Opinion

The Great Debate

Building a three-legged stool

By Reuters Staff
January 28, 2009

lawrence Lawrence Bloom is deputy chairman of Noble Cities and chairman of the World Economic Forum, Global Agenda Council on Urban Management. His views are his own –

The chaos generated by the meltdown of the global economic system provides environmentalists and human rights advocates with utopian opportunities to promote a new economic model, which will not only help sustain life on our planet, but actually increase its quality for many.
As world leaders search for creative solutions to restore global equilibrium, the opportunity for recognising the importance of both human and environmental capital has perhaps never been so possible or achievable.
Recognising all three types of capital: financial, environmental and human, will help us to build the equivalent of a balanced three-legged stool . Hopefully, this stool will be more stable than the current one-legged model of financial capital.
Last week the United Nations Environment Program recommended the business world use the global downturn to press ahead with green technologies that will save firms money and help save the planet. It also recommended using micro-finance loans to help developing countries provide sustainable solutions in such places as Bangladesh where small loans have allowed women entrepreneurs to install solar panels and bring electricity to 100,000 homes.
Society has been operating on the belief that if the engines of capitalism are powered to churn constantly, wealth will prevail and all of human society will benefit. But this system has served to create great income disparities by generating incredible wealth and incredible poverty, and has been the main driver in causing catastrophic environmental damage.
The unregulated, trickle-down financial policy is necessary to generate positive GDP figures, but traditionally these data do not include the cost of rainforest or biodiversity loss. Thanks to the United Nations Green Economy Initiative, and the work being undertaken by Pavan Sukhdev and his colleagues who are engaged in the Economics of Ecosystems and Biodiversity project, we can now put GDP-like values on these losses.
As a result, we are beginning to recognise that the credit crunch in the financial markets is a minnow in comparison to the credit crunch in our environment and biodiversity systems. It appears that we have been “borrowing” $2.5 trillion every year for the last 25 years without any significant compensating payback.
Over time, we may acquire the wisdom to realise that what traditional economics considers “externalities”, as if they were irrelevant, are closer to our survival needs than the creation of economic wealth. The 90 pence we pay for a litre of petrol is divided between government tax and profit for the oil company, but who picks up the tab for the damage that is done by burning the fuel in the atmosphere? We privatise profit and we socialise loss.
We need to start valuing people first, and then we will collectively begin to operate on the principle that the environment is not just another word for commodity market, but that it supports life. Valuing human capital means acknowledging that each person on this planet is entitled to fresh water, nutritious food, proper shelter, healthcare, education, justice and access to capital. This way we can release the creative potential of all of humanity. Only when we are clear on these values can we create a financial system that serves it.
The current financial credit drivers are akin to the booster rockets on a space craft. In the same way as the boosters blast the craft free of the Earth’s atmosphere and gravitational pull, so the current financial system has created wealth, education and freedom for 1.5 billion people. But for many – the remaining 4.5 billion – the cost has been very great and to our ecosystems it has been disastrous. The skill in a space shot is knowing when to blow the explosive bolts, releasing the boosters and continuing the mission with the second stage only. Our skill will be in jettisoning our current economic model and designing a new and more inclusive “second stage”.
What we should be talking about now at a strategic level is urgently restructuring our monetary system into a non-debt, or minimal-based debt structure using Sharia-type finance and complementary currencies with government spending money directly into circulation.
In whichever way we choose as a society to tackle the global financial crisis, we must create a system that protects and nurtures all of humanity and the environment before it is too late.
An inspirational quote attributed to a North American First Nations Chief Seattle states: “We are all connected like the blood that unites one family. Whatever befalls the Earth befalls the sons of the Earth. Man did not create the web of life, but he is part of it, whatever he does to the web, he does to himself.”
These words written more than one hundred years ago speak directly to us today. Will we have the intelligence to listen?

Comments
3 comments so far | RSS Comments RSS

Thanks so much for your post. Your eloquent perspective on our current economic system puts a much needed emphasis on its impact on people and the environment.

You quoted Chief Seattle, these indigenous people understood the crucial relationship between humans and the natural world. Another Cree Indian Proverb prophesies the same thing, “Only when the last tree has died and the last river been poisoned and the last fish been caught will we realize we cannot eat money.”

But are big businesses and governments, brave and courageous enough to be the change, or will the current behaviour of greed, selfishness and fear continue to dominate?

What we need is REAL leadership, like the one Obama is spearheading. Leaders who understand the importance of maintaining and protecting the environment, have compassion for the poor, hungry, sick and weary, who are willing to take responsibility for their actions, and who will build a three-legged stool.

While I continue to hope, it is becoming obvious to me that every one of us need to take personal responsibility and be the change we want to see in the world instead of waiting for others to lead the way.

Posted by Rebekah Shaman | Report as abusive
 

Very well said. Rebekah also made several important points, on personal responsibility and the need to change one at a time, although through fear we respond as a herd of cattle. And this is how ‘market specialists’ are seen us in their mathematical models.

North American Indian wisdom can be extended to the financial web too. Today’s financial system is based on ‘Fiat Currency’, created out of nothing, taxes from future generations for instance. ‘FIAT LUX’ in Latin translates ‘let there be light’, and the Greek phrase is γενηθήτω φώς (or genēthētō phōs). When credibility fades systems crumbles and indeed we need to go back to basics. The financial system will evolve towards a resource (human & environmental) based system. This is going to change rapidly. The interaction with IT infrastructure, the ascend of Knowledge Society and the enlightenment of individual and collective Conciseness will bring the changes we all strive for.

Greed had led us to demand for never ending growth. To deliver their promises, the financial experts devised all sort of alchemies; derivatives, Ponzi schemes, toxic papers, billions of right-offs to oligarchs. Trading and shorting shares has been wide spread through internet in large numbers increasing volatility, risk and instability.

We are in the age of ‘credit crunch’ for those that ‘have not’, and the lack of ‘cash flow’ from those that ‘they have’ but don’t trust the market and their capital is not circulated. Stimulus strategies are created to ‘bring in’ the circulation additional, more money. With current crisis of confidence on the system, the hoarding of capital even with low interest rate will continue. We have seen it in Japan. The one Trillion dollar question is, will it ever end?

During the last Great Depression in the 30s, the ‘Wörgl Experiment’ proved to be successful through the introduction of local currency. Unemployment was minimised and local economy flourished. It was ended by the bank of Austria seen it was seen as threat rather than as complementary and a competing action.

Today with the IT infrastructure, internet, e-society, e-currencies are emerging in different forms and can be a complementary additional stimulus. Currencies are created based on trust we build and agreements we make as group and as society to value something.

The environment can be seen from a ‘positive angle’ rather than a burden or an additional cost to be past to the consumer. For instance, creating value through Innovative ‘Carbon Capture and Storage’ methodologies can be the next source of hope for the activation of environmental measures. Most companies and well paid consulting firms are proposing complex expensive methodologies that ends up with enormous amount CO2 stored in the see or underground with the danger of escaping.

A far more creative method that is been adopted recently with coal power plants is a process that uses engineered algae to capture and reduce flue gas carbon dioxide (CO2) emissions into the atmosphere. The algae are harvested daily and converted into a broad range of biofuels or high-value animal feed supplements, or fertiliser.

There is deep wisdom in the saying, ‘think globally act locally’. If we balance our lives, our families, and the societies we live in, we will see the successful change globally because our conciseness will grow on the way.

Posted by Marios Gerogiokas | Report as abusive
 

Great speech, yet Chief Seattle might say you speak with forked White Man tongue if he could reveal you …. “start valuing people first” … “each person on this planet is entitled to fresh water, nutritious food, proper shelter, healthcare, and access to capital” … well said old chap, in true Brit style. Some live poor so you don’t … next time try some quotes from Chief Sitting BULL.

Posted by Mac | Report as abusive
 

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