The only thing that troubles me about this is having to say it yet again - our addiction to perpetual exponential growth is not survivable. It is lethal. It will end us. This road only leads one way. That's what happens when you have just one, very finite planet, a single biosphere, Spaceship Earth.
Think of it as a lifeboat that's designed to hold 30 people. Maybe it can hold 50 people if the water is calm enough but our leadership, political and corporate, insist they can squeeze 90 or 100 in it. That's where we're at today.
Jason Hickel, an anthropologist at the London School of Economics, thinks it may be time to revive an idea that traces back to Chicago in the 1930s.
When it comes to global warming, we know that the real problem is not just fossil fuels – it is the logic of endless growth that is built into our economic system. If we don’t keep the global economy growing by at least 3% per year, it plunges into crisis. That means we have to double the size of the economy every 20 years, just to stay afloat. It doesn’t take much to realise that this imperative for exponential growth makes little sense given the limits of our finite planet.
Rapid climate change is the most obvious symptom of this contradiction, but we’re also seeing it in the form of deforestation, desertification and mass extinction, with species dying at an alarming rate as our consumption of the natural world causes their habitats to collapse. It was unthinkable to say this even 10 years ago, but today, as we become increasingly aware of these crises, it seems all too clear: our economic system is incompatible with life on this planet.
But replacing GDP is only a first step. While it might help refocus economic policies on what really matters, it doesn’t address the main driver of growth: debt. Debt is the reason the economy has to grow in the first place. Because debt always comes with interest, it grows exponentially – so if a person, a business, or a country wants to pay down debt over the long term, they have to grow enough to at least match the growth of their debt. Without growth, debt piles up and eventually triggers an economic crisis.
Hickel believes that debt, or rather an economy in which currency is based on debt, is the culprit.
So where does all that additional money come from? Banks create it out of thin air when they make loans – they loan it into existence. This accounts for about 90% of the money circulating in our economy right now. It’s not created by the government, as most people assume: it is created by commercial banks in the form of loans. In other words, almost every dollar that passes through our hands represents somebody’s debt. And every dollar of debt has to be paid back with interest. Because our money system is based on debt, it has a growth imperative baked into it. In other words, our money system is heating up the planet.
His solution is to switch to a debt-free currency.
...This is not a fringe proposal. It has been around since at least the 1930s, when a group of economists in Chicago proposed it as a way of curbing the reckless lending that led to the Great Depression. The Chicago Plan, as it was called, made headlines again in 2012 when progressive IMF economists put it forward as a strategy for preventing the global financial crisis from recurring. They pointed out that such a system would dramatically reduce both public and private debt and make the world economy more stable.
I think Hickel may be reaching a bit in his argument that a change in economic systems is the secret to arresting climate change. The reform model he champions could contribute significantly to changing our lethal extraction, production, consumption, waste cycle that is indeed harming the planet but it won't be a magic wand. Where I cannot disagree with him is his observation that our current economic system is incompatible with life on Earth.