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Can New Money and Good Accounting Save the Planet from Human Induced Ecosystem Service and Social Degradation (Climate Change, Famine, War, etc.) and Bring Health, Wealth and Happiness to All? Introduction As our species Homo sapiens enters its tenth millennium as a settled, farmer civilisation we know that the Earth is in crisis and that human activity is the cause. The adoption 250 years ago, of fossil carbon as the energy source in our economy led to massive increases in human population, per-capita natural resource consumption and personal wealth. The intensity of this 'economic' activity is degrading the capacity of Earth's biosphere to provide ecosystem services on which life on Earth depends, threatening our human future. The crisis has been a long time coming. For 90,000 years humans lived mostly in small bands dispersed across habitable landscapes. Their nomadic civilisations were sustained by natural and social wealth generated and sustained by ecocentric economic systems that valued knowledge, kin and country more than things. In the settled feudal and market economies of the last 10,000 years only things that can be owned (chattels) are valued. Knowledge, kin and country are now public goods to be freely exploited for money wealth. The causes of human induced ecosystem and social degradation are embedded in our modern anthropocentric (human centred) economies, particularly the free market economy that has brought such productivity and wealth to the nations that adopted it. We have long know that this market economy is inherently unstable because of its booms and busts. We now know it is also inherently unsustainable, because it promotes consumption of natural and social resources (eg fossil fuel, civic trust) without accounting for or paying the costs. Piecemeal actions will not fix this. It will be necessary to transform our whole economic system in a way that fully accounts for and internalises these costs. How is this to be done? Sustainable Economies In their book 'The Climate Change Challenge and the Failure of Democracy', (Præger, 2007)[1] David Shearman and Joseph Wayne Smith argue that the global market economy is as instrumental as carbon effluent in the impending collapse of Earth's ecosystem services. They find that human induced ecosystem degradation (Climate Change, etc.) and the rapid rise in wealth of the liberal democratic economies, are closely related. Both are a product of the 'individual freedom' granted in liberal market economies to plunder natural and social resources for profit without accounting for or paying the real costs. They conclude that a different political economy is needed if humanity is to end excessive natural resource consumption and remediate the lost ecosystem services on which all life on Earth depends. Shearman and Smith find (p.71) that humanity has three options for sustainable economies: ● a 'free market' liberal democracy with refinement (monetary valuation of ecosystem services, commons trading, green accounting, etc., etc.). They find this inadequate since 'freedom to plunder' is the cause, and a refinement is not enough. ● an 'ecocentric' liberal democracy (balanced values, 'fair play' rules, nomadic). They find this would work, but would entail a revolution in knowledge, science and human value systems, and would be resisted by vested interests, so that no existing democracy would freely chose this option. They dismiss it as unrealistic. ● an authoritarian government with strict enforcement of ecological protection (dictatorship of the wise) They conclude that since the Earth's capacity to provide ecological services will be extinguished without strict control of all human activity affecting the environment 'this may be the only solution for humanity'. Page 1 of 6

The stark options Shearman and Smith identify highlight the tough choices we will face, as the impending collapse of Earth's ecosystem services is better understood by people everywhere. Nonetheless, their assessment of authoritarian environmental regulation as the obvious and only way forward may underestimate humanity's willingness to 'play fair' when the game is fun and the rules are seen to be in everybody's best interest. The 'freedom to plunder' market economy that is causing ecosystem degradation is just a set of accounting rules freely adopted in the past. We can adopt other rules if we agree to do so. Since that book was published the link between unfettered money power in the international market economy and the degradation of human social capital (trust) has been clearly demonstrated, by a collapse of chattel values and business confidence everywhere. The rise of money market economies The money market economy began to emerge about 500 years ago when the economies of Western European nations (particularly Britain) began their transformation from feudal, land based monarchies to mercantile, money based liberal parliamentary democracies. During the 1600's and 1700's CE European world trade expanded. New manufacturing and naval technologies and corporate finance systems enabled European merchants to amass great 'money' wealth in new and ingenious ways. These included the Triangular Trade in which European manufactured goods were sold for slaves in Africa; slaves transported and sold for plantation produce in America and produce sold for profit in Europe. The money wealth amassed by then 'disenfranchised' merchants created a political power imbalance in European feudal economies. It was resolved (one way or another) by the transfer of power from Kings to Parliaments. The parliaments then sanctioned fiat money power; allowed the sale of Estates without stewardship obligations; and, allowed money owners to form business corporations to combine and magnify the impact of their profit making activity. The industrial revolution this soon unleashed caused social disruption for many, both at home and in the colonial lands that were exploited for their natural resources, labour and markets, and it caused increased ecosystem degradation (forest clearing, etc.) everywhere. For all their failings the feudal Barons had understood that their rights to control and profit from Estates were balanced by duties of stewardship and fealty: to sustain the land; to maintain civic order; to provide for defence of the Kingdom; and, to care for the commons. The merchants buying those Estates acquired the land rights but few of the duties. Those duties are essential services. Some persisted as social norms and some others have been taken up by government. The public service systems of hygiene and safety, roads, education, welfare, community infrastructure, police and military forces are a modern means of delivering feudal 'stewardship' obligations (the duty of the wealthy to sustain the commons). In money market economies, stewardship obligations that formerly attached to the ownership of land and natural resources are not recognised, except in a limited way though property taxation (rates, land tax, etc.). They are mostly paid for by taxing workers. The transforming role of money Money played a crucial role in all the wealthy world civilisations of the common era (CE). Money is a social relationship, not a thing. It is an agreement between people in a community to use a token as a means of payment. [2] Both nomadic and farmer-settler societies used chattel money for 'local' trade in produce, goods and services. Modern examples of traditional chattel money include 'frequent flyer' loyalty points and 'shell' money used in Papua New Guinea. However land and landed enterprise (natural resources) were not normally bought and sold for money. Estates in land were allocated by a King. Page 2 of 6

The form of money adopted to drive the transformation of Western European economies was fiat chattel money. Fiat money is authorised by the government of an area for use as a universal token of value for exchange within that area. Fiat money is issued by governments but is also generated by banks and merchants when they make loans or extend credit beyond the money value of their owned assets. The value of fiat money is relative to the value of things (chattels) that can be owned and exchanged for that money. The civilisations of SE Asia toyed with fiat chattel money but they did it at home (without colonies) and soon saw the risks of accelerating the degradation of their ecosystem services and social wealth. They were more cautious - though not cautious enough to save Angkor. In a free market economy business enterprises are bound to seek to maximise shareholders' returns by using their money power to gain control of key natural resources, knowledge and labour and by producing products and services that can then be sold for more than the money cost of producing them. The market sets prices so there is a strong incentive to avoid or minimise money costs. The free market economy allows costs to be minimised in many ways - particularly by allowing businesses and consumers to treat common costs borne by nature or society at large as 'externalities' – someone else's problem. Only money related costs and wealth (things owned) are accounted for. The value of natural and social wealth (Earth's ecosystem services and human societies) is only vaguely known and costs are not managed or accounted for, though we now know this is the real wealth of nations. In the past we have assumed that the stock of our common wealth (God's Earth and human society) was so vast and our human endeavours so puny, that there was no need to measure or account for our impact on it. When we started 'farming' we saw the need for stewardship. For another 9,500 years the ecological footprint of our feudal farming economies was moderate (forest clearing, desertification and species loss concentrated in in India, SE Asia, the Middle East and the Mediterranean regions of Africa and Europe). That all changed 500 years ago when the peoples of Western Europe began a great experiment with money power. It changed even more dramatically when 250 years ago the same peoples began using 'chartered' corporations and fossil fuel engines to vastly magnify the range and impact of their business activities on and across the Earth. The impact has so reduced the value of our natural and social wealth that our human future is threatened by the resulting collapse of Earth's ecosystem services, climate change, famine and disease. New money and good accounting Money itself is not the problem. It is the use of fiat money power to exploit natural and social wealth (the commons) without counting or paying the costs that is problematic. People often say that we would be better off if money was not the only incentive for business; if money was not the only means of accessing limited resources and services; and, if money was not the main determinant of public policy in democratic economies. But it is useful to remember that money is just a token of value that we agree to use and that the free market economy is just an experiment with money that we agree to participate in. The parliaments wanted to transform their economies, as we do, and they used money to do it. In the same way that emerging parliaments used fiat chattel money to transform their economies and generate chattel wealth and power, modern states can use fiat natural and social money to drive natural and social wealth economies that will surely be needed to compliment the failing chattel economy and to focus vast resources, skill and energy to restore Earth's ecosystem services and human social self reliance as fast as we can. A carbon tax or emission cap is a form of 'natural' wealth money token. It is not beyond Page 3 of 6

the ability of governments applying market based schemes to reduce carbon emissions to start to keep proper accounts of natural and social wealth and to create new markets for environmental and social benefits and services using fiat natural and social money tokens. Just as the value of chattel money is relative to all the chattels that money can buy, natural money is relative to our common natural wealth (the utility of Earth's ecosystem services) and social money is relative to our common cultural wealth (the utility of art, language, nurturing and knowledge). This is the basis of a 'fair play' harmonious growth economy[3]. Chattel wealth is different from natural and social wealth. Chattel wealth is owned by individuals or corporations (including governments) and is enjoyed by excluding others from access to it. Natural and social wealth is 'common' wealth, owned and enjoyed by all. Consequently common wealth is unpriced wealth. But it can be assessed, measured and accounted for by the government of the people of an area. The basic knowledge and capacity to do this already exists within natural resource and social services bureaucracies. Accounting for the social and natural wealth of nations (assessing the flux and stocks of 'value' over time) and sustaining new wealth generating natural and social wealth economies will require new civic leadership, new economics, new science, new laws, new accounting systems and new forms of marketing, employment and government services (at least until an harmonious and balanced 'fair play' economy is established). Only chattel money costs are counted and paid for in a 'free' market economy. In a 'fair play' market economy natural and social costs would be accounted for (as best we can) and paid for in new natural and social money tokens. Removing natural and social cost subsidies for business will mean that businesses that are highly dependent on uncosted externalities (eg the fossil fuel industry) will be stressed and some will fail. But most businesses will quickly respond to new markets for trade in sustainable products and services. Activity in 'fair play' markets will be stimulated by dampening demand for 'pricey' things with high natural and social cost components and by increasing demand for more 'affordable' ecologically and socially sustainable ones. In a 'fair play' market economy all prices will include components for natural, social and chattel costs. Chattel costs will still be denominated in chattel money; natural costs in natural money and social costs in social money tokens. Natural and social money costs and incomes will reflect measured changes in the common stock of natural and social capital. Correct accounting for natural and social capital will sustain trust in the value of natural and social currencies. But unlike chattel money, natural and social currencies will not be hoarded but will be circulated in 'fair play' markets generating strong multiplier effects. Each new fiat natural and social currency will be exchanged at bounded market rates just as we do our national fiat chattel currencies. The systematic removal of social and natural cost subsidies will reduce the 'freedom to plunder' element of the economy and put chattel money in its place as a human servant, not the boss. This will leave humans with lots of new 'fair play' economies to generate balanced natural, social and chattel wealth in, and allow all Earth's creatures (humans included) to live healthier, wealthier and happier lives. If we can revitalise the 'dollar' as a useful medium of chattel exchange and unleash the sustainable wealth creating opportunities that new natural and social money (more money) will enable, such a transition may be possible. The money market economy has generated the wealth to transform our anthropocentric economies into balanced ecocentric economies that enable harmonious natural, social and chattel wealth (real wealth) generation.

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Understanding Australia's Aboriginal civilisations In Australia the ecocentric economies and skilled governance of diverse Aboriginal nations enabled their civilisations to nurture and care for this country and so prosper in all parts of this continent for over 60,000 years[4]. We are now beginning to see how a different sort of political economy sustained the health, wealth and happiness of Aboriginal people at levels equal or superior to even the European merchant classes around 1750. We don't know how they did it but we do know their laws required everyone to care for kin and country first. The transplantation of a fully developed version of the 'free market' economy to Australia from about 1840 allowed the immediate and unfettered exploitation of natural resources for profit, a process that took over a century in Europe. In less than 200 years this resulted in the destruction of the Earth's oldest human civilisation; the dispossession, impoverishment and death of up to one million Aboriginal people; the genocide of hundreds of Aboriginal nations; and, the degradation of ecosystem services and biodiversity everywhere. Since the Australian High Court 'Mabo' decision (June 1992) the Australian law has recognised that at the time of British settlement in 1788 Australia was governed by sovereign Aboriginal nations and the land was owned by Aboriginal people. The Court did not find the act of dispossession wrong, they found it happened. The decision means that Australian land not yet alienated from the Crown at that date may be claimed by an Aboriginal person and that 'native title' may be granted, provided their succession in title under Aboriginal law, over many generations, can be demonstrated in the Australian Court. The value of this Aboriginal land was so great that in the 1858's the British colony of South Australia devised and implemented the Torrens title land tenure system to speed up the subdivision and sale of land at minimal cost. For 100 years the sale of Crown land was the main source of Australian government revenues. The 'royalties' paid on mineral wealth continue to sustained Australian Governments. Torrens title has been adopted worldwide. In Australia talking with Aboriginal Australians has begun. A first 'sorry' has been said. But real talking will require Ngiyambalgarra (a Wiradjuiri word, thought to mean: 'fearless speaking together')[5] about the ecocentric economies that sustained a vital and diverse civilization across all regions of Australia for the past 60,000 years, ie 60% of our total existence on Earth as the species 'Homo sapiens' (knowing humans) . Perhaps we can talk 'fearlessly together' about the possibility of a 'fair play' economy that correctly values and accounts for our common natural and social wealth just as well as we value and account for our chattels, the things we own. A true Commonwealth of Australia. We may choose to keep our dollar Bill $ and take up Rainbow R and Eora [6] E as our fiat natural and social money tokens. The price of the international reference 'product' (aka Big Mac) would then be listed as $2R12E6, paid in either $ R or E at 'fair play' exchange rates. Small devices will calculate payments in any mix of currencies and register the exchange. Conclusion Calibrating and managing the transition to an harmonious growth economy will need a 'social' revolution. But money is magic (as we know so well) and with good will, wise work and Ngiyambalgarra it is possible that this can be done. New money and good accounting might save the planet and bring health, wealth and happiness to all beings. Misunderstanding money caused it, but humans did the damage and its up to us to fix it. We are stewards of the Earth, the source of all life – to care for together, or lose forever. - - -

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Author Robert MacLean Irvine Box 112, PO ENMORE NSW 2042 AUSTRALIA Email: [email protected] © Copyright 2008 CCZ (Creative Commons Zero) Acknowledgements Thanks to David Shearman and Joseph Wayne Smith for their fine book and good scholarship. Thanks also to Nicholas Georgescu-Roegen for describing the economy of nature and to Bernard Lietaer for describing the nature of money. Notes in the text [Note 1] David Shearman and Joseph Wayne Smith, The Climate Change Challenge and the Failure of Democracy, Præger, 2007. (Philip Adams interviewed David Shearman on ABC-RN on Wednesday, 20th February 2008.) [Note 2] Bernard Lietaer, The Future of Money: Creating new wealth, work and a wiser world, Century, London. 2001 p. 41. [Note 3] A musical triad - harmony happens when 3 musical notes play felicitously together. [Note 4] See relevant literature on Aboriginal civilisations and political economies, including Donald F. Thomson Economic Structure and the Ceremonial Exchange Cycle in Arnhem Land, Macmillan & Co. Limited, 1949; Nao Nakanishi, Towards Sustainable Development with Indigenous Australians, White Lotus, Bankock, 2008; Sven Lindqvist, Terra Nullius, A Journey through No One's Land, Granta Books, London, 2007 Horton, D (ed) Encyclopaedia of Aboriginal Australia, Aboriginal Studies Press, 1994; nb. Trade occurred across the continent. The drug Pituri is thought to have been used by some Aboriginal economies as a form of money. [Note 5] Ngiyambalgarra - Wiradjuiri word thought to mean: 'fearless speaking together'. (Authority: Muurrbay Aboriginal Language & Culture Co-operative, Source: URL: http://www.muurrbay.org.au/ngaawa_garay.html [Note 6] 'Eora' is thought to mean 'people from this place' in the language of the Cadi'gal nation (South Sydney). This is the response reportedly given when the British asked them: “What people are you?” -----

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