Wednesday, August 22, 2012

"As the World Burns: Can an Integrated Monetary System Save Us?" - Review of The Tierra Solution

Ethan Goffman, associate editor of the open-access journal for sustainable solutions, Sustainability: Science, Practice, & Policy, has written a thought-provoking review of Frans Verhagen's The Tierra Solution. You can read the original review, along with some enlightening articles about sustainability, here, but see what he has to say below.

Climate change requires an integrated global approach. Solutions cannot be isolated by borders, nor from our economic and social systems. Big thinking is needed. One recent book that thinks big is The Tierra Solution by sustainability sociologist Frans Verhagen, President of the International Institute of Monetary Transformation. The book recommends a global currency called the Tierra based on carbon. Given the severe challenge of climate change, such sweeping proposals are needed to create a larger vision and stimulate discussion. And clearly, a major shift in our monetary system is needed for a stable, sustainable planet. Still, the book is simplistic in its claims for a singular solution and understates the huge political challenges.
The Tierra would abandon our current floating currency, in which dollars, euros, renminbi, pesos, and other currency fluctuate relative to one another, oftentimes wildly so. While such volatility is economically stressful, Verhagen points out that the gold standard, the classical stable unit of currency, suffers from the artificial nature of gold, which itself ebbs and flows in price. As an international currency based on carbon, the Tierra would be both comprehensive and stable. It would also be tied to the environment, encouraging responsible behavior globally. As Verhagen explains, “[T]he proximity of a nation’s decarbonization level to the [Tierra] standard would determine the...value of its currency.”
Alas, the book leaves a hole as to how a transition to such a standard would take place. It does, however, describe a more complete system of which the Tierra is only one part, albeit the central one. Controlled by a global monetary institution, the Tierra would be a credit-based currency integrated with an exchange of wealthy countries’ ecological debts and poorer countries’ financial debt, and working alongside a carbon tax.
Read the rest of the review on the Sustainability blog, here. And don't forget to leave a comment here or there with your own thoughts on the issue!

1 comment:

  1. Two comments are given by the book’s author in response to this serious book review.
    1. The Tierra Solution does not claim to a “a singular solution”, it is a specific solution based upon a carbon-based international monetary system. Moreover, this system is not considered to be a complete solution: it is considered to be a necessary, but not a sufficient condition for global wellbeing. Many other factors such as the level inequality, poor governance, economic and energy inefficiencies are also to be considered. The only claim in The Tierra Solution is that it presents a coherent proposal for integrated global governance that makes its value-based planning philosophy explicit and spells out its institutional framework together with a two-fold strategy to accomplish it.
    2. The author is most aware of the “huge political challenges”, part of which are described in the book’s chapter 10 where in about 20 pages various categories of objections are discussed. These challenges are also discussed in penultimate chapter 9 about strategy where it is emphasized that a large grassroots mobilization for the Great Monetary Transition is needed to overcome the obstacles of mighty vested interests in business and government that want to maintain the status-quo of a world order that enrich the few, impoverish the many and imperil the planet. As part of that mobilization effort the author, as part of his extensive engagement with the Rio 2012 Earth Summit, developed a discussion document entitled the Peoples' Sustainability Treaty on Monetary Transformation which can be found at