Green Money: Transforming Finance

February 6, 2014

Eco News Network is pleased to feature portions of an article titled,Green economy offers women more jobs with higher earnings “Transforming Finance and The Regenerative Economy” by Hunter Lovins and John Fullerton for the Capital Institute. The article is reprinted in part with the permission of Green Money Journal and it’s founder Cliff Feigenbaum. Cliff has been covering sustainable business and investing since 1992. He is the founder and publisher of GreenMoney Journal and GreenMoney.com.

Summary
The global economy, which is driving humankind beyond the limits of the planetary boundaries, is itself driven by the theoretical construct and practice of global finance. A perpetually growing economy is at some point in conflict with a finite biosphere, and will impose profound implications for how we live our lives, and without a doubt for finance, as well. Just as we are in ecological overshoot, we are even more in financial overshoot. Finance in general and specifically the flow of real investment capital is one of the critical leverage points to shift to a Regenerative Economy that serves humanity and stewards the integrity of earth’s ecosystems.

Introduction
The current speculative excess and ethical shortcomings of contemporary Wall Street, the problems of too-big-to-fail and, more importantly, other “in-system” failures have all given the economy and the current financial system a bad name. But the challenge goes beyond this. The financial system is designed to propel growth in the economic system with no regard for the physical boundaries of the planet and little regard for the social constraints of human wellbeing. Science tells us that this is fundamentally misaligned with the finite planetary boundaries of the biosphere. Notwithstanding all of its remarkable historical achievements, the global economy must now evolve not only to align itself with this scientific reality, but also to address such critical challenges as the grotesquely inequitable distribution of wealth, intractable poverty in much of the world, and chronic failure to deliver jobs or other means of achieving a livelihood with dignity. Meeting these challenges demands not merely problem solving, but systemic change to address root causes.
Climate change, ecosystem degradation, soil degradation and biodiversity loss are symptoms of an economic system that is beyond the limits. Finance and the money system it is built upon embody the exponential function. Compound financial returns, beginning with compound interest on an expanding monetary base, force the economy to continue growing at a systemic level. Since the economy is linked to material throughput, eventually this must create conflict with the boundaries of the biosphere.

The world has now arrived at that time.

The same planetary boundaries that constrain the economy with limits to material expansion also imply limits to investment since investment fuels growth. This is something no economic system in the history of civilization has ever before had to contemplate. How much and where large economic actors invest have critical implications for collective global security and, consequently, must become a central concern of global governance. This recognition is at the heart of new economic thinking.

The challenge facing the world is a question of story. Thomas Berry put it: “We are in trouble just now because we do not have a good story….The Old Story – the account of how the world came to be and how we fit into it …. sustained us for a long period of time. It shaped our emotional attitudes, provided us with a life purpose, energized action. It consecrated suffering, integrated knowledge, guided education….We need a [new] story that will educate man, heal him, guide him.”

If it is true that the story precedes change, the real job of the Post 2015 Development Goals is to tell a new story that stitches together the challenges facing finance and the economy and the necessary changes in these in such a compelling way that it invites all the necessary stakeholders to participate in the transformation.

The opportunity facing us is to transition to a regenerative economic system. If we fail, the world will face successive collapses of both ecosystems and the economies and financial system that depend on ecosystem health.

Read the complete article here.

Reprinted with permission from the Green Money Journal.
For citations, download the full paper at- http://bit.ly/1h8ICEm
Source: The Capital Institute – www.capitalinstitute.org

Photo Credit: Flickr/DonkeyHotey
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