Two Lights Lost in 2011: Jonathan Rowe and Richard Douthwaite

12/15/2011 07:23 pm ET | Updated Feb 14, 2012
  • Mike Sandler Political economist, climate change professional and sustainability advocate

The world needs every brilliant mind available to help us understand what is happening to humanity and the planet and to show us how to solve the climate crisis. In 2011, we lost two of the best: Jonathan Rowe and Richard Douthwaite.

These two visionary thinkers clearly understood the problems of our economic and monetary systems, and articulated straightforward alternatives that will form the basis for a better world in the 21st century. Each in their own way connected climate change with complementary currencies. They pioneered the re-localization movement. Through their grounded personalities and good-humor, they encouraged countless others (including this writer) to join in the cause. It will be up to us to carry their legacies forward.

I first learned about Jonathan Rowe when I came across his article in the Atlantic Monthly "If the GDP is Up, Why is America Down?" in the mid-1990s. That article led me to apply for an internship at a new think tank called Redefining Progress, where Jonathan was working alongside Peter Barnes, a close friend and later a co-conspirator of Jonathan's on the concept of the Commons.

The Atlantic article called into question the prime economic indicator, Gross Domestic Product (GDP). Car crashes increase the GDP. But they are not good for us. The article gives more examples, and then presents another indicator, the Genuine Progress Indicator (GPI), as a better economic indicator because it subtracts the "bads" from the GDP to give a more accurate reading on whether the economic growth taking place is good or bad. Bad growth? That is a revolutionary concept among economics professors and "the 1%" hedge fund managers. But the Occupy Wall Street protesters would understand what Jonathan was talking about.

I spent the next few years researching basic questions about an economy based on growth. In Northern California, Charles Hurwitz and Maxxam corporation took over the Pacific Lumber Company and began liquidating the ancient redwood trees in Headwaters Forest in order to pay off Maxxam's junk bonds. Hurwitz's math was simple: the compound interest piled up faster than the trees could grow. Good bye forest. All the ancillary benefits of the forest such as absorbing CO2 were "externalities" with no explicit value to our economy.

Jonathan felt strongly about farmer's markets and community. He co-wrote Time Dollars in 1991 with Edgar Cahn, about a community-based currency system that facilitates people helping each other. Here are additional links to some of his writings: here and here.

Brooding about the Headwaters Forest led to reading about the impacts of the monetary system on the environment, which led me to an essay by Richard Douthwaite and a few colleagues at a non-profit in Ireland that he co-founded called the Foundation for the Economics of Sustainability (FEASTA). The essay was, "Curing global crises: Let's treat the disease not the symptoms," and it brought several powerful ideas together: climate change, monetary reform, global equity and sustainable development. The existing monetary system has that interest rate problem mentioned above, but it also has a debt problem. The problem is that the money is actually debt. It is loaned into existence, and must be repaid with that pesky interest attached. So?

The essay explains:

"Creating the majority of world's money on the basis of debt has... serious defects. The first is that it is almost inevitable that some countries will find themselves with severe debt problems... a spiral of borrowing is set up and... the debt burden increases in relation to national income until it eventually becomes insupportable and causes an economic and social breakdown."

Sound familiar, Greece and others?

"...The debt-based money system... makes national economies -- and thus the world system -- very unstable. If money only comes into existence when people borrow, severe problems arise whenever a lot of potential borrowers begin to think that the future looks so uncertain that it would be better if they didn't take out loans. A few months later there will be less money in circulation because more loans will have been repaid than fresh ones taken out. This causes the money supply to contract which in turn makes business conditions difficult so that the level of trading and profit declines. This makes it even more foolish to borrow...The money creation system's defects... combine to create a growth compulsion... [Governments must] work closely with the business sector to ensure that the economy (and the money supply) continues to grow. Indeed, they find themselves forced by the way money is put into circulation to pursue economic growth with little regard for the damage its creation might be doing to society or to the environment. And since economic growth is very closely linked with fossil energy use... No government is going to be able to contemplate massive cuts in carbon dioxide emissions unless the money creation system is changed."

Douthwaite and his colleagues proposed that:

"...An international currency should be linked to the availability of the scarcest global resource...What global resource do we most need to much use less of at present? ...We believe that the scarcest resource is the planet's ability to absorb greenhouse gases and that a new world currency should therefore be based on CO2 emissions rights... [We propose] a version of the Bretton Woods arrangement... except that the right to burn fossil energy replaces gold and [new energy backed currency units] (ebcus) play the role of the U.S. dollar."

The right to burn fossil fuels would be allocated with a goal of per capita equity through a method called Contraction & Convergence.
A few years later, Richard and FEASTA devised Cap & Share as a policy to start down this path, which served as inspiration to my own efforts with Carbon Share. Two quick links to some more of Richard's writings: the books "Ecology of Money" and "Short Circuit."

It is not an exaggeration to state that Jonathan's and Richard's work and writings were a great contribution to mankind: they showed us how to save the world. The passing of these two great minds is a great loss to society at a time when their insight and clarity is most needed. It is up to us to carry on their work.