Financing%20a%20Green%20Economy%20%20%20%20

1
Financing a Green Economy and the origins
of Casino Economics and Fantasy Finance

• the Dangers of Finance
• the Importance of Finance
• Finance Information
• Financialization the Casino Economy
• Regenerative Finance

2
Dangers Pitfalls

• Qualitative or regenerative development requires
  a focus on end-use and use-value
• an inversion of the relationship of means and
  ends typical of capitalism
• same as with manufacturing the mission comes
  first
• need to go beyond the industrial definition of
  wealth money and material
• premised on the development of indicators of
  qualitative wealth

3
The Challenge

• work to build full costs into market prices
• ...while avoiding putting everything in monetary
  terms
• natural capital / social capital etc.
• use social- eco- indicators as much as possible

4
Life as a market transaction?
5
Stages of Environmentalism

• Conservation
• John Muir

6
Stages of Environmentalism

• Regulation
• Rachel Carson

7
Stages of Environmentalism

• Investment
• E.F. Schumacher

8
Finance as Regulation

• Preferential access to credit investment
  capital one of the most important elements of a
  postindustrial incentive/disincentive structure
• Crucial connection to emerging indicators of real
  wealth
• Need for an alternative financial system

9
Investment What would a green or
knowledge-based economy look like?

1. Focus on Services (human environmental need)
   nutrition, access, illumination, education, etc.
2. Organization in closed loops the ecosystem
   model.

10
Distinction between Investment and Gambling

• Wall St. or Main St.
• Phantom vs. Real wealth
• The Economic Treadmill

11
Some basic facts

• only about 1 percent of money on Wall St. goes to
  fund actual work or production.
• small business represents about 50 of N.
  American economy, but gets less than 1 percent of
  total investment.
• investment in local independent business creates
  2-4 times as many jobs as investment in
  multinationals.

12
Investment 3 primary concerns

• limiting social environmental destruction
• taking control over our earnings savings
• financing regeneration
• despite Clean Tech, increasingly a small
  business/community concern
• community investment key
• a values-driven business issue

13
Structural Problems

• Prevalence of short-term over long-term
  investment
• Single bottom line full costs and social- eco-
  benefits are invisible.
• Lack of Democracy input from stakeholders
  financial control by ecopreneurs
• Speculation The Casino Economy primary
  function soak up wealth beyond the consumption
  capacity of rich. Financialization.
• SRI "The biggest difficulty SRI faces is that
  it operates on an unspoken assumption that
  managers have genuine freedom to be
  socially-responsible. (Glickman and Kelly)

14
(No Transcript)
15
Scarcity Class

• Class arose from societies with a
• permanent economic surplus.
• Based in
• control of scarce resources (the surplus)
• monopoly of high culture
• Undermined by
• material abundance (sufficiency)
• Widespread cultural production

16
Watershed of Industrialism The Great Depression

• Structural Overproduction productivity outruns
  worker capacity to buy.
• Beginnings of long-term crisis of effective
  demand
• Waste main development strategy to create
  demand without redistributing wealth.

17
The Post WW II Waste Economy

• Permanent War Economy
• The Suburb Economy
• Oil / Autos / Subdivisions

18
The greatest misallocation of resources in human
history. James Howard Kunstler
19
Keynesianism the Crisis of Effective Demand

• Baran Sweezy crisis of profitable investment
  outlets for capitalism.
• Money a tool of national economic planning.
  Strong domestic multipliers.
• The Paper Economy growing disjunction between
  the real financial economies
•  Planned Inflation Purchasing Power
• re-redistribution of income offsetting wage
  hikes in the unionized sectors
• Debt the Economic Treadmill Work-and-spend

20
1970s End of the Line for the Fordist Waste
Solution

• saturation of markets
• social environmental costs coming due fiscal
  crisis of the state
• limits to inflationary strategy
• Vietnam war, decline of the dollar,
  German/Japanese competition
• OPEC the energy crisis
• Petrodollars Currency Crisis

21
Post-Fordist Casino Economy

• floating exchange rates interest rate standard
• Eurodollars Petrodollars
• new technologies Megabyte Money
• financial sector 30-50 times (?) larger than
  the material economy
• Speculation Stomp the weak / Get rich quick
• Empty wealth creation de facto redistribution of
  wealth.
• The End of Mass Consumption rise of new
  producer services new forms of effective
  demand.
• Polarization of work and society
• end of social contracts attack on Welfare State
• the growing gap between rich and poor

22
Where the US Economic Surplus Went, 1977 to 2007

• Actual Wages vs. Productivity-enhanced Wages in
  the U.S.
• Source Les Leopold using B.L.S. data The
  Looting of America, Chelsea Green Publishers, 2009

23
Debt Forced Economic Growth

• The main point that needs to be understood is
  that in order for money to come into circulation,
  someone must go into debt to a bank. If there
  were no bank debt, there would be virtually no
  moneyits as simple as that. Since banks charge
  interest on all this debt, and since the money to
  pay the interest can come only from further debt,
  debt grows like a cancer within the global
  economic body. This debt imperative creates a
  growth imperative that is forcing us to destroy
  the life-support systems of the planet.
• --Thomas Greco

• Competition for money
• Lack of purchasing power
• Wage dependency
• equals
• Export warfare

24
Debt in the US Economy

• 1970s debt 1½ the size of GDP
• 1985 twice the size of GDP
• 2005 3½ times the size of GDP

25
Source Magdoff , 2008 calculated from tables
L.1 and L.2 Flow of Funds Accounts of the US
and table B-78 from the 2006 Economic Report of
the President
26
(No Transcript)
27
The Global Casino Hijacking the Information
Revolution

• expansion of employment in speculative industry
• Wall St. more advanced technologically than the
  military.
• Bubble Economies last frontiers for capitalist
  growth.
• -stock crash of 1987
• -tech stock bubble of late 90s
• -housing bubble of 2001-07
• Housing speculation most destructive
  exploitative of the poor average people.

28
(No Transcript)
29
Austerity Self-imposed Scarcity

• most repressive solution to the overextension
  destructive impact of debt.
• --creditors rights virtually sacrosanct
• --a kick-start to the timid
  debt-based economy
• the other obvious solution clean slate / jubilee
  / debt amnesty
• --the traditional remedy down through
  civilization. But in an age of potential
  abundance, this risks undercutting class power
  altogether by eroding both material and cultural
  monopolies.

30
Security

• Deliberately undermined by capitalism to create
  scarcity conditions.
• Security a euphemism for defense against
  Abundance.
• -- focus of contemporary capitalist
  economic development
• National Security State
• Incarceration Industry
• Financial Industry
• Info Technology Industry

31
The Economy Culture of Fear

• Mainstream politics and media today are mobilized
  for the creation of fear, based in both scarcity
  and personal insecurity.
• Reality TV competitions, extreme fighting, Tea
  Parties, racist fundamentalism, cultural
  scapegoating, etc.
• Question should we be careful of adding more
  fear, however justifiable? (climate change, etc.)

32
Green Financial Strategy

• Limit and starve Wall St. gambling
• Find ways of getting capital to regenerative
  enterprise

33
A New Paradigm of Security Meet Everyones
Basic Needs

• Geared as much to unleashing individual and
  community creativity as protecting the
  vulnerable.
• Essential for empowering informal sector
  production self-provision
• Essential for unleashing Mass Collaboration in
  the Network economy
• Supports imagination innovation that transforms
  other sectors e.g. community business.

Eliminates fear on many levels. Deflates the
coercive power of moneyallows ethical values to
factor into personal economic decisions.
34
Ending the Coercive Power of Money

• Community Currencies
• especially account-money systems
• Basic Income Guarantees
• the more universal, the better
• Public Provision of Services
• health care, transport, housing, infrastructure

35
Decommodifying Money

• diversification of forms of everyday exchange
• supporting the informational character of
  currencies.
• undercutting the scarcity-power of money.
• financial industry restructured as public utility
  and/or service industry.
• money directed to priority areas of green
  development
• transition green Tobin tax
• new forms of remuneration
• direct consumption basic incomes account-money
  free food, health care housing
• gradually enlarging the sphere of gift
  relationships
• consistent with new productive forces based in
  mass collaboration

36
Regenerative Finance Toolbox

• Cooperative investing
• Impact investment
• Local Stock Exchanges
• Crowdfunding
• Community investment revolving loan funds
• Public banking

37
Speculation Mainstream SRI

• Is the stock market primarily concerned with
  investment?
• Role of share price in performance of
  investments
• How can qualitative factors be included in
  performance?

38
Who Does Corporate SRI?

• Faith community, churches
• mutual ethical funds for individual retail
  investors
• Institutional investors (pension funds)
  interested in SD.
• Commercial banks concerned with social and enviro
  risk in project finance and lending

39
How Much Is Happening?

• 350 firms in EU for retail investors .5 of
  total assets
• 3-5 of institutional investors
• eco- and social banks credit unions

40
Univeral Investors SRI

• Fiduciary capitalism the power of
  institutional investors
• About 50 of US publicly-traded equity
• Relationship to externalities in the economy
• Convergence with SRI?

41
Values-Driven Business SRI

• Debate about going public
• Beyond bootstrapping? How can we finance
  smaller-scale green alternatives?
• Debt vs. Equity
• New enterprise networks institutions
  development banks, loan funds, etc.
• Local Stock Markets?

42
CERES Principles

• Protection of the Biosphere
• Sustainable Use of Natural Resources
• Reduction and Disposal of Wastes
• Energy Conservation
• Risk Reduction
• Safe Products and Services
• Environmental Restoration
• Informing the Public
• Management Commitment
• Audits and Reports

43
NGOs Profit

• A path for self-reliance?
• Dangers
• Hybrid networks and institutions?

44
Other Resources

• Save Wall St.? David Korten on NOW on PBS
• http//www.pbs.org/now/shows/505/new-e
  conomy.html
• NOW on PBS Help for Homeowners?
• The Foreclosure Mess