By Julia Ramos Puentes
And it seems that economy and sustainable development are two completely antagonistic concepts in the current society in which we live. Therefore, in this text I want to show that both can not only go hand in hand, but that they are totally complementary and interdependent.
Let's start by defining Sustainability and Economy. According to the United Nations, Sustainability is the ability to meet the needs of current generations without compromising the needs of future generations.
While Economy comes from the Greek "Oikos", which means: "care or management of the house". Therefore, Economy and Sustainability seem, at least in terms of definition, two quite similar concepts, especially if we understand that taking care of the house refers to taking care of our house, the planet EARTH. Thus, for caring for the earth to occur, we need to manage its resources wisely without compromising our own survival and that of the people to come.
Now, it seems almost crazy to think that in the current times in which we live, economy and sustainability can go hand in hand, especially when we have equated the concept of economy to the concept of money, the latter also becoming the owner and lord of everything and of all. It seems that money has gone from being a medium for exchange, to the central element around which human relationships are built and organized. Well, this economic reality that seems so obvious and that many of us accept as unique and possible, is nothing more than a recent “story”. Today we assume that money has always worked the same way. Nothing could be further from the truth, since for example, it was not until 1870 that the US dollar was established as the only national currency. Until that date there were more than 7000 different currencies in circulation and thousands of other products were used for exchange in that country.
Likewise, the three international organizations, the International Monetary Fund, the World Bank and the World Trade Organization, mainly responsible for regulating economic affairs at the international level, have only been operating since the middle of the 20th century.
So, if we want to implement a new economy for 21st century organizations, we first have to understand how the current economic system works, understanding in depth what money is, how it is created and how it works.
Understanding the financial system
With the arrival of the scientific era in the 16th century, came the separation of human beings from nature. We began to see our environment as a subsystem at the service of the economy that provided us with a bank of resources full of transformable products to satisfy all the economic needs of human beings.
The economic development of human settlements has gone from the survival mode of hunter-gatherers to the development of agriculture, to the specialization of skills, to industrialization and finally to massive and excessive consumption.
The current economic system has flourished thanks to the advent of the era of fossil fuels. The exploitation of natural resources has made huge amounts of energy available to us, giving rise to great technological advances, but also with immense costs for society and the planet, such as greenhouse gases or the economic disparity between rich and poor.
This economic system assumes that we will always have cheap energy and that growth is unlimited. But how can you have unlimited growth on a planet with limited resources?
Likewise, they have made us believe that economic growth and globalization is the only alternative, the only way, when these are nothing more than a cultural construction imposed on all people, the result of a few elaborate policies created by the industrial capitalist system. (Gibler 2006)
Now, if we want to generate change, we need to know how the system works from within. How does the current economic system and money really work?
The first big revelation is that money is created by commercial banks, which are private entities, in the form of debt.
What does this mean? Well, every time a person requests a loan in a bank, they create an imaginary electronic money, assuming that the individual will pay his debt with interest in the specified period.
For the system to continue to function, there needs to be a constant need for borrowing from individuals and the market.
What many people think is that the money in the banks comes from the deposits of the clients in that same bank and in fact it works totally in reverse.
In this way, the economic system and money have their pillar in the debt acquired and in the interests that this debt generates; and therefore they depend on constant economic growth as the only way to repay the debt. Something even more terrifying than this is that this system requires competition between people, taking resources away from each other in order to settle their accounts with the bank.
Currently 90% of world money is only a figure on a computer, being completely intangible electronic money.
Another totally surprising factor is that governments do not create the money used by their citizens and that they depend on and must operate in the same way as individuals, that is, borrowing with interest from banks. Let us also remember that banks are private entities.
Likewise, it is estimated that 96% of the money that currently exists in circulation is purely speculative money and is used to obtain profits by speculating on the rates of currency conversions in international markets.
The creation of money as debt and interest causes money to be transferred from poor to rich. It is estimated that approximately 10% of the population earn approximately twice the interest on their bank deposits than they pay on their loans. The same is true between developing and developed countries.
That is why in order to generate a truly sustainable and fair economy, it is not only necessary to change the way money works as debt, but it is also necessary to pay attention to two key factors: externalities and subsidies.
Let's put ourselves in context: Today, 52 of the 100 most powerful economies in the world are large corporations.
Well, externalities correspond to all those social and environmental costs not included in the price paid by end consumers. This makes it cheaper in many cases to import products from other countries than to consume your own.
If externalities were internalized, that is, if the social and ecological costs associated with industrial products were included in the final price, the cost of production would be higher and these products would no longer be as profitable.
This simple change would have a huge effect on global consumption, since sustainable products, for example local and organic farming, would be cheaper than any industrially produced and unsustainable agricultural product. This would have unimaginable positive impacts on the whole of society, since sustainable organizations would prosper and human beings could develop our professional careers in companies with meaning in which we feel fulfilled.
The second factor is subsidies. An estimated 700 trillion in taxes are spent each year on activities that destroy the environment (Brown 2008).
Most of the subsidies go to large producers and large multinationals, which prevents small producers and the poorest countries from competing on equal terms.
Well, so far we have seen that money as debt, externalities and subsidies are three factors that require a change if we want to build a new, more sustainable and fair economic system. The good news is that the solution is not as complex as it may seem a priori, since according to the data presented above, this whole network could seem like a David vs. Goliath fight.
Therefore, change, as we said at the beginning, will come from the bottom up and for this it is necessary that we develop projects that support the emergence of a new economic model.
The change from the bottom up
This new economic model requires that we understand several factors: The first is that there is an interconnection between all things and all living beings. What I do to others and to my environment has an impact on myself.
The second is that unlimited and exponential growth is impossible and unnatural. There is no process in nature that follows that pattern. Growth always tends towards equilibrium in time.
We also need to review our beliefs about money. How much money do I want or how much do I need? The change in the vision of the economy from how much I want to what I need is the principle of the non-violent economy or of the sufficiency that Gandhi promoted. An economy in which nobody takes more than they can use, because if they took it they would be taking it from someone else. Gandhi wrote: ‘nature produces enough to meet our daily needs; and if only each person took enough for their needs and nothing else, there would be no poverty in this world. '
A similar vision is promoted by Charles Eisenstein, in his book "The Sacred Economy." Eisenstein speaks of the “gift or donation economy”, a form of economy very close to the human being since it has worked for thousands of years in our social systems. The economy of donation consists of sharing with others what you do not need, since abundance for the people around me is abundance for myself and generates gratitude, goodwill, security ...
Thanks to the understanding of all these factors, we can see that the purpose of a 21st century organization should not be the maximization of profits, but the generation of sustainable wealth at all levels. A more practical way to understand this is to delve into the Profit = Income - Expenses formula.
The organizations of the XXI century would have to have a profit close to "0". Any businessman would throw his hands at his head with this statement. However, let's think about the current economic situation. The pursuit of profit maximization has led us to seek to minimize costs regardless of the social and / or environmental impact of our business activities.
In times of economic crisis, this attitude has been carried to the last consequences, such as, for example, taking production to foreign countries with the consequent loss of jobs at the national level. The curious thing about this formula (B = IG) is that reducing expenses has a direct impact on income, making the very people we have fired no longer have enough purchasing power to continue buying our products, with which our benefits they are depleted. This is the story of the whiting that bites its tail.
Now, the vision of a sustainable economy that tends to profit "0" requires that our income and expenses be as equitable as possible. To do this, as we looked earlier with externalities, we need to allocate all real costs of production to this formula. In this way, expenses are no longer seen as expenses, but as an investment for the good of society and the planet. If I invest more and better in the people who work on my projects, they will have better purchasing power which will directly revert to my income. Remember, “if you have more, I also have more. We all have more ”. It is what in the Dragon Dreaming methodology is called a “win-win-win” culture, where individuals, the community and the planet always benefit.
When I refer to "real costs" I mean all those that are not only necessary for my production but also take into account my personal needs. Likewise, if these real costs are generated in the community or environment in which I carry out my activity, this will have a more direct impact on my income.
Finally, let's eliminate the culture of usury and speculation from our minds, ceasing to seek the best possible price or the highest return on investment, since in a more or less direct way, this has a negative impact on ourselves.
What else can we do to create change?
- To generate change we must begin with changing ourselves by putting all of the above into practice, plus:
- Supporting and / or investing in sustainable projects and local businesses.
- Donating an amount of your income to other people or nearby projects.
- Stopping supporting the traditional economic system and beginning to use alternative economic systems such as credit unions, time banks, alternative currencies, microcredits.
- Transmitting to friends-family-acquaintances the operation of the economic system and how the money comes from the debt.
- Connecting with people with similar visions.
- Claiming from governments a real national economy where money is created by governments, without debt and where the wealth of a country is measured by factors such as the happiness of its citizens, investment in infrastructure or social services, the preservation of the natural environment etc..
Finally, don't be demotivated by the belief that this has always been the case and that it cannot change.
According to “Alvin Tofler, if the last 50,000 years of human existence were divided into life spans of approximately 62 years each, there would have been about 800 life spans. Of these, 650 would have been spent in the caves; electricity would have been used for two lifetimes; oil would have been used only in the present life; and the computer, of course, would have been used in less than half the most recent life span. " So this contemporary economic history is but a small span of time compared to the entire history of mankind. This text is the basis of the economic vision of the Dragon methodology
Dreaming, in which workshops for “empowered fundraising” are developed and economic systems for companies in the 21st century are analyzed. You can have more information here.