De-Growth in Slovenia

Brian DaveyFeasta

1972 Club of Rome report• Message: In the 21st

century humanity would have to divert much capital and manpower to battle against ecological system constraints – manifested in a shortage of energy and other resources on the one hand and the increasingly destructive effects of wastes produced by the economic system on the other.

40 Years later the Limits to Growth even more evident

• Shortage of resources: Oil, gas, water, top soils, phosphates, metals and minerals in depletion and nearing or at peak of production/supply

• Effects of ‘wastes’ - particularly CO2 and “greenhouse gases” with climate change in danger of increasing out of control because of reinforcing feedbacks

200 years of growth have been based on cheap and energy dense fossil fuels

• But in burning these fuels• (a) depletion eventually occurs• (b) the climate is changing and

moving towards a “runaway threshold”

• (c) Toxic wastes are overwhelming local ‘sinks’

• With poor harvests, rising energy and other costs growth begins to falter....

In the opinion of many climate scientists humanity is likely to create a runaway process of climate change which will be more than merely dangerous, it will be utterly catastrophic.

At the international and national level there is an utter failure to deal with this global emergency.

A lot worse may be coming...

Graph created by UK Climate Scientist Kevin Anderson –On current trends humanity is on track to an absolutely catastrophic increase in global temperatures

Projections of the Climate Crisis

There are many more problems in addition to climate change e.g.

So what we have is really “Uneconomic Growth”

• The additional costs of growth exceed the additional benefits...in damage to our health, that of our children and the environment...

A future of fighting for scarce resources?

A future of global financial sector meltdown?

A “Super-Bubble that could burst”?

• Is this a hyper inflation of speculative bets?

• Financial assets ultimately only have value if they represent a claim on real resource flows in the real economy.....

Add to these problems a common currency system which takes away from countries the ability to adjust exchange rates and interest rates according to the different conditions in different countries...

The Eurozone Crisis

And the solution of the global political elite?

Politicians make promises, they get elected and then they get co-opted into the circles and networks that organise the corporations thatdominate at the national and international level.

A Crisis of Democratic Governance

If we want something else to happen we have put politicians in political power who are integrated into different kinds of economic activities and networks – working for a different kind of society at the local level that involves developing a community economy.

An alternative politics needed

How does “de-growth” differ from austerity?

De-growth recognises that well being is increased by things other than buying and owning increasing amounts of material possessions – for example

1. greater equality, 2. more free time, 3. different value systems encouraged and supported, 4. more public infrastructure, community facilities and efficient households reducing the need to buy..

Many people wish to trade income for more time – 19% of the US population of working age and 23% of the Australian voluntarily decided to take less income to have more time in a 5 year period...- Source Clive Hamilton “Growth Fetish” citing

More equal countries have less drug use, mental health problems, crime, violence, better life expectancy, lower obesity, less teenage pregnancy, greater child well being....(source Wilkinson and Pickett – ‘The Spirit Level’

Social psychological research in multiple countries finds people who are motivated most by intrinsic values (e.g. finding meaning in life, protecting the environment, social justice, equality) tend to be happier than people motivated by extrinsic values (e.g. wealth, power, authority) - Source “The Common Cause Handbook” citing research by Schwartz et al

Returning ‘Economics’ to its original meaning: producing resilient and comfortable habitats

“Economics is an art of household management” - Aristotle

Eclogical efficiency = food, energy and materials provided close to home (or the need to buy them, and to travel, reduced)

Every city, town and village has shared infrastructure – public transport, libraries, leisure services. The task at hand is to extend these shared facilities as much as possible so that people can have access to resources without needing goods as personal possessions

e. g. Haus der eigenen Arbeit Muenchen: Workshops for wood, metal, paper/bookbinding, jewellery, textiles, upholstery, ceramics, art crafts, glass, blacksmith

Developing a neighbourhood infrastructure to minimise the need to “consume”..

Places where people can come together and help each other, learn from each other and develop ideas and projects together. The aim is to develop connections between people, the encouragement of creativity for its own sake and for the pleasure of doing things together.

“Solidarity economy” - an extension of more effective households.

Creating a seed bed for creative and interesting projects so that people are less centred on stressful employed work in order to earn money to buy their satisfactions in the shops.

Places where people develop different values and priorities enjoying creative opportunities and convivial social contact for its own sake – rather than because they have been “incentivised”.

Creating a different “life style package” to that of the supermarket economy...with skills needed in the ecological economy

Alternatives to the top-down paternalistic we-know-what’s-best-for-you - command and control way of managing things..

Yet we do need to try to make sure that the different community gardens, energy projects, tool libraries, workshop sharingarrangements evolve into a coherent whole...

Changing management approaches

Co-ordination networks between groups that share common or complementary purposes.

Minimise outside interferencein each organisation....

........while at the same time facilitating forms of co-ordination where a bigger picture makes it appropriate.

(a)conflict resolution procedures, (b) steps to achieve synergies, (c) developing a common strategic view of what is happening in shared environments and, (d) activities that clarify and develop shared value systems and purposes.

Given the global crisis and the national crisis that has occurred in Slovenia what ought to happen right now are reforms of

the tax system the money and bank system.

the energy system

Complementary national and international policies

Everywhere you look in the world the tax system is in crisis because the political-economic elite areopting out of its obligations to the wider society by looking for ways to avoid paying taxes. A global network of secrecy jurisdictions and tax havens allows them to do this and facilitates a growing amount of elite crime.

The Disintegration of Tax Systems

Tax land values and natural resource use more, and labour and work incomes less.

Because land is crucial as collateral when bank loans for property developments are made, it follows that land value fluctuations are closely tied to the stability of the banking system.

It is by taxing away the capital gains on rising land values that the incentive for speculative property bubbles is removed.

Solution: tax land values and natural resources more – labour and work incomes less

What makes an already developed location valuable is its closeness to transport links, to schools, theatres, shops as well as the existence of street trees and a park plus public sector funded infrastructure.

A community and its tax payers create these desirable features of a location but a landowner can then charge rents for advantages to a site created by others.

Sites which are still to be developed see land values rise as they are re-zoned with permission for development and scheduled for government investment in infrastructure...

Site Valuation

A community economic development when people work together to make the places that they live in interesting, pleasant and cheap places has a vulnerability – landowners might put up the rent in these places when they become desirable locations to live.

Hence the need for a site value tax to ensure that any extra rental values should go, instead, back to the local state which should then recycle it to pay the local project costs of a local communities that are helping themselves

Land value tax to protect community economic development from landowner parasitism

Land value cannot be hidden in a tax haven and you cannot hide land...

Site Value Taxes would remove the incentive for speculative bubbles that destabilise thefinancial system

It would stabilise the political system too (removing the incentive for corrupt political involvement in land speculation).

You cannot hide land values

Is it because the Slovenian banks are state owned and controlled that the banking crisis occurred?

In other countries when banks are under private control they do not behave any better – and politicians usually do what they can to rescue them.

The issue is not who owns or controls the banks – the issue is that it should not be banks creating the money supply.

Monetary and Financial Reform

Amplifying booms and slumps

Economic conditions• Boom: banks and

borrowers confident

• Slump: banks and borrowers unconfident

Finance Sector response• Lending rises, money supply

expands and boom overshoots into speculative asset bubble

• Banks cut back on loans, borrowers repay where possible. Money supply shrinks

Monetary authorities create non-debt money when the economy needs a boost when there is a lot of unemployment

Unlikely to create inflation if there is unemployed capacity

In any case, if inflation starts once full employment reached the state can tax the money when people have jobs....not increase taxes and cut benefits when they are already poor...

What ought to happen – but is unlikely under the ECB

When countries under an austerity assault from the Troika they should set up alternative “liquidity arrangements” to run alongside the euro. There are precedents for such arrangements running alongside the main currency – and many have been successful. For example, in Switzerland the WIR is a parallel payment arrangement alongside the Swiss franc which helps stabilise the Swiss economy.

I would not expect your government to set up such a system – you will probably have to set it up yourself – only don’t call it a currency or the Troika will close it down.

An Alternative?

Without policies to drive de-carbonisation very hard and completely transform the energy sector we have little chance of preventing catastrophic climate change.

This is a responsibility of every country...

But it effects effects the more wealthy among us above all else...

Transforming the Energy System in order to drive de-growth in a way that is equitable

Pareto’s 80:20 rule

• 80% of something relates to 20% of those involved

• 80% of emissions from 20% of population – run this 3 times = 50% of emissions from 1% of population or 40-60% from 1 to 5%

• The richest 5% of the global population earn above £30,000 = 35,000 euros = 266,000 Kuna

Ban the initial production, sale or import of fossil fuels without a permit for the amount of carbon contained in the coal, oil or gas.

Limit the number of permits issued each year and reduce the number as rapidly as is required by climate science. Make fossil fuel suppliers buy the limited number of permits.

To make the process fair the money that suppliers pay for the permits should mainly be returned to the people – per capita.

Cap and Share

Initial gain – the money from the sale of permits distributed equally to each person

Initial loss – the price of permits is passed on by fuel suppliers and leads to a rising cost of living

People with a low carbon lifestyle get more from their share of the permit revenues than they lose in the rising cost of living.

People with a high carbon lifestyle end up paying out more than they get back from their share of the permit revenues.

Winners and Losers?

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