THE TIERRA APPROACH TO THE LOOMING CLIMATE CATASTROPHE
Much of the causation of the looming climate catastrophe is due the workings of the unjust, unsustainable and, therefore, unstable international monetary system. It is this money system that as glue binds together the financial, economic and commercial systems. Thus, transforming, not only reforming, the global monetary system would lead to the transformation of those other global systems and a transformed global governance system.
Since 2008 I have proposed that we approach the resolution of two of our major international problems by, following Einstein’s advice, bringing both on a higher level of solution. Thus, it is proposed that the climate crisis can be resolved by basing the unjust and unsustainable and, therefore, unstable international monetary system on the carbon standard of a specific tonnage of CO2e per person. In adopting such carbon standard the global monetary architecture becomes very different from the present one where we only have a fund, i.e. the IMF and where exchange rates often strongly fluctuate and are subject to speculation and manipulation and where international business transactions are mostly transacted using a national currency such as the U.S. dollar which is making a most important global system dependent on one nation’s domestic financial and monetary policies. In the proposed Tierra carbon-based international monetary system exchange rates would only vary within a small band as they are based on a monetary standard determined by the level of decarbonization of a country’s economy, i.e. its approximation to the above mentioned carbon standard. (If nations go for the single currency of the Tierra no historical currencies are needed. Cf. The Tierra currency: what, why and how at http://timun.net/blog/post.php?i=210). It is administered by a democratically governed global central bank and an innovative dual balance of payments system that accounts for both financial and ecological (climate) debts and credits.
One of the main obstacles to the emergence of the Tierra monetary approach to reducing climate degradation and advancing low-carbon, climate-resilient development is the still predominant neoliberal paradigm. Neoliberalism refers to a set of policies that the IMF, the G7 and, to a lesser extent, the G20 have been promoting all over the world for decades. These include tighter fiscal and monetary policies (sometimes even when the economy is weak or in recession); an indiscriminate opening up of countries to international trade and capital flows that direction of which are determined by large, powerful and substantially unaccountable international corporations; the abandonment of state-led industrial and development policies; privatization of public enterprises; and various forms of deregulation, including financial that would open up weak national economies to those large expatriate corporations. However, according to Mark Weisbrot, Co-Director of the Center for Economic and Policy Research in Washington, D.C., the influence of the IMF is waning in developing countries while middle-income countries have also become apprehensive of its neoliberal policies. (Cf. http://org.salsalabs.com/dia/track.jsp?v=2&c=9p0Oxe598bulVdK%2FzNHAUedops%2BpJOBj )
One of the ways to foster the emergence of the Tierra Fee and Dividend System—its official name based upon the carbon-reduction methodology of Fee and Dividend rather than carbon trade or a carbon tax methods—is the growing interest in the way money is created and in the use of public banks as opposed to the money creation function of privately owned banking systems. Cf. www.timun.net ; www.positivemoney.org; www.publicbankinginstitute.org; www.onsgeld.org . Very encouraging in this area of the international debate on money creation was the striking and promising event on August 3, when 35 leading, mostly British, economists agreed upon changing the direction of the traditional monetary policy in the face of economic malaise. Leaving the track of QE or helicopter money through the financial system they chose the new track of having QE flow directly into the economy without the intermediary of privately owned banking systems. This momentous change has been presented in an open letter to the British Chancellor of the Exchequer which was organized by the British civil society organization, called Positive Money. Cf. http://positivemoney.org/lettertochancellor.
Another way to foster the Tierra approach to transformational monetary change would be the promotion of issuing an expanded Special Drawing Rights (SDRs) facility as a precursor of a single currency such as the proposed Tierra currency. This type of SDR was strongly advocated by the 2009 UN Stiglitz Conference which dealt with the UN response to the 2008 financial debacle in terms of the interests of developing nations.
We live in a transitional period when traditional values and institutions are unraveling and new ones have not yet fully emerged. In such times and in the face of a global looming catastrophes such as the global climate degradation fundamental change might happen faster than normally expected, particularly when large numbers of national populations such as the 14 million Sanders voters in the USA are not only frustrated with the status quo, but demand “a future that you can believe in”.
The Tierra monetary approach to the looming climate catastrophe may be far out for most readers. However, Bill McKibben, author and team leader of 350.org, responded to my invitation to write the foreword to the 2012 Tierra Solution book by stating the following: “The further into the global warming area we go, the more physics and politics narrows our possible paths of action. Here’s a very cogent and well-argued account of one of the remaining possibilities.”
Frans C. Verhagen, M.Div., M.I.A., Ph.D., is a sustainability sociologist who after working in Ghana in the sixties studied international affairs and the sociology of international development in the seventies at Columbia University. For some thirty years he worked in New York City in environmental education and activism, including producing a monthly TV show on Queens Public TV for 12 years. After four years of research about the causes of the financial catastrophe of fall 2008 he published in 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation", the conceptual, institutional, ethical and strategic dimensions of which are updated at www.timun.net.