Insanity

"Insanity is doing the same thing over and over again expecting different results."

Albert Einstein

So why do we keep on striving for growth in our economy as if it will solve the ills of the growth economy that has failed us so badly?

Why do we need Growth?

There is a beautifully sustainable cycle within nature.
Dead bodies provide food for living creatures, plants photosynthesize and produce oxygen from carbon dioxide and animals use that oxygen in their respiration of which the by-product is carbon dioxide.
At school we learnt all about this and called it the Carbon Cycle, little suspecting that 50 years later this would have such a fundamental significance for the future of the world!
If we can see the Earth as a single living entity involving complex interrelationships and a finely tuned balance of all life, as envisioned for example by James Lovelock, should it not be logical for a sustainable economy to mimic that natural world, indeed be a part of that world, where everything is recycled, everything has a further use elsewhere. We would then be able to build a system that is totally cyclical and sustainable and environmentally sound. Evolution biologist and futurist Elisabet Sahtouris once posed the question: doesn’t it seem crazy and so obviously illogical that our household finances and the study of how we make a living (or economy) should be so totally divorced from the study of how other species make a living (or ecology)? Satish Kumar often says the same thing.

This seems so simple and obvious but we cannot see it!
Neither a borrower nor a lender be; 
For loan oft loses both itself and friend, 
And borrowing dulls the edge of husbandry.
Thus said Lord Polonius in Shakespeare's Hamlet, in 1603.
One of the greatest flaws in our flawed "growth" economy is that loans for interest are made out of fiat money. In other words, money is created out of nothing. Yes, money is created by bank debt against the payment of interest. It is fiat money. This is not widely understood by the general public outside the banking world and usually comes as a surprise. Someone, I believe a Canadian journalist, has estimated that only one person in a thousand really understands how money is made! It is certainly not something that is widely publicized. What is more each bank also has what it calls its Reserve Ratio. This means the proportion of cash invested into its bank deposit accounts that the bank estimates it needs to retain in case the customer wishes to withdraw again against their deposit. If for example £1000 is put on deposit with the bank and they calculate their Reserve Ratio to be 10%, then they reserve £100 and the remaining 90% of the deposit or £900 is available for the bank to lend on. And it does. The bank sets up a loan of £900 to another customer for interest, neatly increasing the supply of money available in the economy by a simple accounting entry in its books. The bank has not only made money out of nothing but it is also making an interest profit on that money that it has created out of nothing. And the bank almost certainly charged a fee for arranging the loan as well. The more times the same money can be recycled and recreated in this way the greater the arrangement fees and the interest profit that the bank can make, all from the creation of illusory money out of nothing. What is more, the amount borrowed by the customer is likely to be placed on deposit again elsewhere and the creation of further debt out of nothing can continue in another bank. The multiplier effect of this exponential increase in debt is astounding and very dangerous. Money has to continue to grow to maintain this system and to avoid financial collapse, even though actual standards of living may remain stagnant. With consumer spending the lifeblood of the economy and a personal consumption now nearing 75% of GDP, which truthful and brave politician will urge us to spend less? It is not hard to see that the system is unjust and unsustainable.

A government can and does make money out of nothing also, but this is only to the extent of new notes and coins it issues. As long ago as 1939 American President Abraham Lincoln was clear in his warnings: “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest,” he said. (1) But fiat money is still issued by banks.

I was shocked when I read that something like 98% of the trillions of dollars changing hands in the foreign exchange markets each day is purely speculative and has nothing to do with wealth creation. Only the remaining 2% relates to real goods and services. As Edward Cahn observes: “Money has taken on a life of its own: its function is to produce for the sake of reproducing – regardless of the impact on the health of the human community … increasingly what we are witnessing in the world’s money markets looks more and more like cancer.” (2)
Now cancer is dangerous and often fatal, requiring unpleasant treatments along the way.
In such loan systems there is an impersonal relationship between the borrower and the lender with a minimal flow of information needed between them. Such loans are therefore cheaper to administer. In addition the tax system favors such business fund raising by allowing tax relief on the related interest. Because such loans are not linked to the success or otherwise of the business, there is no reward to the lender if the business is successful and conversely the lender can foreclose on an ailing business that can no longer afford to repay. This makes the problems of the business worse and it may need to curtail its production and make efficiencies of staff by laying-off, with all the inherent human and social consequences that then arise. This is of course harmful to the economic cycle, and means that interest based economies have exaggerated cycles of “boom and bust.” One of the most harmful aspects of this interest on loans is that it is almost invariably charged by compounding year on year. Typically a home “owner” with a mortgage will pay way over the amount of the original loan before the mortgage is fully paid off. Our debts on credit cards have also reached massive amounts and many regularly pay double figure interest rates on their cards each year. A significant number of college students and undergraduates have credit cards and amass debt on these as well as on their other student loans. This encourages an extravagant attitude of spending among students who no longer need to budget expenditure within their means. When I first wrote of these imperfections in our debt system a few years ago I was saying that alarm bells should ring. I was far from alone. In 2001 Bernard Lietaer predicted a 50:50 chance of a global money meltdown within 5-10 years unless steps were taken to heal what he called the global foreign exchange casino (3). He was pretty much right, wasn't he? 

Unfortunately those in charge of our finances do not appear to consider alternative economic models. They want us to spend and consume our way out of recession. They're stuck in the idea that a growth economy is the only way out of our problems. But the problems and dangers of debt, at personal, corporate, national and international levels, are the cause of huge social disease. Such debt involves the transfer of wealth from the poor to those who are already wealthy. The system does not reflect the skill or the labor of the participant and encourages short termism. Indeed it has been shown that interest based economies cause unemployment, social violence and pollution. Indeed it seems clear to me that compound interest is for the monetary system what excessive carbon dioxide is for the earth’s atmosphere: it is man-made and unsustainable. For an up to the minute campaign on promoting an alternative and workable economy see for example positive money and http://projects.exeter.ac.uk/RDavies/arian/local.html for many resources on alternative monetary systems.

1. Senate Document 23, 1939
2. Edgar S Cahn, 2004 No More Throw-Away People: The Co-Production Imperative Washington D.C.: Essential Books, 2000, p. 68.
3. Bernard Lietaer, The Future of Money – Creating New Wealth, Work and a Wiser World (2001)

From an original idea in Healing This Wounded Earth: with Compassion, Spirit and the Power of Hope, where a chapter puts all this and much more into the context of compassion and healing and relationship.

Corporate social responsibility or profit with purpose?

What difference does your company make to the world? This is the title of a great article written for The Times a few weeks ago by Dr Naftali Brawar, chief executive of Spiritual Capital Foundation; it is posted up in that website.
The point being made is a good one. Corporate Social Responsibility (CSR) dates back to the Nineties when companies looked towards bearing greater responsibility to society, to the environment, and to the next generation. Noble aims indeed. But care needs to be taken, the author writes, that CSR doesn't become just another marketing tool without reflecting, without being underpinned by, a genuine commitment to all that CSR implies.
Brawar proposes a new model, called Profit with Purpose. If your company or business were to cease to exist tomorrow, what difference would it make to the world; an important existential question, linked by Brawar to God's question to Adam in the Garden of Eden - Where are you? - interpreted here as "Where are you heading in life?"
It's worth checking out the article and indeed the whole website of the Spiritual Capital Foundation, especially their ideas on Spiritual Capital, an idea very dear to my own heart.

So should we give up hope?

So many people feel daunted and depressed when they read about the seemingly intractable issues facing our world around Climate Change, water shortages, food shortages etc. This is sad, because I'm sure that most of us are already doing our own things even if only in a small way, trying to change our eating and spending habits for example, recycling where we can, etc. etc. And every little action helps and we should all congratulate ourselves for those. But what if we all tried to change our behaviors in just one more small way - we could all start Ripples of Hope for a better world!

I think it is really a case of finding what appeals to each one of us - we all have different skills, all have things we couldn't possibly do. That doesn't matter. I can think and I can write (at least I think so!) but I'm not hot on the organizing side - some people are quite the opposite - don't ask me to organize a coffee morning or a play group - some would relish it!! 

So rather than focusing on the big picture issues of climate change, population growth, energy and water depletion, all a bit daunting and depressing to some, let's look at other simpler yet powerful ways to do our little bit to help and the simplest thing we can all do is to connect more closely with the food we eat, the choices we make about our life-styles, and the realities of materialism and consumerism and its consequences. Here are a few links to follow up:

The concept of the Transition Town started in the UK in Totnes, but it is now worldwide and gaining significant ground in the US. But this can seem too big and daunting for some, especially if there is no action going on local to your home.

So there is Incredible Edible, which has specifically identified food as a simple yet effective way of contributing to a better world. It started again in the UK, and I am not sure if it has reached the US yet, but on its well developed website it gives lots of ideas and inspiration and encouragement relevant to anyone who has the concern of the world at heart, wherever you live.

For example how about having a meat free day each week? This is something all the non veggies could do once a week - a good start!! - and there's loads of other items and blogs on the site full of ideas for us all.

We vote three times a day when we decide what we eat! Organic? Local? Meat? fair trade? (in sense of ethical trading, not necessarily FairTrade).

You could try the fairtradeusa (every purchase matters) site for a start.

Then for those affiliated to any church or other place of worship are you only using fairly traded tea, coffee, biscuits, wine etc? I have just given a presentation to our own Parochial Church Council Meeting in our church to move this along, and I'm giving a training session in 3 weeks time to a local church group here on making ethical shopping decisions. 

Some Dioceses have already declared themselves FairTrade dioceses.

And there's EcoCongregation - sponsored by A Rocha, to encourage churches to lead by example by becoming "greener" and more eco friendly. Energy efficiency, and so on. Eco-congregation is a tool to help churches begin to address environmental issues in all that they do. It is suitable for all kinds of churches to use, and it has developed across the USA and the UK. 

So there really is plenty we can all get on and do in our own small ways: small things, one step at a time, and don't let yourself be depressed by the seemingly hopeless situation. It is not hopeless at all - but urgent yes!

Finally there are loads of sites on the Internet where if we don't think we can do anything else, we can at least sign petitions! Avaaz is a good place to start.

There you have it. Just a few ideas to start the ball rolling!

Please tell me of your own favorites.