July 2012
In 1972 the Club of Rome published one of the earliest calls to action to preserve the environment, a book that became one of the primers for sustainable living. Authored by Donella Meadows (aka “Dana”) and Dennis Meadows, The Limits to Growth made headlines around the world. Dana was on the MIT team that produced a computer model for the Club that provided a study of long-term global trends in population, economics and the environment published in the book.
Now, forty years later, the European Union Chapter of the Club just published a Report entitled Money & Sustainability – The Missing Link, authored by Bernard Lietaer, Christian Arnsperger, Sally Goerner and Stefan Brunnhuber. Lead author Lietaer is a friend who was kind enough to send me an advance copy of the report in May. I thought it was worth calling this Report to the attention of my Mini-Keynote readers. I consider Lietaer to be one of the most informed systems thinkers in the financial world who also possesses the requisite consciousness to bring about a transformation in our money systems.
In reviewing the draft, one of the first things to capture my attention was the opening sentence of HRH Prince Philip of Belgium’s introduction as the Honorary President of the EU Chapter of the Club. He writes, “We are not telling the truth about money. Yet money is at the core of the economy. And economy is ruling the world. It dominates human welfare from cradle to grave. It rules the use of the planet’s natural resources and the quality of the environment.”
The Prince requested that Lietaer, a fellow Belgian, prepare a report on money and sustainability that could contribute to a societal discourse, not only for the EU but for a wider global context, involving key public authorities and private sector decision-makers, the media as well as the public at large.
Dana Meadows passed way in 2001. Her former husband and Limits co-author Dennis Meadows wrote the Report’s Foreword in which he makes an interesting comparison:
Arsenic was used as a medicine for thousands of years. It is a deadly poison, of course. But its ability to alleviate the short-term symptoms of distress led many sufferers to use it anyway. Only in the past century has it been mainly replaced by less deadly alternatives.
Fiat currency issued by private institutions through the creation of debt has been used by nations for centuries. Its deadly effects are becoming apparent. But its ability to alleviate the symptoms of distress has led to its use anyway. We can only hope that in this century we will begin to use less deadly alternatives
He then points to the Report’s lead author and writes, “….before I first encountered Bernard’s work, I had never heard anyone describe the financial system as a cause of our society’s headlong rush to collapse.” He continues, “A fish will never create fire while immersed in water. We will never create sustainability while immersed in the present financial system.”
Enough of front matter. Let’s hear what Lietaer and friends have to say.
As part of their opening salvo, the authors state: “People concerned with sustainability in general – with issues like climate change, environmental degradation, food and water shortages, population growth and energy use – tend not to worry about the money system. Nor do they tend to look for solutions that involve monetary innovations. Even those economists who are also concerned about sustainability in principle are seldom aware that our money system systematically encourages unsustainable behaviour patterns that may end up threatening human survival on this planet.”
Then they warn us: “…this Report shows that the current money system is both a crucial part of the overall sustainability ‘problem’ and a vital part of any solution. It makes clear that awareness of this ‘Missing Link’ is an absolute imperative for economists, environmentalists and anyone else trying to address sustainability at a local, national, regional or global level. Aiming for sustainability without restructuring our money system is a naïve approach, doomed to failure.”
Then they add: “…this Report also proves – perhaps more surprisingly – that the money system is bad for the money system itself.” This may be the unique value proposition of this book: our financial system must change if we are ever going to achieve environmental sustainability.
This Report is rich in content and information so I won’t even try to cover it all. So please do not think this brief article represents anywhere near all value to be gleaned from this work. Please read it in its entirety. We have kept our money system a mystery for too long and now it is trying to kill us! Let’s bring it out of the shadows and get to know it.
That said, one section caught my eye. The authors write about the three blind spots we have regarding our money system: “The first blind spot relates to the hegemony of the idea of a single, central currency. It is widely believed that societies have always, and must always, impose, as a monopoly, a single, centrally-issued currency, on which interest is charged….”
People who hold this widely-held belief are largely uniformed about the many complementary currencies that exist and function quite well throughout the world, ie, most of us. Communities, associations, cities and trade associations are just a few who have initiated their own complementary currencies which, in many cases, perform better than government issued central currencies.
They continue: “The second layer of our collective ‘blind spot’ is a result of the ideological warfare between capitalism and communism in the 20th century.”
In fact, according to the authors, the two systems have more in common than most people think – both impose a single national currency monopoly created through bank debt. The only significant difference is that the state owned the banks in the communist or Soviet model. In capitalism, banks are privately held except when they get in trouble and are deemed ‘too big to fail.’
The third blind spot they see: “From the 18th century onwards, the systemic status quo was institutionalised through the creation of central banks as enforcers of the monetary monopoly. This institutional framework spins the final layer of the ‘blind spot’.”
I will now skip to some of their conclusions, encouraging each of you to read the entire Report and pass it on to everyone you know who is part of the money system – brokers, bankers, accountants, financial planners, wealth managers, investors, corporate executives, politicians and all the rest.
Here is a synopsis of their conclusions:
- We are facing the greatest challenges ever to be faced by humanity.
- We know that we must switch to a post-carbon economy, and swiftly, if we are to avoid disaster.
- We know that this is technologically possible and that it can be implemented within the time available only with massive government support and funding – something which reined-in budgets in conventional money will not allow for at least the next decade.
- We face caring for a booming greying population who will no longer be contributing to the economic base, but will need to rely on social support programs that are now under frontal attack.
- We face all this with shrinking economies, under brutal compulsion by an anonymous ‘financial market’ to reduce enormous public debts, bloated by the cost of the 2007-2008 banking meltdown and its immediate economic consequences.
Lietaer and friends continue: “The stakes are unprecedentedly high. But the possibilities for creative solutions are also near at hand – solutions that do not further strain public budgets, that have already demonstrated their effectiveness in practice, that can turn populations from hopeless rage to fruitful engagement within their communities, and that can preserve corporate profits, but not at the expense of social and environmental health. We still have a fighting chance to give birth to a sustainable world that works for everyone…
“Is this scenario pie-in-the-sky? Are we offering just one more miraculous panacea? We do not think so. We have never claimed that a monetary ecosystem would be sufficient to address the challenges of today. We hope to have shown, however, that rethinking our money system is a necessary part of any solution.”
I will close by expanding upon what I wrote earlier, modifying the Report’s unique value proposition: Our financial system must change if we are ever going to achieve an environmentally sustainable, socially just and spiritually fulfilling human presence on this earth.
The Club of Rome Report delivers the value. It provides many solutions that could save us all from much misery. But people in the system need to read it and act on it. And soon!
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[NOTE: The Report has since been published as a paperback book and is available]