Note: there is a longer, referenced version of this article
here
The foundation
1.1 Ecology (understanding our habitat) and economics
(managing our habitat) are closely related disciplines: understanding
must underpin management: therefore ecology must underpin economics.
1.2 Green Economics is based on three axioms (self evident truths):
- It is impossible to expand forever into a
finite space
- It is impossible to take forever from a finite
resource.
- Everything is interconnected.
1.3 Green economics is about harmonising human
activities with the processes of nature in line with these axioms.
The structure
2.1 The first rank of the economy relates
to obtaining from our environment the necessities of life, namely
- water
- food
- energy
- housing
- safe management of our waste products.
All of these activities assume access to, and use of, a certain
area of land. In non-slave societies, this access should be
seen as a birthright for every person. It follows that each
human has a notional right to a proportion of the Earth's surface.
Therefore, anyone holding a plot of land is renting that plot
from the rest of society. This is the basis of the Land (or
Site) Value tax which is a core green tax.
2.2 Second rank activities of distribution, trade
and manufacture of tools occur in any society, (as opposed to
a single individual in a subsistence situation).
2.3 A tertiary rank evolves in a complex society,
comprising administration and public services.
2.4 Finally, a quarternary rank consisting of
financial services is useful in complex economies.
Finance (money) is a symbol of value, a symbol
that represents the power to obtain real goods and services.
Money has no value in and of itself. Its purpose is to serve
the smooth running of the economy, not to dominate it. Theories
and practices that treat money as an entity are not sustainable
in the long term as financial value drifts away from the ecological
and social realities of life. So money is the fourth rank of
the economy in green terms, although it is always ranked first
in conventional terms.
This difference underpins the difference between
green and conventional economics.
3 Work
Good work (that is, work that benefits society and environment)
can be stimulated in the absence of money, as evidenced by the
LETs or Time Bank schemes that are growing in scope and number.
We emphasise the importance of the local economy,
since it minimises transport impacts, and fosters a sense of community.
We emphasise co-operation as an economic value
that is at least as important as, if not more important than,
competition.
4 Wealth and Resources
Wealth is created when we take a resource from the environment
and act upon it in certain ways.
At its most simple, the resource may be an apple,
and the action is no more grasping and eating it. At its most
complex, it may involve operation like uranium mining with all
the disease, death, fear and lies that is involved.
Resources may be finite or renewable
4.1 Finite resources
E.F. Schumacher pointed out that at least some
of the wealth generated by using finite resources should be
devoted to helping us to become independent of those finite
resources.
4.1.1 Resource taxes will internalise
the costs of depleting primary resources, and will make recycling
more economic. In the case of finite fuels (coal, oil, gas,
uranium) they should be hypothecated to energy conservation
and the development of renewable energy.
4.2 Renewable resources
It is illogical to destroy renewable resources
such as fish stocks, forests and soil. Their use must be carefully
managed to ensure that their capacity is maintained and improved.
4.3 Internalising costs
Conventional economics disregards any values that
do not lie in the financial sphere. Profit is all; damage to society
or environment is regarded as and "externality". Green
economics requires that these costs are internalised using the
following instruments:.
4.3.1 The Polluter Pays Principle: If
a product has an impact on health or on the environment, and
if the impact is not sufficiently severe to warrant banning
the product, a levy will be built into the price to cure the
problem that has been caused.
4.3.2 Producer Responsibility is assented
to in principle by Government, but they draw back from implementing
it. It would involve placing a levy on all processes and products
sufficient to pay for
(a) the cost of researching any effects the products may have,
e.g. on the health of environment or humans, and
(b) the cost of cleaning up these effects.
4.4 Throughput
Physically, a sustainable economy that complies
with the three axioms above will minimise throughput of materials
and maximise reuse and recycling of materials. No releases will
be permitted that could overwhelm the capability of the biosphere
to absorb them, and any persistent toxins must be sequestered
and/or neutralised. Durability must be in-built into products,
instead of the current tendency towards disposability.
Throughput is a function of population numbers
x consumption patterns.
Population Growth on an indefinite basis is
incompatible with the first axiom, but the problem must be dealt
with by education, not compulsion.
5 Equity
A sustainable society will maximise equity and justice. It will
aim for optimal equity in distribution of resources within any
society, between societies, and between the present and future
generations.
6 The Market: capitalism and divergence
The free market economic system violates the
three axioms and must therefore be radically changed. The command
economies of the communist countries also signally failed to
achieve sustainability.
Both have failed to produce true human happiness and equity.
A sustainable system of economic activity must avoid both free
market capitalism and the command economy. Social and environmental
impacts of economic activities which are currently classed as
externalities will be brought into the price equation through
a variety of economic instruments such as taxes and levies.
Such a system might be called a guided market.
There is a tendency in any economy, especially
in Anglo-Saxon capitalist systems, for the rich to get richer
and the poor to get poorer. This tendency can be called "divergence",
and its opposite, "convergence". Divergence, apart
from being unethical, is not ecologically sustainable in the
long term, as it leads to oppression, and oppression leads to
war, which is always environmentally and socially destructive.
The sustainable economy must be convergent.
The debt/interest system is intrinsically divergent
in its effects, and must be corrected. Any correction must be
gradual and careful, since the income of many vulnerable people,
particularly pensioners, is dependent on interest. Reform of
the financial system should begin with taxes and levies on financial
transactions that are calculated to make money out of money.
Green Keynsianism will smooth out the amplitude
of the variations on the economic cycle, by using money raised
by the state (or community, where appropriate) to stimulate
good work during times of economic recession.
The Green economy will be a mixed economy, containing
both private and public sectors.
7 Unemployment
Unemployment is intrinsically divergent in its
effects. The present benefit system, which applies 100% marginal
taxation onto benefits at the point when a claimant finds work,
acts to perpetuate unemployment. It is irrational to trap people
in unemployment and poverty when there is more than enough work
to be done in serving, healing and protecting both society and
environment. A sustainable society will provide benefits to
those unable to work and will help the able bodied to find good
work, and will not withdraw those benefits at the time that
the person moves into socially and environmentally useful work.
This Green wage subsidy could be implemented by allowing companies
whose product is certified to be socially and environmentally
beneficial to take on new workers, who could retain their benefits.
This gradualist approach to the Citizen's Income scheme is set
out in Bills of Health.
8 Globalisation
The globalisation of trade spearheaded by the
WTO, and resulting in the Global Agreement on Trade and services
is an attempt to free trade from all environmental, social and
moral considerations. As presently set up, globalisation is
incompatible with green economics. It is also incompatible with
the Index of Governance.
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