Vol.1 No.1, 01 June 2001

A SANE Policy for Sustainable Economics

Why we need 'New Economics'

Conventional market economics says that the system we have right now - what we've grown up with - may have its flaws but it's the best model going, and can give us the better life we all want with some fine tuning.

It fails to acknowledge some fundamental systemic faults, which will always inhibit real progress because

• it relies on perpetual growth for its viability, and the planet cannot sustain perpetual growth;
• technology loses jobs and hence purchasing power (machines don't shop), so what is produced cannot be bought;
• it deepens and widens poverty everywhere, even where it is 'succeeding', and this will produce social upheaval;
• it centralises economic activity, causing mergers and take-overs and rendering small business non-viable;
• it gives incentives to measures without adequate concern for their environmental impact;
• it undermines democracy: governments are bound to the same global market imperatives whatever their electorates want;
• it relies for legitimacy upon the IMF and the WTO which are producing the biggest international civil society protest in history, and will impel change;
• it creates increasing indebtedness of people and economies everywhere as recession and depression bite; and
• it promotes instability and uncertainty as international funds slop around the globe in search of speculative profits.

Six Pillars of Sustainability

New Economics proposes the following systemic action, preferably but not necessarily simultaneous:

1. Tax bads and reward endeavour - At present we do the opposite. We need to tax pollution, non-renewable resources, currency speculation; and land; and to reduce income tax.
2. Promote local - Move from export-led to local-led enterprise, especially food, fibre, fuel, and furniture.
3. Restrict international currency movement - Control footloose capital to restore national sovereignty, using Tobin Tax, and other 'speed bumps' and direct controls. These will stimulate local capital generation and direct it to where it is needed.
4. Take control of money creation - Restore to the central bank its right and democratic duty to create the money the economy and people need, instead of leaving this to debt-based creation by commercial banks.
5. Support local parallel currencies - Regenerate local, especially rural, enterprise through developing local currencies and promoting livelihoods instead of jobs. 'Jobs for all' will probably never ever happen again.
6. Issue a citizen's basic income - It is simple to administer and cuts the bureaucracy of means-testing. It can be issued in the form of a local currency, backed by goods and services offered by local government and financed by affordable formal taxes. The multiplier effect of increased local purchasing power will create work for idle hands and skills.

© South African New Economics Network 2006. Page generated at 17:21; 24 September 2006