Looking back from 2020

It is the year 2020. We are looking back on a decade of initiatives that transformed our global economy. Efforts, ranging from global to local, sparked a momentum for a transition to an ethical, green economy.

The shift away from the poverty-exacerbating global casino began by transforming our financial system. Ongoing financial crises following those in 2007-2008 forced the downsizing of the finance sector by enacting a financial transaction tax of less than 1% of all transactions. This cut down on high-frequency trading and speculation without affecting long-term investors while raising revenues which helped finance transition.

At the international level, there were various agreements including raising the capital requirements for banks, higher margins to reduce leverage and other such changes in our financial architecture. It was necessary to stop speculation in oil and commodities which drove up fuel and food prices, leading to deprivation and hunger. The global casino was the prime driver/flywheel of environmental destruction and human poverty, so those agreements had to be put in place by the UN and the G20.

After the financial meltdowns of 2013, widespread civic demonstrations led to the cancellation of trillions of un-repayable government debt, student loans and the resolution of many big banks, the failure of many commodity and other ETFs, illusory credit default swap markets – wiping out their over $600 trillion of notional value, much of which could have netted out to zero in any case.

Changes were also taking place at a national level. It was imperative to change the GDP national scorecards which were based on totaling cash-based output of goods and services and business models based on externalizing environmental costs from balance sheets of corporations. As those externalities were internalized in triple bottom line accounting at the corporate level, statistics and indicators including GDP were conformed at the national level. The old GDP did not include asset accounts, so public infrastructure and investments in education, public health and environmental quality were ignored. This had caused huge misallocation of capital and mis-pricing of sovereign bonds, especially in European countries, and all assets, goods and services.

By 2014, after the Great Jubilee of debt write-offs, nations' budgets began to be seen for what they really were: metaphors for their peoples' values and their societies' cultural DNA. These budgets were vehicles for debating national goals and priorities and mechanisms for translating their numbers into scorecard systems for implementation in all sectors of society. Gradually, governments came to be judged by their citizens for their honesty, fairness, transparency and efficiency at delivering basic infrastructure and public services while enforcing laws to protect citizens and the environment.

People realized they no longer had to maximize financial returns. As long as all expenses are covered, everything’s fine. The onus then fell directly on how Wall St. and the finance industry had become predatory and were simply making money out of money – pyramiding paper and electronic "assets."

Partly driven by distrust of Wall Street, mega banks and central bank money printing and bailouts, people created local currencies, flocked to local credit unions, farmers’ markets and time banks. Finance became realistically viewed as a public utility. Banking went back to its old model of local banks serving local communities, taking local savings and lending these for local needs. Banks simply became intermediaries again, regulated fully by governments.

Innumerable other initiatives and the gift economy and combined to manifest the thriving local living economies we have relied on since the global meltdowns of 2013. The gift economy was always about the unpaid 50% of all productive work in industrial countries, including raising children, caring for households, serving on school boards, growing your own food, building your own houses, etc. The contributions of this Love Economy never appeared on balance sheets and, thus, were also missing from GDP national scorecards.

This problem became central to the reform of the GDP. In villages in developing countries, economists and analysts finally realized that the official GDP figures ignored the Love Economy which could total as much as 90% of all productive work and livelihoods. Economists learned that this inspiring reciprocity was the basis of sound societies and avoided many problems of the developed world.

A more detailed version of this article is available at Ethical Markets Media: http://www.ethicalmarkets.com/2011/07/25/looking-back-from-2020/