Saturday, June 16, 2012

Rio+20: A Defining Choice - How Can We Create an Economy That Serves the Health and Well-Being of Both People and the Planet? Follow the Earth’s Lead

English: A view of Rio de Janeiro in the direc...
A view of Rio de Janeiro in the direction of Copacabana and Ipanema, from Sugarloaf mountain (Photo credit: Wikipedia).
by David Korten, Yes! magazine:

Next week, 20 years after the 1992 UN Rio Earth Summit, representatives of the world’s governments will gather again in Rio de Janeiro, Brazil to frame a global response to the Earth’s environmental crisis.

Debates leading up to Rio+20 are focusing attention on a foundational choice between two divergent paths to the human future.

The Money Path

For money path advocates, money is the defining measure of value. Profit and growth in financial assets are the bottom line measures by which they assess the performance of both the firm and the economy.

They value natural wealth by the price it will fetch in the market and look to global financial markets as the preferred mechanism to organize our human relationships with one another and nature. They propose that the best way to save nature is to price her assets and sell them to wealthy global investors to hold and manage as their private property.

Privatization, commodification, monopolization, and financialization, they assure us, will drive up prices and thus create an incentive to provide for their proper care to maximize a perpetual flow of earnings.

The Life Path

For life path advocates, Earth is our living Mother, sacred and beyond price. Her health and vitality are essential to our well-being and are therefore a priority bottom line measure of economic performance.

In return for Earth’s gifts, we have a sacred obligation to future generations to protect and restore to full health the wondrous generative systems by which she replenishes her air, water, fertile soils, fish, forests, and grasslands, and maintains the stable climate on which our health and well-being depend.

Because we receive Earth’s abundance as a gift, we must assure it is shared to meet the needs of all. None among us created this abundance and no one of us has a right to claim it for our exclusive personal benefit.

Money, which is basically a system of accounting, is only a tool useful in facilitating human exchanges beneficial to people and nature. To use financial results as the bottom line indicator of economic performance makes no sense and leads to disastrous results.

Illusions of the Money World

Ignoring the reality that money in itself is nothing but a number, the institutions of money have created a fantasy world economy grounded in a grand illusion that money is real wealth and that making money creates real wealth to the benefit of all.

Since financial logic favors current returns over future returns and values natural systems only for the financial return they generate, it can lead to dangerously myopic short-term thinking.

Here are three examples:

1) Money in the bank is more valuable than trees in the ground

Some years ago the minister who managed Malaysia’s forests explained to me why Malaysia should clear cut its forests and sell the timber. The interest from the sale would grow faster in the bank than the trees grow in the forest. I imagined a lifeless Malaysian landscape populated only by banks housing computers faithfully calculating the interest payments on Malaysia’s savings deposits.

2) Financial bubbles create wealth

A 1996 article in Foreign Affairs, "Securities: The New World Wealth Machine" argued that the key to wealth creation is no longer the production of real goods and services, but rather the inflation of financial bubbles based on securitized assets. The argument was so absurd I at first thought the article was a joke. It wasn’t. The article circulated widely on Wall Street and reportedly helped inspire the mortgage securitization frenzy that crashed the economy in 2008.

3) Your fishery collapsed? No problem

A 1997 article in the culinary section of The New York Times urged readers not to worry about the collapse of Atlantic fisheries, because abundant supplies of delicious fish were being flown in each day from Chile and Thailand and were even cheaper than local varieties because of cheap labor. No mention of a global decline in fish stocks as the number of hungry mouths in the world continues to grow.

Since it evaluates all decisions based on financial returns to people who already have money, financial logic assures that whatever remains of Earth’s natural wealth will be controlled by the 1 percent, who are looking for the right moment to make a quick profit from a speculative sale.

Asking how to allocate natural resources to maximize financial return is the wrong line of questioning. In the real world of Earth Community the question we should be asking is, “How do we best meet our human needs in a way that maintains or enhances the health and vitality of the natural systems on which we depend?”

We would do well to answer that question by further asking, “What would nature do?” Or, more specifically, “What does the biosphere do?”

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