Toward an Ecological Monetary Theory

Abstract

Money is the most ubiquitous institution on the planet and lays the foundation for human civilization. As such it should underlie economic theory. Due to the dualized nature of Western culture, however, mainstream economic theory assumes that money is simply a value relation to make barter efficient. This theory is manifest in orthodox monetary theory and policy. Ecological economics understands the problems attendant to modern money but has heretofore not developed a theory of money of its own. In order to make its economic theory and policy prescriptions viable, this paper argues that ecological economics must develop a theory of money that is simultaneously rooted in an understanding of money’s socio-history, and an ontological reimagining of dualized Western culture.

Revisiting the Missing Link: An Ecological Theory of Money for a Regenerative Economy

“…This necessary monetary apocalypse must include the deconstruction of persistent monetary blind spots (e.g., the monopoly of single-currency debt money), the unveiling of myths about the nature of money and its evolution (e.g., the myth of barter), the exploration of key structural flaws in monetary and banking theory, evidencing its nexus with political, economic and social power, and most importantly the connection with people and planet. A challenge not only to monetarism and (neo)Keynesianism but, more importantly, to Ecological Economics, a transdisciplinary field that, until very recently, did not have a sound monetary theory of its own [4,31,32]. This is of particular importance for two reasons: firstly because we urgently need new paradigms to understand complex economic systems that do not treat the biosphere and ecological impacts as externalities or market failures but that "explicitly recognize the interconnections and interdependence of the economic, biophysical and social worlds" [33].…”

“…This is of particular importance for two reasons: firstly because we urgently need new paradigms to understand complex economic systems that do not treat the biosphere and ecological impacts as externalities or market failures but that "explicitly recognize the interconnections and interdependence of the economic, biophysical and social worlds" [33]. Secondly, and as Joe Ament argues, without a sound monetary theory, "ecological economics risk importing flawed monetary theories and dualistic social/ecological ontologies, and accordingly, proposing inefficacious and contradictory policies" [31,32] (p. 2). Therefore, we need an ecological approach to money, and ecological economics needs a foundational theory of money.…”

“…Attempts to offer a unified "Reference Ontology of Money"see [19,35,36]-remain as philosophical debates at the edge and somewhat distanced from current monetary thinking. Although there is a growing consensus within heterodox economists and other social scientists to see money not as a thing-a commodity or a neu-tral lubricant of economic activity-but rather as a social phenomenon-perhaps one of the most complex social institutions in our modern societies [22,37]-a new ontology of money with non-hierarchical dualisms between humans and nature is only now emerging and solidifying [31,32]. Lietaer et al attempted to fill that gap with their ecological definition that follows the credit theory of money and tries to go further by honoring place and people at its core: "money is an agreement within a community to use something standardized as a medium of exchange" [2] (p. 120).…”

“…Developments of an EMT have shyly continued after 2013, with ecological economists developing the macroeconomics dimension of EE-see for example [54,55]-and the three key concepts of the EMT highlighted in Figure 2. These developments allow us to envision a monetary theory that focuses not on the quantity of money but instead on the qualities of different monies: a monetary theory that embraces the necessary complexity Beyond Ament's [31,32] and Svartzman's work [16], developments in ecological monetary economics, have shyly progressed since 2013, with ecological economists developing the macroeconomics dimension of EE-see for example [55,56]-and the three key concepts of the EMT highlighted in Figure 2. These developments allow us to envision a monetary theory that focuses not on the quantity of money but instead on the qualities of different monies: a monetary theory that embraces the necessary complexity of an ecosystem of currencies and unpacks its potential relationships-one that re-symbolizes the language of money coherently with an ecological paradigm.…”

From the Anthropocene to Mutual Thriving: An Agenda for Higher Education in the Ecozoic

“…Finance for the Ecozoic would incorporate the notions of sustainable scale, just distribution, and efficient allocation when it engages in value creation [112]. Students would be taught to recognize the socially created and embedded nature of money, and its attendant social and biophysical power relations, rather than treat it only as an independent, neutral tool for facilitating barter [113]. Thus, finance education in the Ecozoic would feature cradle-to-grave effects of wealth creation and conceptualize what it means to create non-monetary value, how to fund the creation of that value, and how to incentivize that process [114].…”