How To Build A Life-Supporting Economic System

Earth is a living ecosystem and necessarily the model for the human economic system. The words ecology and economy have the same Greek root ‘ekos’, meaning ‘home’ or ‘earth’, so our economy is a subset of our ecology. All life-based systems are unique home economies – Earth, nations, states, cities, towns, communities, families, and each living being. Each economy can only survive in balance within natural limits.

Every global crisis derives from an unbalanced economy:

• Financial collapse is caused by an interest-bearing debt-based money system and a grossly overinflated ‘shadow economy’. These cause rising debt as “promises to pay” that cannot be met by the real economy.
• Energy collapse is caused by our economic dependence on fossil fuels and the new reality of relentlessly declining energy returns, leaving less energy to drive the economy.
• Biosphere collapse is caused by the real world demands of the growth-based economy, required to service exponentially expanding interest-bearing debt.
• Societal collapse is the descent into social unrest, the police state and militarism, driven by the above.

We have a Deadly Economy

In an interest-bearing debt system of money creation:

• Money is created by private banks as a commodity for private profit, causing cycles of boom and bust as the money supply expands and shrinks. The lack of balance is destabilizing. Scarcity of money during recessions/depressions causes unemployment and turmoil.
• The interest mechanism automatically transfers wealth upward from those with the least to those with the most, increasing income inequality. This undemocratic money system leads to social polarization and social collapse.
• Interest-bearing debt expands exponentially, demanding perpetual growth of GDP despite our finite Earth, which exhausts all human and natural ‘capital’.
• The need for growth is inflationary, promoting unproductive speculation in financial markets and real estate, inflating house prices, and eroding the productive economy.

In a tax system where we tax labour, sales or enterprise we discourage work, discourage trade and discourage enterprise. We also greatly reduce people’s purchasing power. (We would also impose a Financial Transaction Tax and keep excise taxes). A tax system like this encourages property speculation, reduces productivity and concentrates wealth with land owners.
When we tax these three, we invite taxpayers to use taxhavens and do under-the- counter trades, resulting in lost government revenue. Land cannot be hidden offshore.
A means tested welfare system with an intrusive state and a ‘benefit trap’ is trapping our unemployed and dampening enthusiasm for working. It is also expensive to run.

We Need a Living Economy:

A living economy will feature:

• Publicly created permanent debt-free money as a medium of exchange for public benefit, circulating permanently, its volume regulated by a publicly accountable body. A sufficient, balanced supply of money is stabilizing, promoting business and employment.
• Reliable public revenue without debt or interest is spent directly into the economy to pay for health, education, infrastructure, clean energy, environmental protection and restoration.
• Tax is removed from ‘good’ activity like work and enterprise and trade, and is imposed where people take more than their share of the commons or impose a burden on the commons.
• A Citizen’s Basic Income removes the need for Social Welfare and numerous poverty related social services that are now breaking down. It avoids the ‘benefit trap’.
• Stable money supply is neither inflationary nor deflationary, and promotes productive investment in the real economy.

Transition To A Healthy Public Money System and to a Reformed Tax and Welfare system:

First we need to explain why we are applying a broad-brush approach to reform, not doing it piece by piece.

When family therapists are presented with the problem of a difficult adolescent, it is important to treat the family as a whole system, rather than just look at the presenting problem, the adolescent. Tweak just one part of the system and the whole becomes more healthy. You seem to solve all sorts of problems. But if you just try and fix one problem at a time, it won’t work. The original problem tends to persist. That is because the issues don’t exist in isolation and the relationships continue. You can’t divide up a system because you break the links and destroy the patterns. It is the same for any living system. The challenge is to intervene at the points where it is going to effect the greatest change. This is in the areas of goals of an economy and the fundamental paradigms which are taken as gospel...

CONTINUE READING HERE!