Professor Jem Bendell and Rabbi Jeffrey Newman
What would a sane society do, knowing that one of its luxury food supplies was being exhausted? Consume less perhaps? Or grow more? Japan, knowing that the Bluefin tuna is going extinct, does neither. Bluefish tuna make the most profit for fishermen the nearer they are to extinction, as their rarity endows all the more status on their consumers.
Some might think that is a quirky Japanese behaviour or an anomaly of economics, but actually the free-market system in which individuals compete for profit is resplendent with such stupidities. How else could the investment in fracking or tar sands be explained? Or the way Brazil is consuming the lungs of the Earth to pay back its debts. Or the way industry externalises the cost of processing much of its waste, poisoning the Earth and its future consumers?
The logic that leads to these flaws has long been understood, and there have been waves of visceral protest as the ideology of markets became more entrenched. It is two decades since we were shutting down city centres hosting WTO and World Bank conferences; and almost a decade since Occupy camps squatted in the sacred places of decadent high finance. This time our issue is more than economic justice – it is the way governments are standing by as the global house we live in is burning down. We now see clearer than ever how a stupid financial system is driving an environmental breakdown and mass extinction which will undermine our very civilisation.
But for all the dissent about this situation, there’s little agreement or clarity on where within the financial system the real problem resides – or what could be done about it. Explanations from the marching crowds often invoke privatisation, corruption, greed, the power of banks, or the shrinking state. Deeper analyses point to something that many are unaware of, even economists. It is how private banks, not the government or central banks, create our money supply when they issue loans. It is this practice of issuing money as debt that over time creates a scarcity of money which encourages perpetual economic growth whether a society needs it or not. That means more junk, monotonous work, energy burned, natural environments ripped up, more waste, more money locked up in tax havens, and more unpayable debts. Lifting the veil on the monetary system reveals the interconnection between our social and environmental suffering. Through complex chains of profit-taking, the extortionate financial rewards taken by banks leads to people relying upon food banks while we trash the foundational bank that is a healthy planet.
Therefore, after decades of work on reforming corporations to be more sustainable, we both came to understand that we can’t change the way business does business unless we change the way money makes money. Given our perilous situation with the unfolding environmental breakdown, this change is more urgent than ever. As it oscillates along the knife-edge of debt maximisation and debt default, the current system is simply not fit for a future of climate-induced disruption.
But understanding the driving role of the financial system doesn’t give us a course of action and it certainly doesn’t help us to curtail it. For starters, we exist within the confines of this system. Many of us have little capacity to take radical action because we are working off our debts, or earning wages suppressed by employers servicing their own. That is hardly surprising in an economy with more debt than money.
So what might we do? We can move our money to building societies. But that won’t reform the big banks. We can work together to build alternatives at the local level, such as credit unions and mutual credit currencies. Yet in the UK this has proven difficult, as they are less available and less-funded than their competitors. So we might buy into crypto-currencies, yet many of them are run by speculators who make bankers look saintly!
So the only possible way to put the financial system into a reverse thrust is through government who, after all, unleashed the financial beast over thirty years ago.
It would seem though, that the present UK government imagines a different mandate for itself. In his 2018 party conference speech Chancellor Hammond claimed already to have ‘rebuilt the financial system’ since 2008.He said nothing about energy security, food security, climate change, the global migration crisis or indeed any future concerns except a future Labour government. One can’t imagine the sixth Mass Extinction keeping him awake at night. Rather than existential threats he focused instead on linguistic ones, repeating the term ‘21st century capitalism’ as if the next 80 years of economics were already written.
Hammond is out of touch with a public increasingly alarmed by climate predictions. After 30 years of warnings but no meaningful action, the current (very conservative) estimate is that dramatic changes are needed within the next twelve years, just for a chance of avoiding ‘run away’ climate change. Less optimistic readings of the data indicate that rapid and uncontrollable climate change has already begun. That will mean failed harvests and with it, exploding price rises and, understandably, social unrest. A new paradigm of Deep Adaptation to environmental breakdown is needed to reduce harm and risk in a very uncertain future. As friends and neighbours we might stockpile food, nurture our gardens and install solar power, but government is needed to build the sea defences, mobilise emergency food production and distribution, rebuild transport systems and integrate large numbers of people fleeing droughts, floods and related conflict.
Governments around the world need to develop climate-smart monetary and investment policies. Such bold policies must involve a scaling down of our non-reserve banking system and an increase in government’s issuance of electronic money instead of bonds. All central banks must be instructed to stop buying bonds from companies with large carbon footprints and instead only buy bonds of firms providing low-carbon solutions for a climate-disrupted future. Governments should also ensure there are networks of local banks with a requirement to lend to enterprises that are focused on cutting emissions or drawing down carbon, as well as developing resilience to disruptive weather. Making that the RBS mandate in the UK is a ‘no brainer’. Government should also look at enabling local governments to issue their own interoperable currencies, as a way of helping local communities become more self reliant in preparation for future disturbances. Treasury officials could begin their education on these ideas by talking to the folks at Positive Money. Meanwhile our diplomats could get cracking on negotiating a global carbon tax, embedded into trade law at the WTO, with government commitments to invest revenues for carbon cuts, drawdown, adaptation and reducing impacts on the poor.
Given how bad things are with the environment we don’t know if such dramatic changes will be too little too late. But it is worth a try. And we are convinced that without an attempt to transform the monetary system then we aren’t really trying.
Let’s for a moment imagine what such changes could support. We can imagine what thriving ecosystems look like, so we let’s imagine a thriving economy. Waste would be minimised, and toxic waste eliminated. Most of what we needed would be produced nearby. There would be no unemployment and no shortage of money to pay for valuable work. Housing would be affordable as it was in the 1970s. Children would see more of their parents. Enterprises and population centres would be governed and managed less as pawns of London, Brussels, Berne, or Frankfurt and more by the people who have a stake in them and their continuance.
There must come a time when when it becomes necessary to flout the law to bring down an immoral or incompetent government. Philosophers call it the ‘right of rebellion’. Naturally they differ on the details, but generally a rebellion these days must use non-violent methods, and it must be against a government which is grossly incompetent, malignant, or treacherous. In upholding a financial system determined to burn all the fossil fuels while not protecting the people from the catastrophic consequences, governments are surely being grossly incompetent, malignant and treacherous.
On April 15th international rebellion week will create all manner of creative, exciting and loving peaceful civil disobedience to show the UK government and its financial masters that we can no longer support interlocking economic and political systems that threaten to curtail the life of our children. It is time to tell the truth, act in accordance with it, and set up Citizens Assemblies with mandates that include both financial reform and Deep Adaptation.
If international rebellion doesn’t startle our politicians into making the climate crisis their central agenda, then we must stretch the rebellion into our everyday lives. How many coordinated withdrawals and loan defaults might bring down a targeted bank? How many local councils issuing inter-operable currencies could create an alternative to the Bank of England? How many people joining networks with their own currencies, like Fair Coop, Credit Commons and Holochain, could make these viable alternatives? If government does not heed peaceful calls to change our economic system so that climate sanity is an economic norm, we may well find out.
We realise that initially our suggestions may be dismissed by some office holders in our current system. Religious texts remind us that privileged people “who detest the one who tells the truth” (Prophet Amos 5:10) are neither new or unusual. But the joy of generations coming together in a new spirit of fearless love, reminds us of the divine invitation to “let justice roll on like a river, righteousness like a never-failing stream!” (Prophet Amos 5:24). We therefore invite more leaders in our current system to join this sacred flow of a peaceful rebellion for life on Earth.
Rabbi Jeffrey Newman is Emeritus Rabbi of Finchley Reform Synagogue and leads Shema (Jewish Action on Climate Change).
Further reading on monetary issues:
Currencies of Transition: Transforming money to unleash sustainability. Bendell, Greco (2013)
Re-imagining Money to Broaden the Future of Development Finance Bendell, Ruddick, Slater (2015) UNRISD
The future of sharing: it’s all about freedom, Open Democracy
Thwarting an Uber future for complementary currencies. Bendell & Slater 2017