The International Institute of Monetary Transformation   [ click to return to main site ]   subscribe
Jun
19

Los Cabos and Rio

Post By gaia1 in Economic crisis

Los Cabos and Rio

Tuesday, June 19, 2012

Barack Obama, Angela Merkel and David Cameron are attending the G20 meeting in Los Cabos, Mexico and have decided for different reasons not to attend the Rio 2012 Earth Summit which directly follows their G20 meeting. It is a mistake for the politicians (leaders?) of these three important countries not to attend the Rio summit where very basic issues are being raised about the global economy and global governance in this world where the global economy has put millions of people out of a meaningful job and where national governments are rationally pursuing their limited goals without sufficient political will to improve, let alone overhaul, the global systems which enrich the few, impoverish the many and imperil the planet.

Their forthcoming statement will highlight their wisdom of sustainable growth over austerity without realizing that growthism, even accompanied with the adjective sustainable, is an unrealistic economic pursuit. It does not include the recognition of the natural limits that humanity is up against in these carbon-constrained times of peak oil, peak water, peak food, etc. The unsustainability of growthism is very clearly described in Richard Heinberg’s recently updated book The End of Growth

As suggested by Herman Daly for many years or even decades the term growth is to be abandoned for development. Thus it would be most appropriate to speak of and write about sustainability prosperity which is the purpose of economic activity anyway. Not doing this means one is engaged in goal displacement.

What is needed and being pursued in Rio but not in Los Cabos is a new vision that is able to integrate the social, economic and environmental dimensions of this sustainable prosperity for people and planet. One of the very few proposals for integrated global governance that is not yet widely recognized is the International Institute for Monetary Transformation’s proposal called The Tierra Solution where the climate crisis is conceptually, institutionally and strategically resolved by working towards a carbon-based international monetary system. Details are available on this website with a book length treatment in the recently published The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation.

 

Jun
01

Integrated global governance needed

Post By gaia1 in Economic crisis

INTEGRATED GLOBAL GOVERNANCE NEEDED

Op-ed article submitted to the New York Times

June 1, 2012

The world’s monetary, financial, economic and commercial systems are singly and jointly in a mess. They do not work, singly or jointly. They are unsustainable now and they will be unsustainable in the medium and long-term. Greece’s and Spain’s present monetary, financial, economic and commercial systems will not create jobs, increase quality of life for people and planet. The other euro-zone countries’ monetary, financial, economic and commercial systems, even of Germany, The Netherlands and other more or less well-off countries are also not sustainable without structural changes as ECB’s president Draghi has made clear in his recent speech to the European parliament. What is needed is bold leadership to stop the forces of divergence and push for convergence of common values and vision, of fiscal unity, of Europe-wide governance to start with.

What is needed for Europe, China, the USA and the rest of the world is bold leadership for global governance that would integrate not only the nation’s monetary, financial, economic and commercial governance but also its social and environmental global governance. It is this task that essentially faces the world’s heads of state (can they called leaders?) at the forthcoming Rio Earth Summit this month.

How can they accomplish such momentous task while the nations are less focused on moral, cultural and political convergence and more on divergence, bickering among themselves while hundreds of millions of people are unemployed, ill-housed and of deteriorating health and when the prevailing global monetary, financial, economic and commercial systems enrich the few, impoverish the many and imperil species and planet?

Though the Summit’s pursuit of a green economy and an integrated institutional framework for development may produce some desirable outcomes, they will not be sufficient to match the task for integrated global governance. The focus should be on two priority areas: the acceptance of a common value base and the transformation of the international monetary system.

 Though the Rio 1992 Earth Summit produced its Rio Principles, which was a poor reflection of the various Earth covenants that were circulated by civil society, the Rio 2012 Earth Summit should finally become serious in adopting the integrated social and ecological values of the Earth Charter. It should follow the example of UNESCO and countries such as Costa Rica which have taken this common value vision as the basis of their policies. The importance of values and principles over methods is well expressed by American transcendentalist Ralph Waldo Emerson when he stated at the end of the 19th century: “As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.”

 

The international monetary system acts as glue binding together the monetary, financial, economic and commercial systems. That monetary system if working properly would also lubricate those systems, so that they would work smoothly. The international monetary system can be considered to be the linchpin of those global systems. Transforming that most basic of the world’s global systems would drastically change those other connected systems.

That transformation would take place when the international monetary system was to be based upon a carbon monetary standard with its guiding principle of monetary justice. It would lead to the proposition that the more a nation decarbonizes its society, the stronger its economy and currency become. Most importantly, it would combat the looming climate catastrophe and advance low carbon and climate-resilient development in communities in the global North and South. Unfortunately, organizers of the forthcoming Rio Summit deemed it politically not feasible to include the climate issue as part of their development pursuits in the Summit as if the two realities can be separated. Thus, real integrated global governance based upon a common value system and encapsulated in the overarching value of monetary justice  will have to wait till the world’s monetary, financial, economic and commercial systems will become even less functional and people’s demonstrations become more wide-spread. It was only due to people pressure that FDR was forced to pass enlightened legislation in the 1930s. It was also at that time of the Great Depression that outstanding economists such as Irving Thomas and other members of the Chicago School promoted the idea of having a banking system based upon 100% reserves and a financial system based upon money rather than credit. These transformational ideas are resurfacing during these times of the Great Recession. They have to be combined with the transformational idea of a carbon-based international monetary system to redirect the world’s monetary, financial, economic and commercial systems.

Frans C. Verhagen, M.Div., M.I.A., Ph.D., a sustainability sociologist with the International Institute for Monetary Transformation, is the author of The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation, published last month by Cosimo Books.