James Quilligan on Achieving a Commons Economy
- Interest Rates and Climate Change: Realigning our Incentives through the Power of the Commons. By James Bernard Quilligan. Kosmos Journal, Winter 2010. ; See: James Quilligan on Cap and Rent for Climate Change
According to James Quilligan in a must-read essay in the Fall/Winter 2010 issue of Kosmos Journal, neither prices nor taxes can adequately protect vital long-term common goods. The essay is vital reading and needs to be read in full, but here are some key passages below.
- 'Global Common Goods'
- 'The Commons and Integral Capital'
- ‘People Sharing Resources’
- ‘The Commons of Mind, Life & Matter’
Intergenerational Wealth: Toward the Commons Economy
"Nations are deeply divided over how to manage the global commons, particularly the decarbonization of the atmosphere. Rich states refuse to make major emissions cuts until large developing nations like China, India, and Brazil also take radical steps. Poor states argue that the industrial world, which has been producing emissions for centuries, should provide the resources to help them grow economically while they adapt to climate change and minimize their own emissions. Yet the differences between rich and poor nations cannot be resolved on the same terms that gave rise to them. Our predominant vision of social justice—adaptation to cope with the impacts of climate change through investment, aid and technology—will not be realized through the current economic structure. Adaptation to address present impacts and relieve human misery and suffering is vital for obvious reasons; but the catalyst that is needed to unify nations and transform the economic system is mitigation—measures for limiting future damage from climate change.
The 1987 Brundtland Commission Report called for “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Thus far, the world community has viewed sustainable development through the lens of neo-liberalism and progress has been slight. But fully honoring the principle that the future has value to the people who will live in the future would adjust our fundamental patterns of economic activity toward a more holistic system that will also benefit the present generation. Ensuring that people in the far future have a standard of living on a par with our own requires a new kind of international planning based, not on geopolitical or corporate objectives, but on global resource distribution relative to population growth and ecological carrying capacity. Giving the same weight to future generations’ welfare as we give to those now living obliges us to increase the present wealth per capita—and this will transform the balance of trade, finance and aid for the current generation.
But as long as our global plan for the well-being of future generations is merely a quest to get prices right in the present, the value of the commons will continue to be suppressed by the market. Far from presenting a comprehensive alternative to climate change, carbon emission permits and taxes are incomplete measures of the sources of human incentives and collective worth within the greater biosphere. Renewable energy and technology are essential, but today’s green economics is merely another expression of the market’s misalignment of incentives and risk, since green investment is almost entirely dependent on subsidies, protectionism and debt-financing, which shift social incentives only at the margin. Nor is it adequate to address the problem of climate change by discounting the future—spending more money now and living with less global heating, or spending less money now and living with more global heating. Mitigation to reduce global heating must be measured, not by the scarcity-based instruments of interest or bond rates, but through a value that balances claims of future wealth with the economy’s power to generate that wealth sustainably today.
In a commons economy, the cost of failing to address climate change is viewed as a function of the sustainability of the resources that back our currencies. Thus, in computing the costs and benefits of climate mitigation for the future, it is money itself—the medium of exchange between buyers and sellers—that creates the incentives necessary for the global adjustment of value. With a commons reserve currency issued in co-credits, where the relative value of present and future goods arises from the commons as a collective expression of nature, society and culture, signals about the actual scarcity of resources and the cost of environmental damage and social disparities are conveyed directly through our money. When global sustainability is expressed through the value of currency, each of us will have much fuller and immediate realization of the potential impact of our purchasing power in spending, saving or investing, making it worth less to do ecological and social harm, and worth more to be ecologically and socially restorative. Prices will find the right level only after money is properly valued, breaking the endless-growth imperative, balancing the interests of the future with those of the present, and actualizing our incentives through nature, society and the economy. To get prices right, we need to get money right. This means getting energy right. And to do that, we must first get the commons right.” (http://www.kosmosjournal.org/kjo2/library/kosmos-articles/interest-rates-and-climate-change.shtml)
"In my view, many commons need a social contract negotiated between the commoners and the state. Each one should be negotiated on its own terms. There may be pure commons management on one hand, or perhaps state-commons hybrids on the other -- but that's up to the commoners to negotiate with the state. This is not a sell-out. It's to protect the commons and also to help evolve the future role of the state. Let's face it, governments are not going to somehow melt away. We wouldn't want that anyway, because government provides security and other public goods that we commoners cannot provide for ourselves. The libertarian and fundamentalist private sector folks are (hopefully) learning the hard lesson that the state is a precondition for civilization -- and the commoners mustn't allow the Right's ideologically conditioned condemnation of the state to carry over into our own thinking. This doesn't mean a regressive retreat to the likes of the social welfare state or Keynesianism. The next step for us to consider is creating social charters -- not state constitutions but charters that are negotiated and apply to specific commons -- to determine how our commons trusts are formed and the work that they will carry out, locally, regionally, and globally. It's not that the commoners have to reach after moral legitimacy (we have that), but we certainly do need legal legitimacy and authority on our own terms, on the basis of birthrights and customary claims to the sources of our livelihood and well-being, not on the basis of the old liberal social contract. Hence, the social charters. The sense of a revolutionary change in the nature of what government does -- as it faces the transformational power of the commons -- needs to be faced squarely by all of us. Frankly, without the help of the state, how are commoners ever going to stop these privatized enclosures? Yet commoners often focus on the legal aspects of property rights vis a vis corporations and ignore the potential legal benefits accruing from the state. The corporations wouldn't be enjoying their rights of 'corporate personhood' in the first place if the state had not granted them, and, as you know, commoners have grown to mistrust the state (rightly so!) because it has broken the social contract with us in order to empower and privilege businesses. But that flow of legal and political power can be neutralized, even reversed, if we recognize that the deadweight is not property, but private property. We need to turn legally recognized property rights to our favor, and that can only be done in cooperation with the state and the rule of law. The governance of a commons is not the same thing as the legal protections afforded by the state -- the two things must not be equated, but I'm afraid many commoners have indeed conflated them, somehow assuming that the co-governance of a commons is all that's needed. That's reductionist thinking.
We need a Commons Reserve Currency
"Under the present economic system,money is created by national governments and private banks through loans. To maintain the supply of money needed to repay both the interest and principal on these loans, banks must continually find new credit applicants to create sufficient demand for more loans. Hence, banks are continually pushing credit, driving corporations to borrow more to produce, and citizens to borrow more to consume.
This is our global dilemma. On one hand, no amount of corporate production and consumer spending can satisfy the banks’ continual demands for repayment of these loans; on the other, the algorithm of perpetual economic growth adopted by banks, corporations and consumers has no offsetting formula for repaying the accumulating debt and redeeming the damage that this compulsive growth is wreaking on the commons.
In terms of non-renewable resources such as oil — as well as many other renewable resources — human society has been spending not only the interest but significant portions of the principal.
If we do not reverse this situation — if bank-driven overproduction and overconsumption continue to generate speculation and hoarding of physical and financial assets, loan defaults and job losses, hunger and poverty, and carbon emissions and climate change—soon the planet will not only have diminishing returns from the interest on its commons resources, but the principal itself will be gone.
Since the money system and individual purchasing power are social commons, perhaps there is a way to both stabilize and democratize money.
The world community could create a form of monetary reference — belonging and accountable to everyone — that is not dependent on the economic or political decisions of a single state or the monetary nationalism of currency-issuing states. Global commons representatives could collaborate to produce an international currency, backed by a new kind of reserve asset, to provide a stable and usable exchange credit for business, trade and other social transactions.
This new system would generate a broad measure of common wealth and well-being that is not based on productivity, profit or interest, but on the perpetual vitality and continuous adaptation of local resources to support a good quality of life for all human beings. It would mean turning the present system of private credit— including banking and finance — into a commons utility through the conversion of debt to equity across all sectors of society. It would mean using our commons- based capital — cultural, social, intellectual, natural, genetic, and material — as collateral for an equity-based global reserve system that issues credit underpinned by these resources.
Under this new reserve system, commons assets would form the basis of a composite standard of value. For example, a Reserve Basket of Global Common Goods could include indicators for cultural resources such as indigenous wisdom, household work and the arts; social resources such as health, literacy, economic output and income distribution; intellectual resources such as scientific knowledge, intellectual property and information flows; natural resources such as air and water quality, ecosystem health and biological diversity; genetic resources such as living creatures, organs and seeds; and material resources such as gold, oil, water and the atmosphere. Rather than convert commons assets into a market value, these indicators would generate a unique index based on the sustainability of the global commons and the value that these common goods have for our natural and social quality of life and that of future generations. Resource units in this reserve index would include historically important depletable resources, and also resources that are currently depletable and are likely to be depletable in the future. But it would also include resources that are replenishable and reflect social productivity, human security and well-being. By continually measuring and averaging the indices of each resource in this basket, trustees of the commons reserve system could decide the proportion of those commons resources that should remain untapped as principal. At the same time, the commons reserve system would replace the present interest rate mechanism with a sustainability rate.
This commons reserve currency would function through the creation of Co-Credit — a participatory unit of value used in trading, investment and decision-making. As co-credits are lost or gained in each transaction, the deficit or surplus would be accounted with reference to the sustainability rate — a real-time measure reflecting the capacity of the global commons to provide and sustain the well-being of present and future generations. At any given moment, if the sustainability rate is low, the co-credit is worth less relative to its value in an exchange, which may cause a buyer to spend less, or perhaps not spend or to postpone spending; and if the sustainability rate is higher, the co-credit will be worth more in the exchange, which may convince the buyer to spend more. So, through co-credit exchange among buyers and sellers, community members would determine the value of their own production based on the capacity of the global commons to support the natural and social quality of life. Each use of a co-credit (whether the sustainability rate is low or high) is literally a vote for the longevity, regeneration and diversity of the planet’s common goods, enabling human civilization to protect its principal and withdraw from the commons a smaller portion of its resources. Since the commons reserve system guarantees a stable and lasting source of global capital, the development of co-credit exchange would eliminate the need for banks, financial institutions, government-issued currency, and a debt-based money system in which the continual payment of interest on loans requires unsustainable levels of production and consumption to monetize the existing debt." (http://www.kosmosjournal.org/kjo2/bm~doc/people-sharing-resources.pdf)