The Proposed Solutions
The report authors argue that “the current widespread focus on changing indicators is insufficient without a simultaneous focus on structural and systemic change”.
The authors admit that, given that there is no precedent for a non-financialised and non-growing advanced economy, and interest-bearing debt created by commercial banks is a growth imperative, measures would take time to implement. However, transformative monetary policies are necessary for an economy that prioritises social and environmental wellbeing.
The ambitious proposed agenda to reduce dependence on interest-bearing debt and instead foster balanced creditor-debtor relationships is founded on new ways of guaranteeing access to means of payment and access to credit.
The report looks at the arguments and logistics around universal basic income issued via central bank digital currency (CBDC). A CBDC would allow individuals to hold digital currency in accounts directly at the central bank as a way of ensuring access to a digital equivalent to cash without reliance on the liquidity
of the commercial banking system. This could be used to implement a universal
basic income (UBI), which would perpetually guarantee a certain amount of cash for households. This would be particularly useful in times of crisis such as at present and would decrease needs for households to access high-cost credit. In the long-term, a UBI would alleviate pressure to engage in full-time wage labour and thus allow more time for activities that do not involve market transactions such as personal caring responsibilities.
Alongside this, well designed complementary currencies at regional and local levels could further guarantee access to money that specifically promotes local economic activity and community ties.
Providing access to credit is another central function of the monetary system, also currently managed overwhelmingly by large commercial banks via the issuance of interest-bearing debt. A post-growth monetary system requires ways of guaranteeing access to credit which promote balanced creditor-debtor relationships.
The report proposes direct clearing facilities as they are based entirely on balance and reciprocity between participants. They are essentially simple accounting systems that record debits and credits between firms when they trade with each other. An obvious model for this is the long-standing ‘WIR’ in Switzerland, which has allowed over 60,000 businesses to continue trading even in times of financial crisis.
The report also echos the calls of others for an ecosystem of public banks, including a Post Bank and a National Investment Bank, and it emphasises the importance of adding more small-scale banking grounded in local communities and owned by members or local authorities.
In terms of debt jubilees, the report comes out in favour of those arguing for central banks to create money and issue it to households with the condition that it is used primarily to pay down debt. “This would be more immediately feasible than debt cancellation and would help stabilise the financial system by getting rid of unsustainable private debt burdens.” Furthermore, and crucial to post-growth goals, it would reduce the vulnerability of debtors and minimise their pressure to consistently grow their incomes for the purpose of debt repayment.
Lastly, the report looks at how governments, with their own currency-issuing central banks, need not rely on debt markets and taxation for increased spending. After all, both indirect and direct forms of monetary financing have been used by governments to support spending on Covid-19 response schemes.
An holistic alternative to GDP measurements would be a dashboard of social and environmental wellbeing indicators, grounded in a comprehensive wellbeing framework. The New Zealand Living Standards Framework (LSF) is cited as a good example of such a dashboard with its various indicators on ‘our country’, ‘our future’ and ‘our people’.
In the UK, there is interesting work within organisations such as the ‘Centre for Thriving Places’ and the ‘What Works Centre for Wellbeing’ but their efforts are not yet being sufficiently incorporated into decision-making processes.
Ultimately, it is virtually impossible to argue that the current GDP and economic growth model works, it just patches up things between crises. With the world in the midst of the global pandemic and climate and ecological breakdown, it is more urgent than ever that countries repurpose their economies to serve social and environmental wellbeing. Will the opportunity be grabbed or are even the current most stark lessons about to be ignored?