Financing a Green Economy …and the origins of Casino Economics and Fantasy Finance

Stages of Environmentalism Conservation John Muir

Stages of Environmentalism Regulation Rachel Carson

Stages of Environmentalism Investment E.F. Schumacher

Finance as Regulation Preferential access to credit & investment capital: one of the most important elements of a postindustrial incentive/disincentive structure Crucial connection to emerging indicators of real wealth Need for an alternative financial system

Investment: What would a green or knowledge-based economy look like? 1. Focus on Services (human & environmental need): nutrition, access, illumination, education, etc. 2. Organization in closed loops: the ecosystem model.

Distinction between Investment and Gambling Wall St. or Main St. Phantom vs. Real wealth The Economic Treadmill

Some basic facts only about 1 percent of money on Wall St. goes to fund actual work or production. small business represents about 50% of N. American economy, but gets less than 1 percent of total investment. investment in local independent business creates 2-4 times as many jobs as investment in multinationals.

Investment: 3 primary concerns limiting social & environmental destruction taking control over our earnings & savings financing regeneration despite Clean Tech, increasingly a small business/community concern community investment key a values-driven business issue

Structural Problems Prevalence of short-term over long-term investment Single bottom line: full costs and social- & eco- benefits are invisible. Lack of Democracy: input from stakeholders; financial control by ecopreneurs Speculation: The Casino Economy: primary function: soak up wealth beyond the consumption capacity of rich. Financialization. SRI: "The biggest difficulty SRI faces is that it operates on an unspoken assumption that managers have genuine freedom to be socially-responsible. (Glickman and Kelly)

wheat, cattle, tools metals Currencies coins certificates of deposit private & public fudiciary currencies fractional reserve gold standard gold-exchange standard Breton Woods Interest Rate Standard Casino Economy community currencies Money as Information: Money is an information system used to deploy human effort. (Linton) The Dematerialization of Money The Paper Economy

Class and Scarcity Basis of class in scarcity, material & cultural Mass production & the Threat of Abundance Waste: a means of artificially maintaining scarcity Suburban sprawl / Arms industry : wasteful stimulus for the mass production economy Financialization / Casino Economy : wasteful stimulus for the information-based economy

Keynesianism & the Crisis of Effective Demand Baran & Sweezy: crisis of profitable investment outlets for capitalism. Money: a tool of national economic planning. Strong domestic multipliers. The Paper Economy: growing disjunction between the real & financial economies Planned Inflation & Purchasing Power re-redistribution of income: offsetting wage hikes in the unionized sectors Debt & the Economic Treadmill: Work-and-spend

1970s: End of the Line for the Fordist Waste Solution saturation of markets social & environmental costs coming due: fiscal crisis of the state limits to inflationary strategy Vietnam war, decline of the dollar, German/Japanese competition OPEC & the energy crisis Petrodollars & Currency Crisis

Post-Fordist Casino Economy floating exchange rates: interest rate standard Eurodollars & Petrodollars new technologies & Megabyte Money financial sector: times (?) larger than the material economy Speculation: Stomp the weak / Get rich quick Empty wealth creation: de facto redistribution of wealth. The End of Mass Consumption & rise of new producer services: new forms of effective demand. Polarization of work and society end of social contracts: attack on Welfare State the growing gap between rich and poor

Where the US Economic Surplus Went, 1977 to 2007 Actual Wages vs. Productivity-enhanced Wages in the U.S. Source: Les Leopold using B.L.S. data; The Looting of America, Chelsea Green Publishers, 2009

Debt & Forced Economic Growth 1. Competition for money 2. Lack of purchasing power 3. Wage dependency equals Export warfare The main point that needs to be understood is that in order for money to come into circulation, someone must go into debt to a bank. If there were no bank debt, there would be virtually no moneyits as simple as that. Since banks charge interest on all this debt, and since the money to pay the interest can come only from further debt, debt grows like a cancer within the global economic body. This debt imperative creates a growth imperative that is forcing us to destroy the life- support systems of the planet. --Thomas Greco

Debt in the US Economy 1970s: debt 1½ the size of GDP 1985: twice the size of GDP 2005: 3½ times the size of GDP

Source: Magdoff, 2008: calculated from tables L.1 and L.2; Flow of Funds Accounts of the US; and table B- 78 from the 2006 Economic Report of the President

The Global Casino: Hijacking the Information Revolution expansion of employment in speculative industry Wall St.: more advanced technologically than the military. Bubble Economies: last frontiers for capitalist growth. -stock crash of tech stock bubble of late 90s -housing bubble of Housing speculation: most destructive & exploitative of the poor & average people.

Speculation & Mainstream SRI Is the stock market primarily concerned with investment? Role of share price in performance of investments How can qualitative factors be included in performance?

Who Does Corporate SRI? Faith community, churches mutual ethical funds for individual retail investors Institutional investors (pension funds) interested in SD. Commercial banks concerned with social and enviro risk in project finance and lending

How Much Is Happening? 350 firms in EU for retail investors;.5% of total assets 3-5% of institutional investors eco- and social banks & credit unions

Univeral Investors & SRI Fiduciary capitalism: the power of institutional investors About 50% of US publicly-traded equity Relationship to externalities in the economy Convergence with SRI?

Values-Driven Business & SRI Debate about going public Beyond bootstrapping?: How can we finance smaller-scale green alternatives? Debt vs. Equity New enterprise networks & institutions: development banks, loan funds, etc. Local Stock Markets?

CERES Principles Protection of the Biosphere Sustainable Use of Natural Resources Reduction and Disposal of Wastes Energy Conservation Risk Reduction Safe Products and Services Environmental Restoration Informing the Public Management Commitment Audits and Reports

NGOs & Profit A path for self-reliance? Dangers Hybrid networks and institutions?

Other Resources Save Wall St.? David Korten on NOW on PBS NOW on PBS: Help for Homeowners? The Foreclosure Mess