29 April 2009

Would you buy a used economy . . .?

I am faintly tempted to make some sort of connection between the budget and the scrappage scheme, which might get as far as a joke if it weren't such a desperately serious business. The blogosphere is full of confident experts selling their opinions but I feel fairly comfortable letting on that I don't really know what it feels like when your economy goes bust. Perhaps we should be looking across the Irish Sea to get a few hints.

As usual the main budget stories have been apolitical and have avoided the most important issue, but tucked away inside the Guardian we find an article that tells us what the financial markets made of it. They weren't impressed. The result was an increase in the cost of insuring UK debt, which is now considered riskier than that of Spain and almost twice as risky as that of Unilever or France.

On the one hand you might be tempted to laugh this off, given that the risk is measured in terms of the very credit-default swaps that got the global economy into this mess and by the people who considered Lehman Brothers in good health the weekend before it went bust. On the other, as in all matters of economic confidence, it is a self-fulfilling prophecy, since as our IOUs become riskier they become more expensive to sell. So we have to work harder to pay off the debt that was taken on in our name, and a default is more likely.

Meanwhile, reading between the news, we find that the 'quantitative easing' programme, where the government invents money and uses it to buy the national debt, is expanding to twice the originally planned level. So it is only the sleight-of-hand process of removing some of the unwanted debt that is keeping the price as high as it is. The interesting question for puzzled economy-watchers is how long this bizarre stealing from Peter to pay Paul can carry on? And who will take the decision to call a halt to the game? Answers on a postcard, or in a comment.

The Peasants are Revolting

Simon Fairlie wrote an excellent article in The Land a couple of issues back. His focus was the need for a rehabilitation of manual labour. Heinberg's concept of the 'energy slave' makes it clear how much harder we are all going to have to work as oil supplies dwindle. We can gain a similar sense from thinking about the horsepower of machinery that supports our decadent existence. Fairlie's argument was about the nature of the lives we will be living, which he ascertained from considering production, and particularly food production, before the countryside was overrun with machinery. This was the life of the peasant, a person who is also in need of rehabilitation.

A few concepts from our shared past can help to inform the future we are going to build together. One is the concept of the cottage economy. The label 'cottager' did not relate to the bijoux design of your Cotswold-stone residence but was rather about your rights to use common land and therefore to be able to subsist without selling your labour. Cottage industry, by extension, was work that you engaged in to generate surplus cash, not for your bare subsistence.

J. M. Neeson provides a fascinating account of the liberated existence of Britain's peasantry and how they fought to maintain it as landed interests used their political power to force through the theft of shared land via enclosure acts. She estimates that up to a third of the land of the country was either owned by commoners or was itself common which they had rights to use. The destruction of this ancient social system led to an imbalance between people's work and their needs. It led to explosive population growth, as mouths to feed needed to be outstripped by hands that could be sold to work for others rather than to produce their own food.

It also led to a changed attitude to consumption, a loss of the sense of satiety and sufficiency, and the substitution of greed and excess:

'Perhaps having "enough" was unimaginable to men who wrote about crop yields, rents, improvements, productivity, economic growth, always more, as it has been incomprehensible to twentieth-century historians living in constantly expanding market economies, albeit on a finite planet.' (p. 41)

The commons represented a system for sharing a large proportion of the land of this country, even after the advent of fedualism. Their loss was a financial disaster for commoners and the end of a sustainable socio-economic system. Their revival will be a fundamental foundation for land planning within a bioregional economy.

24 April 2009

Busted Budget

This has been an extraordinary budget season. Our economic destiny for the next 50 years is being changed and, because of the way the red, yellow and blue parties have adopted mix-and-match policies in recent years, there is no real political debate. I was sorely disappointed by the Green Party's response, which focused on the £5bn. of investment in the economy and ignored the £175bn. of borrowing (itself a significant underestimate) which will really determine the future of the economy and of our society and environment.

There are three reasons why we must reject this level of government borrowing, and in fact the whole system of money creation based on debt. The first is that it is socially unjust: it operates as a means of transferring wealth from working people who pay taxes to those who live from investment earnings. In order to buy government bonds you need to have spare money to invest, but the interest that they return will be paid by those who earn their money through work.

The role of public debt in enabling a transfer of wealth from poor to rich is sufficiently routine after 300 years to raise no qualms, but the less advantaged in our society will surely notice the pressure of the debt that Labour has taken on over the past year through increases in taxation and reductions in public services, which will combine with the rises in unemployment brought by the Recession. We already hear rumblings from union leaders. Dave Prentis’s ‘carats for the rich; the stick for the poor’ speech is only the beginning of a return to the conflictual politics that massive borrowing makes inevitable. Unless the policy is changed we face a period of social unrest and community breakdown that will make the 1970s look like Blue Peter, and perhaps an even more right-wing political backlash.

The third reason to oppose a debt-based economic policy is that it creates an in-built pressure on the planet and its resources. When the government creates money through issuing bonds it creates a parallel future demand for goods and services—goods and services which can only be produced using energy and resources. So the system of paying for future consumption by public debt, just like the system of creating money as private debt, is the central cause of exponential economic growth and the environmental destruction it brings with it. Building up an ecological debt that is far more serious than a mere balance-sheet.

So what is to be done about this fine mess that capitalist economics has gotten us into? If we begin from the understanding that the debt is unpayable, then our only alternative is to bring the debtor and creditor nations together for a negotiated round of debt forgiveness, a global jubilee. Without such a deal the decade ahead looks grim as we face internal unrest over the struggle for diminishing output and trade wars and possibly worse abroad. Rather than reliving the sad history of the 1930s Depression and the Second World War, we could just fast forward to Bretton Woods and negotiate a stable and balanced financial architecture based on the abandonment of the reserve currency system and a trade system that treats all the world’s nations fairly.

18 April 2009

A New Ethic of Consumption

Let's start with a cliche: you are what you eat. I've been interested by the growing number of people who have food allergies and digestive problems. Of course some of this results from stress, and no doubt post-modern, identity-related orthorexia has something to answer for too, but would it be too fanciful to suggest that we have treated our environment badly and it is now biting back?

Eating is the most direct way in which we come into relationship with our environment by literally consuming bits of it. In this act we cannot deny our dependence on the natural world around us. Some of my more consciously spiritual friends remember this by giving thanks to whatever they believe in rather than thoughtlessly tucking in.

There are other thoughtless ways in which we can consume the environment. I recently spent a delightful weekend in the Peak District, which was somewhat spoiled by a band of sweaty fell-runners. I'm sure that many of these guys, for such they were, love mother nature as much as I do, but the fact that they were delivered to one side of the peak in question in a minibus and then collected by the same bus 30 minutes later on the other side suggested a significant limitation of their commitment to the environment they were consuming.

So I would like to join the call for a rethinking of our consumption of nature, whether in food or leisure. More than a source of internal combustion, food is a gift, the most basic way in which we can acknowledge our dependence on nature in our daily lives. A chance for a meditation of re-embedding. At a seminar I attended in Belfast recently Peter Doran referred to this kind of practice as 'askesis', a sort of lived philsophy. A way we can inhabit our bodies as part of our environment and distance ourselves from our minds and the destructive discourses of consumption they have bought into.

I'd like to think that the rapid growth of interest in edible environments and edible estates is an indication that such a process is already underway. It seems to me it offers hope of 'the great re-embedding' that is the route to a healthier relationship with our planet.

9 April 2009

Plus ca change . . .

Now the dust has settled, what are we to make of the G20 conference? Such high hopes; so little real achievement. When the whole process began the discussion was around a new global financial architecture, then it moved to a major financial stimulus, but what we got was a strategy of inventing money to boost the coffers of the world's disaster management bank, the IMF.

I'm not surprised the architecture went nowhere. It took more than two years and some of the best brains in the world to pull Bretton Woods together. The media circus that was G20 shows how the world has moved from substance to superficiality since then and no amount of clever graphics or smart clothes can conceal this.

We might draw our own conclusions about why no fiscal stimulus was agreed. Presumably a combination of warnings from bankers that they would tolerate no more public debt and a reluctance from some of the countries in Europe that do not control reserve currencies pushed this off the table.

So we are left with the controllers of powerful currencies using this power to make money from thin air which they then deposit with the IMF. The poorer and less powerful countries that we have economically destroyed are then forced to beg our humble permission to borrow this money, which they then pay back to us. The inequity of personal banking writ large.

We wait to see what conditions the IMF will put on these loans but we may expect that they will be the sorts of conditions that allow the globalising sharks to take control of the resources of the poor countries as they have in the past, first through colonialism and then through trade. It leaves me wondering how much difference the expansion from G7 to G20 has really made.

3 April 2009

The Paradox of Thrift

It was Keynes's view that 'Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.' He is now become the posthumous eponym of his own adage, as the economic crisis forces the resuscitation of politically unpopular measures that are no longer appropriate to our times.

Commenting on the horrific consequences of capitalism's last truly spectacular bust, Keynes noticed that people's natural response to be cautious in times of crisis could actually make the problem worse. In the typically natty way he had with language Keynes referred to this conundrum as 'the paradox of thrift'. While saving at the individual level may be entirely noble, at the level of an economy as a whole, and especially one with insufficient demand, it can be devastating. Japan is often taken to be the paradigmatic case.Wise he may have been, but Keynes did not recognise the planetary frontier and so his plans to save us from Depression through exhorting us to consume more are now dangerously outdated.

Thrift has been a concept with a serious PR problem for several decades, as built-in obsolescence and the fashion industry have generated wants and desires that were then satisfied by production and consumption. In my paper 'Sen and the Art of Market-Cycle Maintenance' I sketch the environmentally destructive consequences of this capitalistic modus operandi.

The paradox itself is easily resolved once we think our way beyond the ideology of capitalism, since its existence results from the underlying assumption that individual behaviour is only helpful if it fits in with that system's logic. We are, in reality, free to make much wider choices than whether to spend or save, or what variety of washing powder to buy. We are free to choose a whole new economic system based on balance rather than growth and justice rather than inequality.

1 April 2009

G20-20: No Vision

Yes, I know it's tempting to smash things up. I can't remember the last time I felt so frustrated as when I watched that glass window go at the RBS building and realised I could have been there if I hadn't been in an Economics and Accounting management meeting. Even the thought of being hemmed in by thousands of coppers without access to a toilet failed to persuade me I'd made the right decision to go to work today.

It is not difficult to say where the G20 should be going - the media are choosing to hear from the same old men with blue eyes and pale faces who caused the problem. The sense appears to be coming from people dressed up as apocalyptic horsemen and clowns. I am sorry to say that the Green Party has taken to wearing suits (and having a leader) in the mistaken belief that this will ensure we are given more serious attention by the media and political classes. If only it were so simple I might wear a suit myself.

But lest you despair, I will share with you the radical, visionary and just policy that was passed a fortnight ago at our still fully democratic party conference in Blackpool:

International finance

EC960 The present international financial system provides disproportionate benefits to banks, trans-national corporations and currency speculators. It must be replaced by a system in which money returns to its proper role as a medium of exchange, not a commodity in its own right. This requires international negotiation. The result could be a reformed World Bank and International Monetary Fund at the centre of a global economic system with commercial institutions playing a much diminished role.

EC961 The tripartite global system regulating international finance should be replaced by three new bodies: an International Reserve Bank to administer the neutral international exchange currency (EBCU); an International Clearing Union to oversee goods and carbon trading; a General Agreement on Sustainable Trade.

EC962 All countries belonging to the tripartite system should make their currencies convertible but according to internationally negotiated and fixed exchange rates. Domestically countries would be expected to administer exchange controls.

EC963 The global trading system would aim to achieve balance trade between countries; those which operated extended surpluses or deficits would be fined.

EC964 The US dollar should no longer be accepted as equivalent to gold in international transactions and other national or supra‐national (i.e. the euro) currencies should no longer be used as international reserve currencies.

EC965 Their role should be taken on by a neutral international currency ‐ the EBCU ‐ linked to the right to produce carbon dioxide.