) This provides ample justification for the existence of a science of the economy. In fact, economics is part of the economic infrastructure it purports to study. Economists have to judge themselves on the basis of how well they fulfill the task at hand. This means that no element of the infrastructure -- neither the way the economic system as a whole is organized, nor the way in which the economics profession is organized -- can be off limits. The only task at hand is this: to ensure that every single member of humanity accesses the happiness threshold.

Above the happiness threshold, the building and maintenance of per-capita economic infrastructure is pathological. It means that people keep generating more income and wealth -- eventually in the form of constant "growth" -- while their search for existential fullness stagnates. This is the pinnacle of absurdity. It illustrates a simple but extremely important fact: Once per capita economic infrastructure has exceeded the happiness threshold, an economic science that takes as its objective the continuation of that "growth" for any individual is a science of existential avoidance. Therefore, the threshold is more aptly termed the "existential-absurdity threshold." Let me explain.

One hallmark of existential absurdity is that you keep on doing something that has long since lost its initial meaning. You're on a mechanical treadmill, going through the motions and no longer recalling precisely why you're here. We often have this feeling in our lives, and waking up to the reality of absurdity can be extremely painful. In the most extreme cases -- which, unsurprisingly, are getting more and more frequent in today's economic climate -- the waking-up mechanism is curtailed by addiction: you can't wake up because that would simply mean the end of what you feel is Your Life, with capital Y and capital L. For the addicted, waking up means dying. But even in less extreme cases where waking up would merely imply a more or less severe dose of transitory discomfort, keeping on the treadmill is literally a way to avoid the pain of waking up to the absurdity. The best parable for this figures in Antoine de Saint Exupéry's Little Prince, when the small boy asks a drunk what he's doing. "I’m drinking," answers the man. "And why are you drinking?" retorts the Little Prince. "To forget." "And to forget what?" The man’s answer pierces the reader’s heart: "To forget that I'm drinking." Haven't we all, in one form or another, experienced this inner dialogue?

No one is entitled to impose the specifics of what "a full life" means. However, unless we are already fully alienated to the pervading culture, we must recognize that there are some constants to the quest for existential fullness. To witness, the sorts of preoccupations our toddlers, children, youngsters, and adolescents have when they're not busy conforming to the latest commercial fashion or TV fad. What preoccupations? The basic "business of life": getting reassurance, warmth, and affection; building and maintaining meaningful human relationships; coping with the fragility of one's body and psyche; integrating one's sexual impulses; giving one's vital energy to causes worth fighting for; feeling at home in nature; knowing why one is alive, whether there is a transcendent meaning and how one can understand it and translate it into one's actions. With apologies, let me wrap all these things together in the somewhat dry expression "existential integration." No, not food, not water, not shelter, not clothing -- those are already part, albeit a very basic, indispensable part, of the infrastructure. Health yes, in the sense of a basic feeling or awareness of one's body, mind, and spirit operating in a fluid synergy and opening up horizons of sensation, thought, meaning, and understanding; but health services, no, and not medication, either. The latter are, again, part of the very basic infrastructure, the access to which it's the economist's job to secure for everyone.

None of this implies that anyone is going to impose one specific doctrine or faith about existential integration should be gotten. That's open. What matters is that the path to existential integration not be obstructed by a peculiar, and particularly pernicious, form of poverty: the poverty of economic affluence…

When kids or young people get caught up in fashion, fads, or imitation rivalry, they have already been infected by existential alienation. It's not specific to our modern commercial culture. However, the curse of consumerism is that it creates the deadly illusion that existential integration can be equated with a flow of goods and services, extending all the way to health services and medications (which also get more and more routinely over-consumed). To the extent this is the case, "commodities" end up summarizing existential integration in the very process of also making it meaningless -- and the whole economic infrastructure becomes a scam for existential avoidance: escapism from fragility, relationship, mortality, sexuality, etc. There's a lot of death and sex imagery in consumer culture, but it's precisely there to mask the true issues involved in mortality and sexuality.

In that sense, there is a widespread, rampant poverty in affluent society. It is quite literally a poverty created by the very affluence and opulence we have generated to block out the difficulties of true existential integration. You can be poor by being insufficiently rich, i.e., when your economic infrastructure lies below the existential-absurdity threshold; but you can also be poor by being too rich, i.e., when your economic infrastructure lies above that threshold.

Let's distinguish between a lower and an upper threshold: below threshold A, you are poor by lack of economic infrastructure; above threshold B, you are poor by excess of economic infrastructure. Below A, your existential integration is bad-to-mediocre because of sheer lack, and it improves only slowly as you get somewhat less poor, picking up speed as you reach threshold A. Between A and B, you can develop your potential for existential integration by actually using the economic infrastructure to enhance your integration -- that is, by using health care and transport and clothing and food to pursue and perfect your relationships, sexuality, religious quest, and so on. Above B, however, as material wealth continues to climb your existential integration dwindles, and you might get so caught up in the absurdities of large wealth that you could drop to pre-A integration levels. The factors that account for these threshold effects can either be linked to (a) the unanticipated external effects of infrastructure buildup, such as the degradation of social relations and the degradation of environmental conditions; or they can be linked to (b) the unconscious internal effects of infrastructure buildup, such as the alienation suffered in meaningless work, in mindless accumulation, or in mechanical consumption. (In this blog, I have called the former "bio-environmental externalities" and the latter "anthropo-environmental internalities." See the April 18, 2011 post.)

Economics is about keeping us all prosperous, not about making us ever more affluent. That's a very wrong message, which the hijacking of economic science by the industrial-capitalist-modern mentality has ended up sending out. Economics ought to be about nothing else than maintaining human beings between these two thresholds -- prosperous, which means neither too despondent nor too affluent. It's a great and noble task, full of links to psychology, ecology, and spirituality. It's why I wanted to be an economist. And it's also what no economics class ever taught me because for two centuries economists have been busy trying to push people above threshold A. Meanwhile, economists have become so engrossed by wealth as a value, and by the social legitimacy which their role as professional assistants to "wealth creation" gave them in the eyes of the powerful (as well as being a juicy a source of financing for their own personal career purposes) that they have ended up forgetting to look out for threshold B.

Moreover, they have in their overwhelming majority -- and despite their above-mentioned incompetence in matters of philosophy and anthropology -- taught the "virtues" of an economic system whose logic makes some people's overcoming of threshold A dependent on other people's overshooting threshold B. This is the current rhetoric of free-market "development" through international trade or, more generally, the rhetoric of a "trickle-down effect" going from the affluent over-consumers to the under-consuming poor. It neglects the existence and relevance of the A/B divide. All economic systems that make some people's overshooting of B a mechanical or technical condition for the survival of those who remain below A are perverse systems.

To renew economics, we simply need to make visible the distinction between thresholds A and B, and to insist that navigating the more or less narrow space between them is what the "new" economics should be about. Economics should be about wealth reduction just as much as about wealth creation. (Please note that I wrote "just as much as," not "instead of.") When this is so, it will be about prosperity, as indeed it should be: a science of increasing or reducing economic infrastructure in the name of people's existential integration.


So much for philosophy. The reflection on Existential Ecological Economics isn't just an abstract, reclusive activity. Existential integration isn't merely an intellectual concept. They serve as the (often unrecognized) basis for our more concrete and immediate efforts. Therefore, all of these reflections having been set out, it's now back to the Global Green New Deal, the development of sustainable investment, finance and banking, the promotion of eco-preneurship, the development of efficient mobility and responsible tourism, and so on. It's all part and parcel of the same endeavor.

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This post from the "Eco-Transitions" blog by Christian Arnsperger is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.