The Revolutionary Monetary System That Can Save Civilization

I am convinced that humanity is careening towards an environmental cataclysm. I have no doubt in my own mind that, absent revolutionary change, within fifty years civilization will have ceased to exist.

If that happens, the whole world will look like Syria does at present — only worse. At least people in Syria can get food from the outside. If civilization collapses as a result of environmental factors, fighting over political power will be replaced with fighting for food.

Civilization — the existence of cities — depends, as it has from the time of the very first city, on agriculture. It couldn’t be simpler: farmers, who do not live in a city, must produce enough surplus food to feed those who do.

Agriculture is wholly dependent on climate. During the several thousand years that civilization has existed, as a planet Earth has had the same climate; the global, mega-scale agricultural system on which contemporary civilization now depends only came into existence after World War Two.

We are in the process of changing that climate. Given that civilization as we know it and the global agricultural system on which it depends evolved in one climate, on the face of it changing the climate is extremely unlikely to be good for the status quo.

In addition to a warming lithosphere, the ecology upon which all life depends is under attack from more direct environmental damage of various kinds that proceeds apace with the economy we have. In it economic ‘health’ requires ‘growth’ (increasing output) and ‘development’ (expanding the physical footprint of economic activity and its associated infrastructure). So nations ‘must’ always be doing all they can to increase the consumption of resources, the production of wastes (to include those of a toxic variety), and the conversion of ‘unproductive’ land through construction projects of all kinds.

It is true that agriculture as it is currently practiced contributes to environmental degradation in various ways. That needs to change, too.

The revolution that is necessary to avert a climatic catastrophe could possibly come in the realm of technology. To their credit, that is the focus of outfits such as CleanTechnica.

Here I am proposing a revolutionary macroeconomic paradigm that would ameliorate not only climatic change but also other environmental threats. Given what’s at stake, I’m of the opinion that we really should be doing all we can.

Specifically, I am proposing a revolutionary monetary system. Yet, I hasten to add, though it would be revolutionary, this system would not be radical. It would build on existing institutions, not tear them down, to transform the macroeconomic functioning of the market-based economy (i.e. the one we have). Central banks (in the U.S., the Federal Reserve System) would still exist

I should note that as it provided increased sustainability, this new iteration of the existing economy would also be stable and self-regulating. There would be less government, not more. In fact, both taxes and public debt would be eliminated (along with unemployment and poverty — with no Welfare or governmental pensions/disability benefits, such as Social Security in the U.S.). Moreover, there would still be no limit on income or property or wealth. Those outcomes are built into the structure of this revolutionary monetary system.

This monetary model also provides the means, should the political will exist, to eliminate exploitation — without having to change one word in the preceding paragraph. Taking it that far would also enhance the ecological benefits to the planet; we might have to go that far to save civilization, anyway.

The structure and functioning of this proposed system is explicated elsewhere (including, as of this writing, two introductory essays under my name here on medium.com). In this effort I want to emphasize the environmental benefits of the system. Even so, like all of the other outcomes touted for this proposed monetary system, increased sustainability is incidental to justice.

I arrived at this paradigm by asking myself what a really just economy would be in its structure and functioning. That required eventually figuring out what the ethic of justice (‘real justice’) must be (‘mutual respect in effecting choices’, as it turned out). At bottom, that ethic has a handful of absolute prohibitions: no killing, harming, coercing, lying, cheating, or stealing, as means or ends, in the process of effecting any choice.

The point is that to degrade the physical environment is to do harm to other people, eventually if not immediately. While almost all human activity does that to some extent, real justice requires that it be minimized and, when damage is done, that it is rectified to the extent possible.

One hopeful hypothesis from the early days of the environmental movement was a ‘steady-state’ economic model. That concept lingers yet, but seems to be in a coma. (At least one eponymously named site exists on the Web, but my attempts at contact have been unacknowledged.)

One theoretical version of a steady-state economy was to link total output to population. That, it so happens, is precisely what this proposal would do. There are two ways that would be accomplished.

For one thing, the total of the supply of money for the economy would be determined by demographics. There would not be an absolute relationship between the size of the supply of money and total output because lending would still exist. Lending would increase the amount of consumption that the given supply of money could generate.

At the same time, government would be funded directly as part of the functioning of the monetary system. That is why there would be no taxes or public debt.

Government would be funded forever at the current per capita rate of total government spending (central, intermediate, and local). So spending by government would also be tied to population.

Thus the supply of money for the economy and spending by government would both be limited, and that limit would be determined by demographics. That means that total output would ultimately be governed, passively but effectively, by demographics.

That would establish a ‘natural’ limit on the consumption of resources, the production of waste, and the expansion of the physical footprint of the economy — without threatening any economic harm to people on the lower rungs of the economy. With this system there would be no unemployment or poverty whatever the level of total output in the economy might be.

That leaves the size of the population itself as the remaining driver of the existential environmental threat to civilization. With this system economic security would be guaranteed, and there is much evidence that economic security encourages people to have fewer children, not more. The amount of the minimum income would be the same regardless of the number of children that the people being paid it had, so that would further discourage them from having more than one or two children. (It would be as easy as not, by the way, to pay one parent in a household with one or more children the minimum income.)

That last point is particularly relevant to ‘emerging’ and ‘underdeveloped’ economies. Currently, they are following the path trod by more developed nations. Environmentally, there is no way the planet can sustain every nation on Earth utilizing that developmental model.

This monetary model could be implemented in any nation, however developed or not. Poor nations could eliminate poverty overnight. In the most developed nations the minimum income would be based on the median income; in poorer nations it would be based on average income or even per capita GDP.

This system would then provide a foundation for more a measured, less environmentally damaging economic evolution. I could see it as the basis for a kind of Jeffersonian developmental model, with many small farmers, artisans, and shopkeepers and lots of local production for local consumption.

Once its viability was established, that Jeffersonian model might even eventually replace capitalism in the most developed nations. A whole world with economic freedom and no exploitation would be the ultimate triumph for economic justice.

I have other relevant essays here on medium.com and a Web site, www.ajustsolution.com.