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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
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
 need to go beyond the industrial definition of
wealth: money and material
 premised on the development of indicators of
qualitative wealth
The Challenge:
 work to build full
costs into market
 ...while avoiding
putting everything in
monetary terms
 “natural capital” /
“social capital” etc.
 use social- & ecoindicators as much as
Life as a market transaction?
Stages of Environmentalism
John Muir
Stages of Environmentalism
Rachel Carson
Stages of Environmentalism
E.F. Schumacher
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
 Need for an alternative financial system
Investment: What would a green or
knowledge-based economy look like?
Focus on Services (human & environmental
need): nutrition, access, illumination, education,
Organization in closed loops: the ecosystem
Distinction between Investment and
 Wall St. or Main St.
 Phantom vs. Real wealth
 The Economic Treadmill
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.
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
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)
Scarcity & Class
 Class: arose from societies with a
permanent economic surplus.
 Based in
1. control of scarce resources (the surplus)
2. monopoly of ‘high’ culture
 Undermined by
1. material abundance (sufficiency)
2. Widespread cultural production
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.
The Post WW II Waste Economy
Permanent War Economy
The Suburb Economy:
Oil / Autos /
“The greatest misallocation of resources in
human history.”
…James Howard Kunstler
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
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
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
The End of Mass Consumption & rise of new
“producer services”: new forms of ‘effective
Polarization of work and society
 end of social contracts: attack on Welfare State
 the growing gap between rich and poor
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
Debt & Forced Economic Growth
1. Competition for
2. Lack of purchasing
3. Wage dependency
Export warfare
“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 money—it’s 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 lifesupport systems of the planet.”
--Thomas Greco
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
Source: Magdoff , 2008: calculated from tables L.1 and L.2; Flow of Funds Accounts of the US; and table B78 from the 2006 Economic Report of the President
The Global Casino: Hijacking the
Information Revolution
 expansion of employment in speculative
 Wall St.: more advanced technologically than the
 Bubble Economies: last ‘frontiers’ for capitalist
-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.
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
--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.
Deliberately undermined by capitalism to create
scarcity conditions.
“Security” : a euphemism for defense against
-- focus of contemporary capitalist “economic
National Security State
Incarceration Industry
Financial Industry
Info Technology Industry
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.)
Green Financial Strategy
Limit and starve Wall St.
Find ways of getting capital
to regenerative enterprise
A New Paradigm of Security:
Meet Everyone’s 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
Supports imagination & innovation that
transforms other sectors: e.g.
community business.
Eliminates fear on many levels.
Deflates the coercive power of
money—allows ethical values to
factor into personal economic
Ending the Coercive
Power of Money
Community Currencies
 especially account-money
Basic Income Guarantees
 the more universal, the better
Public Provision of Services
 health care, transport, housing,
Decommodifying Money
diversification of forms of everyday exchange
 supporting the informational character of
 undercutting the scarcity-power of money.
financial industry restructured as public
utility and/or service industry.
 money directed to priority areas of green
 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
consistent with new productive forces based in mass
Regenerative Finance Toolbox
 Cooperative investing
 Impact investment
 Local Stock Exchanges
 Crowdfunding
 Community investment &
revolving loan funds
 Public banking
Speculation &
Mainstream SRI
 Is the stock market primarily concerned with
 Role of share price in “performance” of investments
 How can qualitative factors be included in
Who Does Corporate SRI?
 Faith community, churches
 mutual ethical funds for individual retail investors
 Institutional investors (pension funds) interested in
 Commercial banks concerned with social and
enviro risk in project finance and lending
How Much Is Happening?
 350 firms in EU for retail investors; .5% of total
 3-5% of institutional investors
 eco- and social banks & credit unions
“Univeral” Investors & SRI
 “Fiduciary capitalism”: the power of institutional
 About 50% of US publicly-traded equity
 Relationship to externalities in the economy
 Convergence with SRI?
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?
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
NGOs & Profit
 A path for self-reliance?
 Dangers
 Hybrid networks and institutions?
Other Resources
 Save Wall St.?
David Korten on NOW on PBS
 NOW on PBS: Help for Homeowners?
The Foreclosure Mess