My search to find official recognition of Prosperity Without Growth was not entirely fruitless.  Amongst the other documents for download from HM’s Treasury I found this little gem produced by Feasta (Foundation for the Economics of Sustainability, see link opposite) inputting into the Stern Review on the Economics of Climate Change.  It’s a couple of years old now and doesn’t take account of recent events in the financial markets but not withstanding that still has an interesting idea to put on the table.

This paper recognises that the current financial system is based on debt produced money (97% of money in the OECD).  More money and economic growth is constantly required to prevent the debt laden financial system from collapsing.  New growth is constantly required to service old debts.  Without growth the current financial system collapses with all of the real social effects that we have witnessed over the past year magnified many times over.  As such much as politicians would like to concern themselves with social and environmental aims these are always trumped by the need for economic growth.

Feasta recognise that if global green house gas emissions are to be rapidly curbed fossil fuel usage will have to be rapidly reduced.  This would cause economic growth to slow and quite possibly be negative for a protracted period.  A long depression caused by contraction in the real economy would be likely to bring down the global financial system.  For sustainability to be achieved therefore Feasta insist that the global financial system must be overhauled.

Feasta also recognise that whether by peak oil or by climate change restrictions the price of energy is going to increase in the coming years.  They also note the importance of not simply allowing distribution of this vital good to be left to the market.  In times of shortage (such as war) even very market oriented governments have introduced rationing systems to protect the poorest from being priced out of an unregulated market.

They suggest that a global buyer’s club for fossil fuels be created and that rights to buy fossil fuels be granted to governments on the basis of population.  Developing countries with currently no need for their full allocation could sell their ration providing them with resources for convergence.  The benefit beyond being a global cap and trade system is that it also puts effectively a new currency, not based on debt and with the seignorage benefit accruing rather more evenly across the world.  If the financial system does collapse having at least one hard currency left could be rather useful.

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