Archived Nov 5 2008
A proposal for transition to a sustainable economy
This excerpt is from a new book by Australian Lionel Orford, titled "Peak Capitalism: "Peak Capitalism: Our Opportunity to Choose Between and Survival and Collapse. Lionel has made available an executive summary (PDF)
The following is proposed as a preliminary plan for discussion amongst all those who are willing to acknowledge the reality of our predicament, think beyond the paradigm of the current system, and rationally discuss the fundamental reforms required to avoid catastrophe.
Step 1: Emergency Management
Changing to Emergency Management Mode
We are as dependent on our complex system of food production, processing and transport in the same way as the passengers of a ship on the ocean are dependent on the ship staying afloat. When the ship is sinking, the business of the voyage must be abandoned and the crew must mobilize any available means to try to save the ship. There are no lifeboats, and even if a few could be improvised, they would only condemn those in them to a slow and miserable death on the high seas.
As the economic collapse becomes undeniable, our governments will need to declare a State of Emergency that enables them to suspend business as usual and mandate that all necessary resources are dedicated to maintaining essential services. The failed Capitalist economy will need to be replaced by an emergency command economy.
We also need to recognise that this is a global emergency and accordingly, all countries need to cooperate through the UN to form the international agreements required to ensure that each country is able to access its essential requirements and that all countries partake in the reforms required to save civilisation and our planet.
Maintaining Essential Services
Governments throughout the developed world will probably need to directly intervene to create a command economy to ensure that the economic collapse does not cause the breakdown of essential services. It is important to understand that this is a failure of our economic system rather than a failure of the actual means of production of our essential goods and services.
Many millions of people who have lost their incomes will need to be provided with food, water, housing, medical care, electricity and sewage treatment. It is proposed that this be achieved through government issued ration system that provides every person with their essential needs.
Such rations would need to be non-transferable so that a no black market in rations is possible.
A system of fuel rationing will be required to ensure that the available fuel is dedicated to the production, processing and distribution of food and other essential services as the supply of oil dwindles. This will entail a progressive shutting down of as many non-essential commercial and private activities as required to reserve sufficient fuel for essential services.
A Moratorium on Housing Foreclosures and Evictions
As the economic crisis deepens, it will be necessary to acknowledge that those that find themselves victims of this disaster cannot be held responsible for it. These people need shelter like anybody else and it is immoral and impractical to throw them all out on the street.
This is already happening on an informal basis due to the inability of the creditors and the courts to process the avalanche of foreclosures that is already occurring. My message to people forced into mortgage default is “stay in your houses”; there are simply not enough bailiffs to evict all of you simultaneously. A formal moratorium is required urgently.
This moratorium will remain until such time as an International Monetary Treaty can be established and the terms of settlement of debts, both national and private can be agreed.
An International Monetary Treaty
The global economy is crashing. Like a crashed computer, it is no longer able to function even though the hardware is still useable. The fatal error that has caused this crash is the Capitalist money system. There is no point in trying to run the same flawed system up again; it can only crash again.
This paper proposes a new money system, the rules of which would be defined by an International Monetary Treaty (IMT) to be agreed through the United Nations.
The fundamental basis of Capitalism is the power of the banks to create money as debt and to charge interest on that debt. This results in the money system being dependent on continuous expansion of debt and therefore ‘economic growth’, and in the concentration of wealth and power in the hands of a rich elite. The proposed IMT would transfer the power to create money to ‘we the people’ through our governments. It would also eliminate the hegemonic power that America derives from having its currency as the world currency.
The collapse of global Capitalism means a breakdown in the international system of trade. All nations are dependent on international trade to provide some part of their fundamental requirements, so we must re-establish a functional trading system as a matter of urgency. It is now time to declare “game over”, settle the scores, and start again with a new set of rules for international trade.
The proposed IMT would include the following articles:
- The legal right of banks to create money as bank debt and to charge interest on that debt would be withdrawn. Money would be created by ‘we the people’ through the treasuries of our Governments, as needed to facilitate the trade of goods and services.
- Each national government would be responsible for issuing their nation’s money into circulation via direct government spending and interest free loans, and for reclaiming that money through taxation and loan repayments so as to maintain a stable value of their currency.
- International trade would take place in a new international currency unit, referred to here as the “Geo”. A UN chartered World Central Bank would determine the exchange rate of each national currency so that governments that ran inflationary monetary policies would have their currency devalued accordingly against the Geo and those that balanced their money supply would maintain a constant exchange rate.
- All bankrupt corporations (including the banks) would initially be nationalised by their country of incorporation and their assets used to provide for the common good of the people.
- Each nation would take possession of all assets located within its borders, regardless of nominal ownership.
The IMT is essentially a proposal for ‘we the people’ to take advantage of the situation where Capitalism has collapsed to finish it off once and for all. Even though Capitalism is terminally ill, it’s not dead yet and we can be sure that the rich elite will fight to the last breath to retain their enormous power to create and control our money.
It is important to note that this is not a proposal to eliminate free enterprise, but to depose the Banks from controlling our money and burdening us with interest; free enterprise and private ownership would be retained and supported. As a new economy is established, nationalised companies that were suitable to compete in a free enterprise environment could be reprivatised.
Because the culture of Capitalism has such enormous influence over the minds of the people and our governments, it seems unlikely that such an IMT will be adopted immediately. It seems more likely that the existing system will be restarted with a few minor changes that do not address the fundamental problem, leading to partial recovery followed by further failure of the monetary system.
An Oil Production and Sharing Treaty
It is imperative that the global economic collapse does not result in a collapse of oil production, which would be catastrophic. Hence there needs to be an international agreement to ensure that oil producers are paid and the investment in new supply continues, so as to limit the rate of decline to a manageable level. Some form of IMT is required urgently so that this can be made possible.
It is also imperative that the burden of reducing our consumption of oil to match the available supply be shared by the international community so that essential services can be maintained in all countries and systemic collapse can be avoided.
Provisions are required to ensure that oil is apportioned according to need rather than price.
Heavily oil dependent countries, most notably the US, need to maintain supply of sufficient oil for their essential services. Since it is highly unlikely that they would initially be able to pay for that oil through international trade; some form of special consideration will be required.
In return for such consideration, these countries would need to formally commit a process of rapid transition to a less oil dependency in their own societies and commit to providing substantial practical assistance to poor countries to break the poverty cycle through education, medical care and the development of self sufficient food production and other essential services.
Dealing with America
It is unlikely that America will readily agree to any form of international treaty because they regard any international agreement as relinquishing their sovereignty. Even as their empire collapses, the ruling elite is far more likely to pursue their current policy of seeking to appropriate the world’s resources through threatening and subversion of other governments, as well as outright military aggression. Although this is the path to certain failure, there is a significant risk that America will escalate the current resource wars rather than admit that their era of world domination is over.
As a means of last resort, it may be necessary for the world community to resolutely stand together to cut off their supplies of imported oil in order to disable the military industrial complex and prevent full scale war. If maintained for a few months or more, such action would result in a systemic collapse of their entire society leading to catastrophic civil strife, famine and mass deaths. This is to be avoided at any cost – except full scale war.
It is imperative that the world community allow America a way to step down with dignity from the potentially catastrophic situation they now face. The basic deal would need to be one of debt forgiveness and an arrangement to supply America with sufficient oil to keep their essential services operational in return for a binding commitment to cooperation with international community to implement the fundamental reforms needed to deal with the Sustainability Emergency.
If war can be avoided, America has a great deal to offer the world. Most obviously, America is by far the world’s largest food producer, without which the world cannot feed itself even now, and this reliance is almost certain to increase in the coming decades.
Also crucially important is the scientific and technological prowess of America, which the world urgently needs in order to develop new technologies to phase out fossil fuels and find sustainable ways to grow more food.
Step 2: Building the Infrastructure Needed for the Future
An emergency command economy is highly undesirable as a long term solution and should be phased out as soon as practicable. There will be an urgent need to get people back to work so as to re-establish a functioning society and there is no shortage of work to do to.
We need to build a multitude of new facilities to enable the phase out of fossil fuels and to develop and implement sustainable agricultural systems to feed the world going forward. The proposed plan would entail direct government spending on major projects to be owned in common by the people. This would provide the primary capital for a new economy. Private enterprise would provide services to the projects thus circulating the money through the economy. Where required, interest free loans would be made to private enterprises to enable them to get established or re-established following the economic collapse.
Specific major projects are proposed:
- National electric railway networks for freight and passenger rail
- Solar Thermal Storage electricity generation on a huge scale
- Large expansions of the electricity transmission networks
- Development of new generation nuclear reactors to burn Uranium238 and/or Thorium in countries where solar thermal storage is impractical
- Research and development of sustainable agricultural systems, including the use of ‘agrichar’ to sequester carbon into the soil.
- Re-deployment for new purposes or materials salvage of buildings and machinery left unused due to the economic collapse.
- Research and development of production of oil from algae on a vast scale.
It is essential to understand that all this development will need to be undertaken in a world constrained by steep declines in hydrocarbon fuels. Thus whatever fuel is available will need to be dedicated to providing essential services and building the things we need for the future. It is simply not possible for the current profligate personal energy consumption to ever resume.
This implies that there can never be a resumption of the consumer economy and the commerce and employment that it once provided. Large numbers of people who formerly worked in the consumer economy will remain unemployed and dependent on the dole for their basic needs.
Direct government spending will be required to support these people for some time. This spending is absolutely necessary because the systems of production of essential goods and services can only continue to function if people have money to buy those goods and services. It is equally important to understand that, once a money stock is established, all the money spent by government must be reclaimed through taxes so as to not render the currency worthless through inflation.
Having large numbers of people on the dole is highly socially corrosive because these people are denied a useful role in society; it is not a long term solution. Hence we must conduct programs to involve these people in the betterment of their communities and to develop the new skills needed for a sustainable society. The development of permaculture community gardens (where land and water are available) is an example of the type of programs needed.
In order to develop these new systems worldwide, a greatly expanded Peace Corp is proposed.
The resources of the great powers currently dedicated to the military, as well as a large number of unemployed people could be trained as educators, engineers, agriculturalists, doctors, etc and deployed throughout the poor world to assist these people out of the vicious cycle of poverty and overpopulation through education, infrastructure building and development of self sufficient organic agriculture. This would truly be a “win win” for everyone involved.
Step 3: Transition to a Sustainable Economy
Once we have dealt with the immediate emergency of the collapse of Capitalism, established a functional international monetary system and gotten people back to work building the infrastructure we need for the future, we need to look at the long term plan for a sustainable society.
Guiding Principles for a Sustainable Economic System
In order to formulate plans for transition to a sustainable economy, we need to consider the essential requirements of such an economy. Seven guiding principles for formulating a sustainable economy are proposed for discussion:
1. Money must be used to facilitate the exchange of goods and services for the common good. It must not be manipulated to concentrate the wealth and power of a rich elite.
2. The system must deal effectively with the Sustainability Emergency and begin to heal the planet.
3. The needs of everyone must be met before anyone is entitled to any surplus.
4. The process of transition must lead to a society in equilibrium with the planetary ecosystem, which implies an economy that functions without growth and achieves complete recycling of all finite resources.
5. The physical assets of the current system must be preserved as far as possible and used for the common good.
6. The cultural assets of enterprise, initiative, creativity, knowledge and skills that developed under Capitalism must be preserved and rewarded.
7. Quality of Life rather than Wealth and Status must become the overriding aim of society.
Note that all these principles, except No.6, directly conflict with Capitalism.
The Cultural Transition
Capitalism is our culture; its values and assumptions are fundamental to the way we see the world and the overwhelming majority cannot even conceive of any other way to live their lives.
It will take time for people to come to terms with the death of their way of life, to accept the need for fundamental change and to revise their belief systems and fundamental values.
Only when a significant part of the community understands and accepts the need for a new monetary system will the necessary reform become politically viable. Hence it is absolutely essential that those of us who recognise the fundamental problem with the Capitalist monetary system express their views as prominently and widely as possible. As noted by German philosopher Arthur Schopenhauer:
All truth passes through three stages:
First, it is ridiculed;
Second, it is violently opposed;
Third, it is accepted as being self evident.
We will need to persevere despite ridicule and opposition before the need for change is accepted as self evident.
The Energy Transition
As modern humans we are all totally dependent on a highly complex system of production that provides our essential goods and services. That system requires large amounts of energy in order to function. We now face an urgent need to phase out the fossil fuels that currently provide most of that energy because of the need to dramatically reduce carbon emissions and because of the declining supply of all fossil fuels, most imminently oil and gas.
It is not possible to conduct a demographic transition to a self sufficient agrarian society that is not dependent on an energy intensive system of production in the time frame available to us.
Such a transition would take centuries, whereas the required transition will be imposed upon us in decades. Hence, we must replace fossil fuels with energy sources that do not emit carbon with all possible speed in order to avoid the collapse of civilisation.
There are only two such energy sources currently available that are feasible for replacement of fossil fuels on a large scale; Solar Thermal Storage and Nuclear. Both of these produce electricity rather than liquid fuels, which implies that we need to replace our oil powered infrastructure with electric powered infrastructure.
This represents probably the greatest challenge ever faced by modern humans due to the sheer magnitude of the infrastructure required and the reality that this work must be done in a world of declining oil supply, declining agricultural productivity and probably other competing priorities due to climate change.
In the early decades of the transition, it may be feasible to greatly reduce our use of fossil fuels but some will be required for the foreseeable future. Coal and natural gas will be required for backup electricity generation for systems with large amounts of solar thermal generation and to meet load swings in systems dominated by nuclear power. In the long term, this backup and swing capacity could be provided by pumped storage hydro generators, but this is another major infrastructure project and not an immediate priority.
Even if we achieve the best possible scenarios, we will be forced into lifestyles that are much more energy austere than those we have grown up with. However, if we work together it may be possible to achieve lifestyles that meet all our needs perfectly well and are potentially far more rewarding than the materialist society of today.
The Transport Transition
All of us living today are highly dependent on the complex system of transport that supplies us with the goods required to keep our complex society functioning. With the coming declines in available oil supply, there is an urgent need to dramatically reduce the amount of transport that our lifestyles entail, as well as to provide replacement systems for essential transport that are not dependent on oil.
This will entail transition
- From oil powered road freight to electric powered rail freight
- From oil powered sea freight to wind powered sea freight
- From food produced all over the world to mostly locally produced food
- From a car commuting to a public transport and bicycle commuting
- From cheap mass market air travel to expensive and exceptional air travel and mass market high speed rail
- From single occupant car travel to shared car travel and eventually, to a lifestyle without cars altogether.
There is no electric powered alternative to the hydrocarbon fuels for many transport applications including local pickup and delivery services currently provided by trucks, earthmoving equipment, personal travel to rural locations and all aviation. Hence we will remain dependent on some hydrocarbon fuels for the foreseeable future.
In gas rich countries such as Australia, compressed natural gas (CNG) is a potential transitional fuel to power the vehicles and machinery required to maintain essential services and build the vast infrastructure required to phase out fossil fuels. However, it is essential to realise that natural gas is not a replacement for oil as it is already close to peak production on a worldwide basis and will be in very short supply within a few years.
Given the enormity of infrastructure works required and the scarcity of hydrocarbon fuels required to undertake those works, it seems highly unlikely that there will be sufficient resources to replace private cars with electric alternatives. We will need to use a small portion of the existing vehicle fleet for essential travel. Cars will generally be fully loaded when they are used as they are in poor countries today.
In the longer term, a small fraction of the liquid fuel we currently consume could be provided from biofuels. The biofuel that seems most promising is the farming of lipid rich algae on a vast scale. This offers the advantages that it does not compete with food production, does not require fresh water and draws down CO2 from the ocean.
In every case, the transition involves reducing transport overall and adopting more locally based lifestyles. As new renewably powered transport systems are established, there may well be a re-establishment of recreational travel but this would entail a much smaller number of trips, each trip taking up a longer period of time. Overseas travel will be a significant undertaking, much as it was in the 19th and early 20th centuries.
The Food Transition
We face a worldwide food crisis of unprecedented scale. However organic farming has vast potential to simultaneously:
- reverse the loss of fertility of our agricultural land,
- reduce dependence on industrial fertilizers and oil,
- reduce the amount of water needed by improved soil water retention,
- reduce atmospheric CO2 by sequestering vast amounts of carbon in the soil,
- improve the self sufficiency of food production in poor countries.
The technology of making ‘Biochar’ or ‘Agrichar’ (essentially activated carbon) from any available plant material and introducing it to the soil, shows great promise as a means of radically improving soil fertility and directly sequestering large amounts of atmospheric carbon in the soil. The process of creating the Biochar also produces high grade renewable energy that can be used for power generation and other uses. This technology rapidly improves the fertility of depleted soils and can provide a major boost to organic farming. It should be developed on a vast scale.
What is now required is a monumental effort by the wealthy countries to work together to develop these organic farming methods around the world so as to have any chance of feeding the population of the planet going forward and developing the food security that is crucial to population stabilization and reduction over time.
The new economy proposed here will not produce any where near the levels of employment for people in cities as the Capitalist system has. However, the organic agriculture proposed will require far more human labour than the present industrial agriculture, particularly in a world of declining oil supply. Over the coming generations there needs to be a migration of people from the cities to the food producing areas so that they can work the land and be closer to their
food supply. However, it must be understood that this is not a solution to the current emergency; it will take generations to unfold.
The Transition to Equilibrium
The proposals put forward in Step 2: Building the Infrastructure Needed for the Future all involve real economic growth. However, the fundamental problem with Capitalism is its dependence on growth, which can not continue due to the limits of a finite planet.
Growth is inherently a transitional phase of the development of any system. In order for any system to be sustainable it must achieve equilibrium with the environment within which it functions. So we must plan for the phase out this growth as the infrastructure projects and supporting systems are completed.
Growth utilises resources and human productivity and as it reduces towards zero to achieve an equilibrium state, the resources consumed and the human productivity required are reduced accordingly. Simply stated; far less human labour is required to maintain an equilibrium economy than a growth economy.
Hence we need to transition to a lifestyle where far less of our time is spent working and far more is dedicated to fulfilling our human potential through other means, which could include involvement in music and the arts, philosophy, inventing new toys, recreational travel and involvement in our local communities, particularly in support of our elderly people.
We are all deeply socially conditioned to believe that we must work hard most of our lives. The need to work hard most of our lives actually arises out of the need for labour to maintain economic growth and to pay the interest on the ever expanding debt that is inherent to Capitalism.
In the proposed new economy, there would be no interest on debts, almost no debts to be repaid, far less material consumption and far lower income required to meet our needs. We need social policies to promote job sharing, part time work and early retirement so as to transition to lifestyles involving far less work per individual.
In order to achieve equilibrium, we must develop systems to almost entirely eliminate waste including:
- Phase out of disposable food packaging in favour of containers that are durable and reusable or made from plant material and completely biodegradable.
- All manufactured goods must be designed for maximum lifespan and designed so that they can be disassembled into totally recyclable components at the end of their viable life.
Materials such as fibre-glass and resin composites would be eliminated.
- Phase out the discharge of sewage into the sea in favour of returning the water and the nutrients it contains to the land.
The transition to a post-capitalist society is an enormous, difficult and unprecedented undertaking in cultural change, however the story unfolds.
The Sustainability Emergency is so advanced and so serious that a disaster involving the deaths of billions of people and many more entire species may be unavoidable. However, we are far more likely to achieve the ‘best possible’ outcome if we acknowledge reality, manage the emergency, and work towards a transition to a sustainable society.
The alternative is to let events take their natural course, which is to maintain belief in Capitalism and follow it blindly to our own destruction. This is the path to the collapse of civilization and much of life on Earth.
The fall of Capitalism offers us an opportunity to escape the power of its belief system and to choose Survival over Collapse.
Contributor Lionel Orford writes:
I am a professional electrical engineer with a long standing interest in renewable energy, energy sustainability and climate change. I have studied the Peak Oil issue in depth since 2004.
Last year, Lionel wrote an Open letter to Kevin Rudd, Australia's new Prime Minister.
-BA and SO