Real vs. Phantom Wealth Part I: The Nature of Money Trends in Money & Finance Financialization: Money, Debt, Scarcity and Waste Part II: Culture, Quality and the Value Revolution Indicators of Genuine Wealth The Information Economy & Qualitative Development Community, Education & Activism

Part 1: Trends in Money & Finance What is Money? What is Wealth? Debt, Waste and Scarcity Financialization: Hijacking the Information Revolution Decommodifying Money

Money Basics Impersonal: allows transactions to be extended over time and space. Trust essential Most prominent initially in external trade. Capital: money increased in the process of exchange.

Main Characteristics of Money 1. Means of Exchange money as information, a symbol 2. Store of Value a commodity, a thing-in-itself, a source of power The evolution of money: growing importance of the means-of- exchange function

The Disintegrative Power of Money rooted in the impersonality of money internal concerns with alienation of land & labour money-trading: long considered an unsavoury occupation. related concerns with bourgeois competitive individualism major breakthrough--Capitalism: the means of production become forms of money. –increasing production means increasing moneyand vice versa. money becomes industrialisms main measure of wealth.

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

The Industrial Definition of Wealth Money Material N.B.: Perpetuation of the System demands the perpetuation of this definition

Industrialism: Accumulation Production-for-productions-sake Invisibility of key factors Centralization of production, massive upfront investment Focus on labour productivity : resources substitute for human energy Cog-labour: humans as component parts Regulation: controls as limits Scarcity-based: role of waste since WWII Globalization: free trade & intellectual property

Postindustrialism: Regeneration New relationship of culture to economics: centrality of human development Substitution of human creativity for resources Direct targeting of human need: conscious consumption Human-scale technologies: production distributed over the landscape ; Integration: ALL places are places of production Qualitative Wealth is PLACE-BASED Distributed regulation: incentives for positive action throughout economy. Self-reliance / interdependence: Trade recipes, not cookies

Industrialism: The Divided Economy Invisible Visible Use-value Exchange-value Consumption Production People Things Unpaid Paid Women Men Informal Formal Private Public

Scarcity & Class... inequality & relative scarcity: 1. control of scarce resources & monopoly of high culture...by a minority.

Markets and Material Connection between needs, wealth & markets. the Invisible Hand: worked... 1.for an economy focused on meeting primary needs simplicity. 2.in a situation of relative scarcity 3.in the absence of sophisticated information technology

The Threat of Abundance Productivity boom of the Roaring Twenties –output outdistances worker wages Crisis of effective demand & structural overproduction: Great Depression as a reaction to potential abundance. White-collar work, universal education: the threat to cultural monopoly. –increasingly social character of production; rise of industrial unionism

The Post WW II Waste Economy Permanent War Economy The Suburb Economy: Oil / Autos / Subdivisions Note the gender and racial subtext of sprawl

The greatest misallocation of resources in human history. …James Howard Kunstler

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

Fordism & the Reinforcement of Industrial Wealth Matter Waste Fordism Suburbanization/ Consumer Economy War Industry Money Debt Keynesianism Paper Economy Planned Inflation New forms of credit- money

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

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.

Decommodifying Money diversification of forms of everyday exchange –supporting the informational character of currencies. –undercutting the scarcity-power of money. financial industry restructured as public utility and/or service industry. –money directed to priority areas of green development –transition: green Tobin tax new forms of remuneration –direct consumption; basic incomes; account- money; free food, health care & housing gradually enlarging the sphere of gift relationships –consistent with new productive forces based in mass collaboration...or turns them into service workers

Living in De-Material World Redesign not controls Direct focus on human (& environmental) need The Service Economy: Extended Producer Responsibility (EPR) encouraging provision of services not stuff. Servicizing (voluntary EPR). The Lake Economy: economic biomimicry: sectoral orientation: regenerative food, energy, manufacturing, c ommunications. New forms of economic security Conscious support of the Commons Disarming the autonomous power of money Building a community/ecosystem base: localization.

Security in Gift Economies "In that way, the giving of surplus to friends and neighbours is not very far from the giving of surplus to the cashier in a bank. The quality of integrated society, like the legal rules of banking, guaranteed that the gift would not be forgotten and a future claim ignored. --Hugh Brodie on Irish rural life

Dematerialization & the ESCO model Savings as a virtual source of energy The Green Economy: creates Wealth through savings (or dematerialization) Savings as a source of Investment Challenge of financial design: dealing with first costs

Part 2: The Value Revolution in Economics Wealth, Indicators & Accounting

Redefining Wealth Quantitative: Money & Material Accumulation Qualitative: Well-being Regeneration

Quantification & Value What is measured gets done What gets counted is valued; What is valued gets counted

Indicators [If it is to be achieved, the new economic system] will result from our becoming better ecological accountants at the community level. If we must as a future necessity recycle essentially all materials and run on sunlight, then our future will depend on accounting as the most important and interesting discipline. Wes Jackson, Becoming Native to This Place

Indicators & Value Expression of potential for a knowledge-based economy Centrality of end-use: requires more sophisticated monitoring of human need. –also required by the centrality of creativity to qualitative economic development. Radical potential of eco-literacy: –Murray: Fordist Waste Economy depended as much on deskilling of the consumer as deskilling of the worker. Deflating Financialization: potential to replace money as key determinant of value –decommodifying money: money as pure information

Indicators & real wealth Qualitative Wealth is far more complex: requires more quantification Qualitative Wealth is place-based or specific to circumstances Qualitative Wealth is needs-based, requiring examination of consumption. Accounting takes place on many levels in terms appropriate to that level

A Dashboard for the Cockpit The Family of indicators: –Urban Metabolism or regional mass balance –Green GDP (e.g. Genuine Progress IndicatorGPI ) –Ecological Footprint –Carbon accounting / carbon footprint –Life-cycle Assessment (products, processes, landscapes) –Industry-based accounts: food, building, forestry, etc. –Local Development Standards –5 capitals: personal, professional, spiritual, environmental and financial –Firm sustainability accounting –Sustainable Community Indicators –Risk Assessment, EIA, etc.

Indicators & Trends in Regulation Raw material for certification systems Regulation as more civil society-based Markets as values-driven FSC wood / LEED building / etc. integrated evaluation / regulation / marketing systems

Entrepreneurial Value Creation Local Food Plus: valuation regulation marketing education

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The Evolution of Indicators Difficulties with many early indicator sets: –Wish-lists, divorced from solutions or relationships –Either too detailed or too aggregated /oversimplified Next Generation of Indicators: from librarians to plumbers

Indicator Design organized around a purpose highlight important trade-offs Varieties: those that… –cause an outcome (e.g. reduce air pollution) –document the outcome (e.g. amount of smog) –react to the outcome (air pollution legislation)

Genuine Wealth Assessment Life-cycle

Business-related Applications Internal accounts Natural Step, ISO 14000, Eco-footprint, Sustainability Reporting Government Regulation Alternative Industry Standards --LEED green bldg.; FSC wood ; B Corporation ; Innovative Business Models: -- B Corporation -- McDonough/Braungart Protocol --Local Food Plus

Business Applications-II Builds external costs into firm decisions Essential to Triple Bottom Line SBLS: can be translated into financial bottom line Crucial to Stakeholder relationships Made easier by network support: --market transformation

Business Applications-III Sustainability accounting : Global Reporting Initiative Triple Bottom Line accounting Social accountability reports Outcome-based reporting & mapping etc.

Genuine Wealth Applications All 5 capitals: financial, built, natural, social, human Balance sheet for each Full-cost sustainable income statement Progress indicators Genuine Progress Report

LCA and Product life-cycles: Environmental Lock-in over a Products Development Cycle

Economic Transformation in the Solar Age Get regenerative enterprises, work and wealth creation going in every sector of the economy Complete the evolution of money into a pure information system –Decommodify it: make it no longer a thing-in-itself –Money as a means-of-exchange Embed social & environmental indicators into both markets & planning as the primary sources of value. –Market Transformation: design social & eco- values into markets as driving forces. –3 rd party certification Reorient finance to regenerative production

Economic Transformation II Rethink remuneration in terms of the real wealth created. –support of social- and eco- work outside of the cash economy. Free creativity from the pressures of scarcity: account- money systems, Basic Incomes –create a culture of abundance: free education, health care, housing,...even food. Redefine ownership to support equality, participation and stewardship. –extended producer responsibility (EPR): internalizing costs in a positive way Support democracy, equality and participation in every area of the economy and community.

Business in Transformation needs to reorient to the needs of community and planet in its goals and means. needs to expand its moral and legal status to include its workers and all stakeholders affected by its actions. needs to support positive business activity in every community. special difficulties of small business in the existing economy. –need for a fundamental shift in economic resources from the Wal-Marts to the Small- Marts.

Labour in Transformation needs to reorient to the nature of wealth, not just its distribution. needs to acknowledge productive activity everywhere: non-cash economy, etc. –needs to defend community & worker interests everywhere: marginalized communities, etc. needs to recover & defend the quality of work lifecraft, etc. needs to support the democratization of work life –co-ops, etc. needs to support regenerative small business while defending worker interests.