Newsletter No. 17 - January 2009

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CONTENTS 

1. Editorial- Prospects for 2009.

2. International G20 Meeting in London in April – as host government, the UK should put national and international monetary reform on the agenda. See Evidence to House of Commons Treasury Select Committee.

3. Sharing the Value of Common Resources: Citizen's Income in a Wider Context - see draft of a paper to be published later this year in the journal "Basic Income Studies".

4. Book Review: Molly Scott Cato, GREEN ECONOMICS, An Introduction to Theory, Policy and Practice.

5. STOP PRESS - Hazel Henderson diagnoses the economic body politic.

1. EDITORIAL: PROSPECTS FOR 2009

(1) Barack Obama's inauguration takes place tomorrow with high hopes. But we would be wrong to expect too much from him. He will be subject to a multitude of conflicting pressures competing with one another for his attention.

An important question is, How will he balance his role as world leader with the need to restore his own country to economic and political stability and self-esteem?

Having so much of Africa and Asia in his make-up, he may feel more strongly moved to help the people of the world through the coming years of global crisis than his predecessors would have been. On the other hand, the fear of criticism by his domestic political opponents on that score could limit his freedom in negotiations affecting US short-term national interests, e.g. on global warming and international monetary reform.

(2) The outcome of that conflict is what Donald Rumsfeld called a known unknown. As he famously said: "There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know".

He didn't mention that known knowns to some people are unknown unknowns to others. Not everyone knows, for example, that the politicians and professionals responsible for managing and commenting on the present money crisis have no clue what to do about it, although that fact is becoming more and more obvious to more and more of us.

Most readers of this newsletter will know that 2009 will be full of surprises; for us a known unknown is that we don't know what form the surprises will take. Here is one that I expect will turn into a known known in 2009: We are suffering from Cognitive Dissonance.

(3) Cognitive Dissonance (see Item 4) is how psychologists describe the threat to our mental well-being when we feel compelled to act on contradictory beliefs at the same time. Many people will come to experience it in 2009, as we are increasingly pressed to act in ways that any fool can see are in flat contradiction to each other - for example, by emergency measures to persuade us on the one hand to minimise ecological damage like carbon emissions, and on the other to restore economic growth to full blast by borrowing and spending more money - and investing it in unecological, uneconomic white elephants like a new runway at Heathrow airport.

So we are being asked to ignore the choice of either/or which we face: either preserve the ability of our planet to continue to provide support for ourselves and other living creatures or try to restore and continue with the ways of economic life and organisation and thought that have landed us in the present ecological and economic breakdowns.

The need to resolve the cognitive dissonance created by pressure to do those contradictory things simultaneously will accelerate the transition from an obsolete economic paradigm to a new one that meets the needs of the world in the 21st century. In practice, this will involve radical changes in how we work, how we get and use energy, the nature of business and industry, technologies, local self-reliance, welfare services, and how the world's systems of money are managed - locally, nationally, and internationally.

2. PROPOSALS FOR NATIONAL AND INTERNATIONAL MONETARY REFORM: THE G-20 MEETING IN LONDON IN APRIL

(The G-20 is the group of leaders from 19 of the largest national economies in the world and the European Union. They are to meet under the chairmanship of Gordon Brown, the UK Prime Minister. For the members of the G20, click here.)

Members of the House of Commons Parliamentary Select Committee on the Treasury have now had an opportunity to study the memorandum of evidence I submitted to them on 2nd January, on National And International Financial Architecture: Two Proposals. The Committee has now given me permission to circulate it more widely. It can be downloaded from www.jamesrobertson.com/article/nationalandinternationalfinancial architecture.pdf. The Executive Summary includes the following points.

a) The money used by national and international monetary and financial systems provides the foundation for their architecture. Who creates and issues the money supply, and in what form, affects how those systems work and therefore how they should be regulated.

b) The ways money is now created, both for national and for international economies, combines conflicting functions. That is a cause of recurrent financial crises, and of other economically, socially and environmentally damaging outcomes.

c) The first proposal is for genuine nationalisation of the national money supply, making it unnecessary to nationalise commercial banks.

d) The second proposal is for genuine internationalisation of the international money supply. In other words, the UK government should be asked to consider promoting the introduction of a genuinely international currency.

e) As host government to the G20 meeting in London on 2nd April 2009, the UK government should put the two proposals on the agenda.

f) In the past two centuries distinguished leaders have supported the first proposal, for a genuinely nationalised national money supply. The second proposal, to introduce a new genuinely international currency alongside national ones, shares the underlying principle of Keynes' proposal at the Bretton Woods Conference in 1944, and the principles put forward by the Independent UN International Commission on Global Governance in 1995. It has recent support from the BRICs Group of countries.

g) Some experts in the complexities of existing financial architecture may dismiss these proposals as too radical and simple. But measures unthinkable a few months ago have now been taken in response to the present crisis. So I hope these commonsense proposals will not be dismissed out of hand. They are in tune with the UK's historic record of financial evolution in response to changing needs. Treating them seriously could increase the credibility of those responsible for public finance, at a time when people are looking for new solutions to the problems of the new financial world of today and tomorrow.

That the G20 is replacing the smaller G7 and G8 groups is itself a considerable advance toward more democratic global governance. It would be very fitting if national and international monetary reform were on its agenda at President Obama's first meeting - the first also since Bretton Woods in 1994 at which world leaders will seriously discuss a new foundation for the world's monetary system. Even if it may seem unrealistic to aim to get them on to the agenda in less than two and a half months from now, that itself could be a good target with which to generate active public debate about their desirability.

I hope readers of this newsletter who wish to press for national or international monetary reform or both will use whatever points from the memorandum of evidence they wish in communicating the need for them to their national, local or European MPs and other officials, and to the press and broadcasting media. It will almost certainly be more effective if they communicate the points as their own, rather than attributing them to me. The matter is too important to fuss about brownie points and academic niceties.

3. CITIZEN'S INCOME AND THE CREDIT CRUNCH - The draft of my paper on "Sharing The Value Of Common Resources: Citizen's Income in a Wider Context", which will be published later this year, can be downloaded from www.jamesrobertson.com/article/citizensincome.pdf.

A slightly revised version will appear in a special issue on "Basic Income, Green Politics and Post-Productivism" of the journal Basic Income Studies. The issue will appear in December 2009, guest edited by Simon Birnbaum and with the following contents :

Introduction: Is there a green case for basic income?

Jan Otto Andersson: Basic income from an ecological perspective

Paul-Marie Boulanger: Sustainability and basic income: Are they compatible?

Tony Fitzpatrick: Sustainability, post-productivism and liberal neutrality

Miriam Kennet: Basic income and world poverty: A green economics approach

James Robertson: Sharing the value of common resources

Philippe Van Parijs: Basic income and the autonomous sphere.

Mine presents a Citizen's Income as a component part of a new approach to public money and finance, based on sharing the value of common resources. Among the links it describes is one with monetary reform, as follows.

"Monetary reform + basic income = financial stability. The recent "credit" boom followed by the present "credit" famine have been caused by allowing commercial banks to create the money supply. They created much too much money in the boom and are now creating much too little in the famine. At the time of writing, there is growing awareness of the need for "quantitative easing", financial jargon for getting central banks to create large sums of money and pump them into the economy.

The question for today's policy-makers is how and where are they to be pumped in? If central banks themselves were accustomed to keeping the money supply at the right level, and if arrangements already existed for the regular distribution of a Citizen's Income, the answer would be easy: vary the size of the Citizen's Income as required. This would inject the money into the economy where it would circulate quickly and would directly benefit those who most need it in economic downturns."

4. BOOK REVIEW

Molly Scott Cato GREEN ECONOMICS, An Introduction to Theory, Policy and Practice, Earthscan, 2009, 224pp, £16.00

Molly Scott Cato - www.gaianeconomics.org/molly.htm - is a Reader in Green Economics at Cardiff School of Management, and Economics Speaker for the Green Party. She is also a member of the core group of Transition Stroud and regularly addresses the Transition Towns on economic themes.

Her book was launched in Oxford on 14 January. Here is what I said on that occasion.

"I'm delighted to have been asked to say a few words at this launch of Molly's book. I'll start by thanking her for the appreciative references in it to my own work. I don't find it easy to ignore them in order to make an objective assessment of the book!

So let me just say briefly that I very much agree with what Caroline Lucas and Richard Douthwaite say about it on the back cover: it 'explains in clear terms the economic paradigm for the 21st century' ... it gives 'a vision of a just, sustainable and fulfilling economic life' ... it's 'an excellent introduction to a rapidly developing branch of political economics' ... 'the scope for debate is one of the things that makes this pioneering book so exciting'.

It organises clearly a very wide range of subject matter.

The three Parts are on: Theory; Vision for the Future; and Policies.

Chapter headings include: Work; Money; Green Business; Globalisation and Trade; Relocalising Economic Relationships; Green Taxation; Green Welfare; and Land and the Built Environment.

Chapter 5 on Money is particularly topical. It's an excellent 16-page summary of the background to the present financial shambles, and what should come after it. The final Chapter 13 - "Summary and Further Resources" - helpfully pulls the whole book together.

The book suggests very clearly the "cognitive dissonance" to which societies like ours are now exposed. That's the term used by social psychologists to describe being compelled by circumstances to believe, and act on, two contradictory beliefs at the same time. On the one hand our governments say they must take emergency action to induce us to live more lightly on the planet. On the other hand they are doing what they can to stampede us into returning to high consumption lifestyles in order to save the economy - at the cost of billions of money borrowed from ourselves as future taxpayers. This book will, I am sure, help to accelerate the inevitable and necessary resolution of this contradiction within the next 10 years or so.

I will end these few remarks, as I began, on a personal note.

Molly has dedicated the book to me as 'the Grandfather of Green Economics'. Not being a grandfather myself, I decided to consult Google on the grandfather's role. I learned that:

"Grandfathers have lots of wisdom and life experience to draw from. They have seen events and changes come and go. .... As grandchildren grow, they make attempts to learn about their world, their family, relationships, and society. A grandfather's perspective, formed from years of experience, can help guide, inform, and influence the growth and development of his grandchildren."

Straightforward enough, though quite a challenge in this context.

However, I have settled for being a less conventional grandfather than most - if only because I have no idea how many grandchildren there are in this case. The practical answer to that has to be, of course: 'the more the merrier'. So I hope we can help their numbers to grow unstoppably.

Green Economics will be an invaluable aid for that purpose, as well as for our own understanding. We must try to make sure it gets the attention it deserves in places of education, in the press and communications media, among environmental, social and economic NGOs, and among the politicians, officials, and other mainstream professionals who will be responsible for helping us to shape a greener future."

I hope some readers of this newsletter will be moved to act on that last sentence, just as I hope they will press the case for national and international monetary reform (Item 2 above) wherever they can.

5. STOP PRESS

Hazel Henderson has just put on physician's white robes, diagnosed the body politic's disease, and prescribed a cure. A devastating medical analysis, great fun! Click here.

Best wishes for 2009. It's going to be a crucial year, one way or the other.

James Robertson

19 January 2009