Once we have decided how much of each commons should be made available for use, we can issue money “backed” by it. For example, we might decide that the atmosphere can sustain total sulfur dioxide emissions of two million tons a year. We can then use the emissions rights as a currency backing. The same goes for the rest of the commons. The result would be a long list comprising all the elements of the commons we agree to use for economic purposes. Conceptually, it might look something like this:
Our money derives its value from the right to harvest 300,000 tons of cod from the Newfoundland cod fishery, the right to draw 30 million gallons of water monthly from the Ogallala Aquifer, the right to emit 10 billion tons of CO2, the right to pump 2 billion barrels of oil from the ground, the use of the X-microhertz band of the electromagnetic spectrum …
How to implement this in practice? One way would be for the government to simply create money and spend it into the economy in the way governments spend tax revenues today. The money would circulate through the economy and eventually back to the government when producers redeem it for the backing items. This could happen through auction, or relative prices for the backing items could be set in advance and then adjusted each year according to actual prices on the secondary market. Either way, the redemption of money for backing items would function just like a tax on resources and pollution.
Let’s look at a concrete example of how it might work. A local government issues salaries to police, firefighters, and the local ecological cleanup crew. One of them spends her salary on food, electricity, and a new transmission for her car. The food comes from a local farm, which spends part of the money for the right to pump 300,000 gallons of water a year from the local aquifer. This payment goes to the local government, which is the steward of that part of the commons.
Meanwhile, part of the money for the transmission goes to a factory somewhere, which pays part of that for pollution credits needed to operate. That cost is embodied in the price of the transmission, which also reflects the pollution credits for the gasoline used to transport it, the mineral rights for the iron ore used to make the steel, and so forth. These payments go to various stewards of the commons, some local, some regional, some national or global. Any factory that figures out a way to use less of the commons—for example, to make less pollution, or to use recycled metal from old junkyards—will be able to reduce its costs and earn a higher profit. The profit motive thereby becomes the ally, not the enemy, of our desire to heal the earth.
Remember the principle that whatever commodity we use as money becomes valuable, so that we seek more of it. When gold is money, we mine more gold, beyond any practical need for it. In societies where cattle are money, people keep herds beyond what they need. If we use oil or energy as a currency backing, as some propose, then we will try to produce and hoard more oil. But what if we use oil still in the ground, gold still under the mountain, and forests still in their pristine state as currency backing? Won’t we then elevate their value, too, and seek to create more and more of them? The mechanism is not at all mysterious. If you have to pay the full environmental costs of oil extraction, you will diligently find ways to keep it in the ground. If you have to pay for each unit of pollution, you will strive to pollute less.
An alternative means to the same end would be for the government to create credit-money by borrowing from the central bank at zero interest and repaying the loans with money from the sale of the items of the commons it holds in trust. The government could also issue bonds to investors and the central bank exercise monetary policy as it does today by purchasing or selling varying amounts of these bonds on the open market. It is crucial that these bonds bear zero (or negative) interest, a possibility I will explain in the next two chapters. Otherwise, a need for perpetual growth in the use of the commons would be created.
Either way, producers would have a financial incentive to minimize their use of the commons. No such incentive exists today, or if it does, it exists only haphazardly. This system would fully internalize social and ecological costs. Today, when a mining company drains an aquifer or a trawling fleet depletes a fishery, the costs to society and the planet are external to the producer’s own balance sheet. With this system, that is no longer true. Since these costs would be passed onto downstream industries and eventually to consumers, consumers would no longer face today’s dilemma that the cheapest products are those that cause the most social and environmental damage, while the fair-trade and eco-friendly products are way more expensive. Instead, products that avoided pollution in their manufacture would be cheaper because pollution quotas would cost a lot of money. Products would be more expensive in proportion to the amount of the natural commons consumed in their production.
But when you dgaf I guess that ceases to matter.
