Calling out BP at their AGM in Manchester

Steady State Manchester campaigners joined yesterday with Fossil Free Greater Manchester, Frack-Free Greater Manchester, Friends of the Earth, Platform London, Global Justice Now, Fossil Free UK, Justice for Colombia and Argentina Solidarity Campaign to share experiences in the opposition to BP, Shell and other fossil fuel companies’ continued drive to extract as much fossil fuel as possible, whether conventional oil and gas or unconventional, fracked, shale oil and gas.

We heard about environmental and social destruction in Argentina from Fernando Cabrera of Observatorio Petrolero Sur (OPSur) and in Colombia from Fabian Laverde of COSPACC.  Their presentations were complemented by Helena Coates of Frack Free Greater Manchester and Maggie Walker of Fossil Free Greater Manchester both of whom drew out the connections between what happens here in the North West and in the global South.

Fossil Free Greater Manchester’s Maggie Walker explains how Greater Manchester pensions are funding the frackers.

Steady State Manchester participants also pointed out (to broad agreement) that the fossil fuel industry itself sits as an integral part of an economic system that seeks continual expansion, reliant on the concentrated energy provided by fossil fuels.  We do want to see renewable energy replacing fossil fuels but this is far from happening and nor is it likely that it would “fuel” the continuation of material growth production and consumption.   The implications are profound for our way of life.

Video interviews with speakers will be available later.

Meanwhile here is the press release from Fossil Free Greater Manchester drawing attention to the involvement of Greater Manchester Pension Fund whose two biggest holding just turn out to be in Shell and BP.

_________________________________Fossil Free Greater Manchester news release

Immediate release

On Monday 21st May, campaigners from Fossil Free Greater Manchester and pension fund members will be joining campaigners from Latin America at a vigil outside BP’s Annual General meeting in Manchester, calling on BP to stop fracking in Argentina and worldwide. [1]

In 2017, the Greater Manchester Pension Fund’s second largest investment holding was in BP.

Greater Manchester residents overwhelming oppose fracking. The Manchester Evening News conducted a poll in 2014 and found that 73% of respondents opposed fracking.

The Mayor of Greater Manchester, Andy Burnham, has called for a presumption against fracking [2]  and Manchester, Bury, Salford, Trafford concils, and Westhoughton town council in Bolton have also come out strongly against fracking.

In a Manchester Friends of the Earth survey of local election candidates across Greater Manchester, 87% of the 342 candidates who responded agreed that “the Greater Manchester Pension Fund should fully divest from fossil fuels in the next five years.” [3]

In 2017, the Greater Manchester Pension Fund (GMPF) invested over £820 million in companies that are involved in fracking in the UK and worldwide. And BP was the GMPF’s second largest investment holding. [4]

BP, does not frack in the UK because of concerns for its reputation here (it would attract the wrong kind of attention).  However, BP is a key backer of the Vaca Muerta mega fracking project which, according to local community organisations in Argentina, is being forced through by the Macri government and major fossil fuel corporations at the expense of the indigenous peoples living in Patagonia. The project is also reported as being associated with countless environmental and human rights abuses, including the deaths and disappearances of known local activists and community members. [5]

Ali Abbas from Fossil Free Greater Manchester said:

“The consensus in Greater Manchester is against fracking, and yet the Greater Manchester Pension Fund continues to invest huge sums into the fracking industry and dirty fossil fuels. We need the Pension Fund to show leadership on climate change and divest from all fossil fuel companies”.

Research, commissioned by Friends of the Earth Europe, and undertaken by researchers at the Tyndall Centre (University of Manchester) and Teeside University has shown that fracking will add more greenhouse gas emissions to an already overburdened atmosphere, amplifying the already accelerating process of global warming and climate change. [6] As well as having more immediate impacts on air, water and land in the fracked places and on the communities who live there.


Contact for comments

Ali Abbas, Fossil Free Greater Manchester, Mobile: 07786 090520

Notes for editors

[1]  See: Call out BP’s Human Rights Abuses in Latin America – AGM Vigil, 10am, Monday 21st May.

Join us on 21 May outside BP’s Annual General Meeting to call out the social and environmental devastation they are bringing to Argentina and remember those who’ve been affected by BP’s operations in Colombia.

Meeting outside Manchester Central Library at 10am, we will hear from a speaker from Argentina on the damage BP’s fracking pursuits are causing to communities and the environment in Patagonia. We’ll also be joined by Fabian Laverde, from Colombia, who will be challenging BP about its impacts on communities and their lands, and demanding justice for those abuses. We’ll then stage a vigil outside the BP AGM (at the Manchester Central Convention Centre) for those affected by BP’s current and historic abuses.

Join us to demonstrate to the shareholders that BP is a toxic company to invest in for people and climate. s/357912441366813/

[2] See _will_oppose_fracking_in_regio n_if_elected/

[3] Manchester Friends of the Earth local election survey.  See Question 2 – Divestment from Fossil Fuels.  299 (87%) of 342 local election candidates agreed. /

[4] Greater Manchester Pension Fund (GMPF) holdings at the end of year 2016-7 can be found here: mar/mainstream.pdf

Shell and BP: As of 31 March, 2017 (the most recent report from the Fund on its investments), the Fund’s two biggest investments were in Shell at £318 Million BP at £275 Million. BP does not try to frack in the UK because it “would attract the wrong kind of attention”. But both BP and Shell are involved in Vaca Muerta (which, appropriately enough, means “Dead Cow”) a fracking mega-project in Argentina. The extraction of this, the world’s second largest reserve of gas, threatens indigenous land rights, safe drinkable water and clean air for people in Patagonia.

Barclays: At £119 Million, Barclays was the fourth biggest holding of the Fund. Barclays has been heavily involved in the financing of fracking. Under considerable pressure from campaigners it has announced that it is to sell off its stake in Third Energy, but as yet it has not, and indeed it has increased its loan to the company. It seems from statements made at the AGM that they may be waiting for fracking to begin before selling. Barclays still has a statement in favour of fracking from 2015 on its website.

Centrica: The Fund had £78 Million in Centrica, which owns British Gas. Centrica is one of the backers of Cuadrilla, the UK fracking company that has been drilling in Lancashire.

Chevron, Exxon, Conoco Philips: The Fund has investments (totalling £20 Million in 2017) in all these major oil companies, heavily involved in fracking in North America.

Other companies: The Fund invests in Duke and Schlumberger (£16.4M in 2017), both companies heavily involved in fracking.

[5] See Vaca Muerta Megaproject: A fracking carbon bomb in Patagonia. 018/02/05/vaca-muerta-megaproject-a-fracking-carbon-bomb-in- patagonia/

[6] See Natural gas and climate change (2017) climate_change_anderson_broder ick_october2017.pdf

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Does housing financialisation deliver a Viable Economy for Greater Manchester?

Does housing financialisation deliver a Viable Economy for Greater Manchester?

By James Scott Vandeventer, Steady State Manchester
originally published by Greater Manchester Housing Action, 6 May, 2018.

Manchester’s skyline is changing. Fast. While the dominant narrative is that dozens of the 2 contrasting pictures of housingbuildings transforming this skyline aim to provide more housing in the city centre, the recent report From Homes to Assets: Housing financialisation in Greater Manchester by Dr Jonathan Silver makes clear that these housing developments are overwhelmingly driven by financial institutions and actors who have identified Greater Manchester’s urban core as an attractive site for investment. Indeed, the primary function of these developments is financial speculation. We are witnessing the process of housing financialisation in Greater Manchester. For those concerned about the wellbeing and prosperity of the people living in Greater Manchester, as we are at Steady State Manchester, this poses the question: Does housing financialisation deliver a viable economy?

What is a viable economy?

As we describe in our 2014 report The Viable Economy and in other publications, a viable economy is predicated on a shift in political decisions and societal actions away from the growth-driven instrumental rationality of neoliberal capitalism. Instead, a viable economy demonstrates greater resilience, localisation, and balance as economic activity is treated not an end in itself, but rather as a means to deliver a sufficiently prosperous future without growth. Further, a viable economy subordinates the economic system to the control of society, and organises around cultural attitudes favouring equality, solidarity and cooperation. Finally, a viable economy recognises the finite nature of ecological resources and embraces an ethic of stewardship by minimising imbalances to the planetary systems – including the climate, biodiversity, and nitrogen and phosphorous cycles – upon which human life depends.

So, how does housing financialisation in Greater Manchester measure up against a viable economy? This commentary applies a viable economy perspective on housing to Dr Silver’s report: it analyses the motivation driving housing financialisation, the evidence of it in Greater Manchester, and the social and ecological impacts of housing financialisation, and – importantly – concludes by proposing ways this trend could be reversed.

Housing financialisation for profit

Housing financialisation treats housing as an asset that can, should, and must, generate profit. So, housing assets are expected to provide a steady return to the financial actors developing or investing in these assets. This overarching motive remains firmly stuck in the growth-driving circular reasoning of capitalism whereby profit is necessary to accumulate wealth, and accumulating wealth is necessary to secure further profit. Perhaps due to its remit, Dr Silver’s report does not really explore housing financialisation as part of the desperate search for profit that characterises a stagnating capitalism.

Still, housing financialisation is a clear case of the constant search for profitable new frontiers inherent in growth-oriented capitalism. How can this continuous accumulation through profit to enable further growth treat anything other than profit as the goal? Indeed, any goal aimed at bettering the lives of Greater Manchester’s residents will be placed secondary to the goal of profit for the financial actors behind this housing financialisation. It fails, then, to utilise the economy for delivering societal well being if this profit is ever at risk. Any housing financialisation for the sole purpose of profit has no place within a viable economy.

Analysing the evidence of housing financialisation

To document housing financialisation in Greater Manchester, Dr Silver presents two types of evidence: one relates to government policies, and the other to the changing characteristics of the housing market.

Considering first the latter – evidence of which includes the expanding Private Rented Sector (PRS), involvement of financial actors, and the international origins of capital – it is clear that housing financialisation is not unique to Greater Manchester and occurs in many housing markets around the world. Two common explanations are, first, that the Internet and information technology have enabled financial actors to invest at a global scale, and second, that consumers lead increasingly mobile lives and careers and therefore demand more short-term rental accommodation. However, in both cases the role of producers in shaping housing markets is underappreciated or ignored altogether.

There is little doubt that technology has increased global capital mobility. But this has in turn allowed the concentration of capital into fewer and fewer – corporate or individual, and domestic or international – hands, thereby increasing the power of these few to set market conditions for pursuing profitable endeavours. So, the rise of the PRS reflects less the unified voice of a homogeneous consumer group demanding rental accommodation, and more the power of those that control international financial capital to maintain ownership of housing developments from which to extract revenue. Not only is this ownership model inherently undemocratic, but claiming that individuals can make their demands known through market choices misses the reality that financial actors increasingly dictate – and limit – the choices available to consumers. In other words, this is an oligopoly. The mechanism for reigning in this unequal power arrangement is through government policy.

Before examining government policies enabling housing financialisation, an elaboration on the outcome of the above ownership model is necessary. There are several ways international financial actors obtain ownership of housing. Large institutions can develop a site and maintain ownership, sell the entire building, or investors can purchase individual property – so-called ‘buy-to-let’ schemes. In each of these cases, owners have no meaningful stake in the local community. What sense of community emerges from thirty floors of identical, rented flats where one-year contracts ensure few neighbours get to know each other?

A viable economy approach would, for example, demand supporting local community infrastructure like green spaces, walkability, civic engagement and mass transit. It would recognise the persistent – and increasing – homelessness issue in Greater Manchester, and developers would proudly meet and perhaps even exceed affordable housing requirements. A viable economy approach may even find common cause with environmental groups over issues such as air pollution affecting health and wellbeing and contribute toward taking action. Of course, these proactive stances extend far beyond the concern of the financial actors involved in housing financialisation. So, how is government responding?

There is evidence of both local and national government policies supporting housing financialisation in Greater Manchester. For large development projects, legal obligations are waived, including affordable housing requirements and other Section 106 obligations, which mitigate the impact of a development on the local community. The ‘viability assessments’ – procedures that examine the financial viability for developers – should provide a transparent view of why affordable housing and Section 106 requirements are not being met. But these assessments are withheld from public scrutiny. Finally, Dr Silver’s report identifies government loans amounting to £265 million to developers by the locally-controlled Greater Manchester Housing Fund, which must be allocated to market-orientated developments, and a further £50 million from the national government.

All of these actions reveal that both local and national policies are helping to shape the housing market in favour of the housing financialisation model. This comes at the expense of other models, such as co-operatives or mutual ownership schemes, that align with a more viable economy. Further, the skirting of affordable housing requirements for developments in Greater Manchester’s urban core risks segregating society based on income. Other Section 106 obligations would require that developers address relevant social concerns, including the above mentioned investment in local infrastructure, alleviating homelessness, and air pollution, as well as others that would emerge through dialogue with local stakeholders. By waiving these obligations, local government – with backing at the national level – advances the housing market of Greater Manchester toward further financialisation.

Housing financialisation’s social impacts, but also ecological concerns

Dr Silver’s report identifies a range of impacts housing financialisation is having on Greater Manchester. With the local economy starved of funding, there is insufficient investment in the local community. Housing in the urban core is increasingly unaffordable for the working class. The threat of future boom and bust cycles in the housing market looms. Spatial implications include areas surrounding the city centre becoming targets for housing financialisation, the privatisation of public space, and destruction of the historic built environments. Finally, there are transparency concerns about the international financial actors involved in housing development.

These impacts reflect how changes to the housing market can be inherently unequal. A viable economy approach would respond to the increase in people living in the city centre by providing opportunity to all kinds of people. A mix of people living and rooted in a community leads to fundamentally different social solidarity than segregated, isolated and transient residents. Further, the population of Greater Manchester is expected to increase in the years to come. From the perspective of a viable economy, the solution is not a focus on densification in the city centre, but rather on encouraging medium-rise developments beyond the inner urban core that are accountable to Section 106 and are affordable to the working class. This should be complemented by renovation of the existing housing stock and continued investment in local infrastructure. This spatial distribution should occur across Greater Manchester and prioritise replacing existing stock or developing brownfield sites, not expanding to the green belt or other green spaces, which all provide significant amenity, biodiversity or carbon or floodwater capture services to Greater Manchester and must be protected.

A spatially distributed and diversified model is also more resilient: in the face of a potential housing bubble, hundreds of units with nearly identical offer do not flood the market at once. Instead, differentiated units are gradually developed.

Dr Silver’s report names many of the financial actors currently involved in housing financialisation, from pension funds and private equity firms to banks and wealthy individuals, providing a clear picture of the international nature of the current model. Instead of international financial actors, a viable economy approach would depend on local financing for housing projects, ensuring investors have a stake in working toward the betterment of Greater Manchester.

This would be a radical change from the current situation, where the citizens of Greater Manchester typically have little way of knowing who is behind the changes to Manchester’s skyline. Dr Silver’s report provides the beginnings of transparency regarding this housing financialisation, a standard that should be adopted by local government for all future developments. As the report indicates, transparency extends to information about the existing investments of international actors involved in financing these housing developments. At present, these actors profit from, among other activities, petroleum and palm oil extraction. If the attitude toward these investments is any indicator, these actors will ignore the impacts of their profit-seeking behaviour on individuals, communities, or the environment.

One area the report does not address, which may sit outside its remit, is the direct ecological outcomes of this housing financialisation. The energy footprint of high-rise buildings is enormous, including petrol engines running construction equipment, the transport of construction materials, and the production of those materials themselves. Concrete and steel are two of the most energy and carbon intensive products of industrial manufacturing, and thousands of tons of both are required for any high-rise development. Further, the international sourcing of the materials and fuels to produce them means these developments support extractive industries, which often exploit workers and ruin livelihoods and landscapes. Of course, the above critiques could be made of most new construction sites. What is worth noting is the role of housing financialisation in catalysing these projects at such a scale, volume and concentration in the urban core of Greater Manchester.

A related case of the way that ecological considerations are not addressed is how energy efficiency and the size of flats are dictated by housing financialisation. The extent to which energy efficiency is deemed a key feature of these new developments, and whether their design embraces alternative spatial norms favouring sufficiency – less square footage – deserves further scrutiny.

If consumer resistance due to the above social and ecological concerns leads to refusal to inhabit these new housing developments, there is a potential for oversupply in the housing market. Thus, echoing the call in Dr Silver’s report, new policies and standards should be applied to all future developments, and not only address social impacts but also adopt higher ecological standards.

The recent Green Summit, organised by the office of Greater Manchester Mayor Andy Burnham, considered discussing the large scale retrofitting of the existing housing stock to improve energy efficiency, with the potential for creating 55,000 jobs. Thus far, there is little indication this is moving forward. A policy subsidising the retrofitting of all housing to meet the highest energy efficiency standards would create many more thousands of jobs and would entail moving housing in Greater Manchester toward a more viable economy.

What can be done?

To the debate about the future of housing in Greater Manchester, Dr Silver’s report makes an important contribution. Recent media coverage on affordable housing, the council’s swift retaliation and subsequent withdrawal, and a recent motion by backbench Councillors to make viability assessments more transparent, all respond to the key messages in the report. So, what further specific actions can be taken for Greater Manchester to deliver a more viable economy?

The prior analysis points to some positive actions. Reigning in the lust for profit inherent to housing financialisation would involve holding financial actors accountable to affordable housing requirements and Section 106 obligations, making investment in the local community a prerequisite to future developments. Encouraging innovative ownership schemes and medium-rise redevelopments, spatially distributed across Greater Manchester, would diversify the housing market and improve its resilience. Demanding transparency about financial arrangements and social and ecological impacts of developments would honour the local government’s commitment to represent the interests of its constituents.

Still, these recommended actions entail a more proactive stance by the local government toward new developments. It is important to note that this certainly occurs within the constraints imposed by the national government and the concentrated power of international financial actors. Still, local government can be an agent of change. Proposing to retrofit the existing housing stock is an indication that these issues are at least being considered by Mayor Burnham.

Greater Manchester should utilise its clear appeal to set a new benchmark for housing developments in urban centres not only in the U.K., but across the globe. By acting as a facilitator toward a viable economy approach to housing, local government can reverse the detrimental trend toward further housing financialisation.

The upcoming release of the rewritten Greater Manchester Spatial Framework is an opportunity to articulate a new approach to housing development that places the interests of residents in Greater Manchester above financial actors. The Spatial Framework should articulate how mechanisms to decelerate housing financialisation in Greater Manchester will be implemented. But this is not a foregone conclusion and, at Steady State Manchester, our work in the coming months will focus on communicating a new vision for the spatial framework away from housing financialisation and more in line with a viable economy. This is an opportunity to position Greater Manchester at the forefront of innovative approaches to housing. Let’s not miss it.


Posted in Greater Manchester, housing, investments and finance, Viable Economy | Tagged , , , , , , | 1 Comment

The Viable Economy … and Viable Finance

The Viable Economy – and Viable Finance

Mark H Burton and Mike Riddell.

pdf version (not updated)

updated, 10 May.

money and hands


It is all too clear that our economy is precarious, economically, socially and ecologically. Steady State Manchester promotes the Viable Economy1, which means greater resilience, localisation, and balance as economic activity is treated not an end in itself, but rather as a means to deliver a sufficiently prosperous future without continual “growth”. The Viable Economy aims to bring the economic system under the control of society, building a culture that favours equality, solidarity and cooperation. Finally, a viable economy recognises the finite nature of ecological resources and embraces an ethic of stewardship by minimising imbalances to the planetary systems – including the climate, biodiversity, and nitrogen and phosphorous cycles – upon which human life depends.2

Any economy requires a sound financial system to facilitate its necessary transactions. Here we take a look at some current and recent financial innovations, asking whether they might help us move in the Viable direction.

Types of financial innovation

We will organise what follows in terms of the following categories, even though they do overlap somewhat.

Financial institutions that serve the interests of the community.

  1. Community investment

  2. Community-based currencies

  3. Non-monetary community exchange schemes and credit.

We will not be discussing monetary reform, popular among some parts of the alternative economics and degrowth movements: we have critically discussed one set of proposals in this area previously.

  1. Financial institutions: Community banking

A movement is now gathering pace to fill a gap in the UK’s banking system, that of mutual or co-operative, regionally-based banks, orientated to the local economy, and specialising in offering financial services to smaller enterprises, as well as local citizens. As Greenham and Prieg (2015) noted,

The UK lacks … a local stakeholder banking sector, particularly in certain key markets. We use the term ‘stakeholder banks’ to include any ownership or governance structure that has a broader remit than simply to maximise returns to shareholders. The primary forms are co-operatives (including mutuals and credit unions), public interest banks, and socially orientated loan funds such as Community Development Finance Institutions (CDFIs) .3

At present there are initiatives at various stages of development and realisation to establish such institutions in a number of regions, including Hampshire, Avon and the South West, Greater London, Warrington and Preston. SSM members recently attended a workshop (What works in community banking?) looking at the possibility of establishing something similar in the Greater Manchester region4.

Could a regional or community stakeholder bank, or similar, help facilitate the move to a Viable Economy? Advocates of stakeholder regional and community banks emphasise similar aims.

At his presentation to the Manchester seminar, Tony Greenham of the RSA (and formerly NEF) identified

  • Redressing regional inequalities

  • Commitment to financial inclusion

  • Higher proportion of SME lending

  • Credit allocation to real economy

  • Economic resilience

James Moore of the Community Savings Bank Association said these banks aim to be

  • Trustworthy

  • Sustainable

  • Independent

  • Transactional

  • Recycling local savings into local loans

  • Inclusive

Broadly, the idea is to establish a bank with local knowledge and local governance, using a social ownership framework, with support from key local anchor institutions. It would be funded partly from interest on loans made to small and medium sized businesses and from transaction fees. James Moore said that more important than offering loans would be the provision of transactional banking services that provided short term credit to enable businesses to make payments while waiting to get paid – this would cover around 60% of the bank’s running costs.

So do these stakeholder and community banking initiatives represent a pathway to the Viable Economy? In these models there is no automatic preference for the environment: “sustainable” here refers to financial sustainability – important of course but not the same thing. The dual emphasis on accessible credit for local business and supportive transactional banking could help local businesses in the green and social solidarity economies. It could also help businesses that have no interests in creating social and environmental benefit. These banks could play an important role in plugging the leaks of the local economy, providing another home for local savings, for example, slowing the outflow of money into London and international financial institutions, speculative lending, derivatives and other aspects of “financialisation”. Could they aspire to achieving a game-changing scale? We do not know, but based on the example of Germany, it is possible5. And Germany gives us a clue as to how fundamental such a change could be: small scale local business is stronger there, and there are many environmental initiatives – but we could hardly say that Germany represents an ecological and socially desirable end point. It means that stakeholder community banks would be consistent with the Viable Economy but only a part of it– a necessary if not sufficient condition for it.

We said as much in last year’s report, Policies for the City Region6:

It is not enough simply to establish local/regional banks and funds though. They would need to focus on the kinds of investments that a resilient, viable city region requires, not on sectors that by expanding will increase carbon emissions, traffic congestion, biosphere erosion and inequality.

We therefore propose the establishment of a council sponsored investment fund, or better, since less constrained in terms of money supply, a bank, supporting mostly SMEs and social enterprises working in broadly foundational areas, emphasising environmentally and socially friendly sectors. The form could be a public, municipal or community banking institution. Proceeds from fossil fuel divestment could be used to help establish the bank, which would also be somewhere for local investment and re-investment.

  1. Community investment

There are already a number of ways in which savers and small investors can put their money into community and environmentally oriented business. These fall into a number of different categories with differing risk profiles, rates of return and scale of investment. Some co-operatives and social businesses issue their own loan stock, typically seeking local investors. Other schemes work through one of the platforms now available for ethical investment and savings (e.g. Ethex and Abundance), which offer a variety of equity investments, bonds, debentures and so on, including tax free options using the ISA provisions, SITR (Social Investment Tax Relief) and Enterprise Investment Scheme (EIS).

In the immediate future, one pressing need is to establish bundled investment options, like Unit Trusts / OEICs in the mainstream equities sector. This is because by investing in a single offer, savers and investors risk their capital: combining investments within a collective package would allow smoothing of the risks across companies (and also of the returns of course)7.

Similarly, some councils are issuing municipal bonds to reduce their borrowing costs. It is something we have previously advocated but the pace of development of this option is painfully slow.

By using their local assets in local, community and/or environmentally orientated, citizens and local organisations can directly promote a more viable economy rather than their money acting as feedstock for financialised and remote investments elsewhere. The returns they obtain will, at least to some extent, be spent locally, so the “bioregional multiplier8” operates. Potentially, closing the investment loop on a regional basis can help reduce the extent to which investment in the local economy fuels profit and rent extraction by remote shareholders. It is a strong argument against the frenetic search for external and unaccountable sources of investment. Again there is no guarantee that the investments will be the right ones for the Viable Economy: another necessary but not sufficient condition for it.

  1. Currencies and near currencies.

The idea of a local currency that keeps spending local while easing transactions in the local economy has become popular in environmentalist and solidarity economy circles9. A number of variants are possible.

    1. Convertible community currency.

Here the local currency is issued and can be exchanged for the national currency. Examples are the Bristol, Brixton and Totnes pounds. They depend upon there being a matching holding in the national currency, so limiting issuance. There is typically a cost to their use, via a transaction fee on each payment.

    1. Non-convertible community currency.

An alternative approach is to issue a currency that cannot be exchanged for the national currency. This is the approach taken by Hullcoin. In principle, there is no limit to issuance, making the idea attractive for money-limited local economies. In practice though, the model is even more dependent than the convertible currencies on attaining a sufficient scale so that a significant proportion of transactions are made in that currency. Except under conditions where the national currency is radically devalued (for example in a financial crash and depression), it seems unlikely that such a currency could aspire to the kind of scale where it became a viable alternative. What it can offer though, is a potential augmentation to people’s resources for certain classes of local expenditure, particularly in exchange for assets that would otherwise be wasted (e.g. surplus food, unused cinema seats): the currency itself can be linked to a requirement for voluntary labour, and becomes a way of recognising (or is that regarding) voluntary action. That in itself is a principle requiring debate, given the dilemma between facilitating more voluntary action and undermining its non-conditional moral basis.

    1. Business to business credit and barter schemes

Here businesses use what is essentially a complementary currency to trade among each other. Two well established examples are the Swiss WIR and The UK’s Bartercard. In both cases, businesses reduce their transaction costs and reliance on bank credit through a mutual system of credit and exchange. Nether work on a regional basis, although no doubt much trade is between neighbouring businesses. WIR has been shown to be countercyclical (i.e. it contributes to economic and financial resilience) and Bartercard reduces the exposure of businesses to lost income and credit charges. According to the International Reciprocal Trade Association, in 2011 over 400,000 companies worldwide used bartering to earn an estimated $12 billion on unwanted or underused assets.

The people working to establish the Brum (Birmingham) Pound have decided that the idea is not feasible and instead are working up a business to business credit scheme.

There are also less well documented levels of organisational peer to peer lending, for example from well established co-ops to new ones: the new co-op gets access to start up capital while the established one gets a better return than they would from leaving their spare money in the bank.

  1. Non-monetary community exchange and credit

Work by one of us (Mike Riddell) is exploring a rather different approach, called CounterCoin, with an initial base in the Potteries. This is part of an integrated approach to socially and economically renewing a shopping centre that has suffered like many from the flight to out of town centres and the internet shopping: it is covered in a recent Guardian feature in Aditya Chakrabortty’s series “The Alternatives”. CounterCoins are plastic tokens that are awarded in return for voluntary activity. They are redeemable by a number of retail and recreational outlets, either in whole exchange for access to a facility, or in order to obtain a cash discount. CounterCoin is different in the sense that its credit is issued by the community to individuals who contribute to the community’s upkeep and well being. In other words it’s earned into existence rather than gifted into existence. For someone outside of the jobs market, but with time to give, this sense of earning the right to discount, might help them feel like a valued member of the community. And that has value for all sorts of reasons – self worth, self esteem, self confidence, and the gaining of experience towards a c.v. and employment. Democracy comes into play when the community decides for itself what is and what isn’t a contribution. So it becomes “defined contribution” from the perspective of the community in that it can be issued (by non-profits/social enterprises) for all sorts of activities that contribute to community health and well being.

Each issuer has the responsibly to ensure that (a) the contribution is valid and can be verified as being done properly (to certain standards maybe) and (b) that they issue CounterCoins at the same rate for different activities. This to avoid counterfeiting. In a sense – they are giving cross-guarantees to the other issuers in the network, that they are issuing “by the book”. Trust is crucial.

The more diverse and inclusive the community using CounterCoin, the more legitimacy can be built up. Standardising the issuance of CounterCoin in exchange for defined contribution, is when it becomes ‘equitable’. As in timebanking, it doesn’t matter who you are – everyone earns at exactly the same rate. Once it is issued, and redeemed by businesses – it turns into a ‘trade credit’ rather like the Bartercard model. But the difference between this model and Bartercard’s is that the CounterCoin marketplace is ethical – it’s underpinned by the shared values of inclusivity, diversity and equality.

There are also the better established schemes that allow the matching of people’s spare time and skills (LETS, timebanking, Hours currencies) or (in the case of freecycle/greencycle) unwanted goods with those that need them. These schemes all do useful work but are probably, at this stage anyway, relatively marginal, at least in terms of the kind of economic transformation that is required for a move to the Viable Economy. Where they do come in is establishing models for resilience that will be vital once our unviable economy and society hits the inevitable buffers of planetary limits and/or the next crisis of global capitalism.


Community currencies and near currencies are probably the best researched of these areas in terms of their contribution to transition to what we’d recognise as the Viable Economy10. From his review of LETS, Timebanking and convertible local currencies as tools for the degrowth transition, Dittmer11 concludes,

… there are no clear success stories of local currencies as drivers of degrowth. LETS can facilitate informal resale, repair, and sharing of commercially produced goods, but their burdensome management and confinement to small memberships, dictated by their reliance on informal social pressure, limit their usefulness in this regard. LETS have also been found to support alternative livelihoods, but under quite uncommon conditions. Time banks help people expand their social networks, and are better than LETS at reaching the socially excluded. However, they are confined to unskilled personal services, bureaucratic, and dependent on grant funding. …. Convertible local currencies (CLCs) are best at attracting local businesses, but no significant evidence of their said capacity to localize supply chains has surfaced as yet, and their business-friendly design works to the detriment of other criteria. The Wörgl experiment [in 1930s Austria] suggests that a council-tax-endorsed CLC aimed at eco-localization may require the local state to increase geographical discrimination in public procurement, shifting the actual locus of change from the local business-oriented currency system to the broader struggle for sustainable public procurement.

However, a study of the Bristol pound (Marshall and O’Neill, 2018) does not seem to support this view: a study of the Bristol Pound as a tool for eco-localisation concluded it had little impact (although this was no more than a limited exploratory study with a small sample of participating businesses). My understanding (from talking with participants) of the Brixton Pound, which can also be used to pay council fees and taxes, is that it is a good propaganda tool for raising awareness of the local economy, and seems to help increase the sense of collective place-based identity, but it has limited economic impact as an exchange medium.

Dittmer goes on:

In sum, local currencies do not appear to have more than a marginal role in driving purposive degrowth. …. In the context of fossil fuel scarcities, the pursuit of alternative livelihoods supported by part-time employment is a frail political strategy. Eco-localization by means of friction in monetary space is an inferior option to a tax on transport fuels.12

        1. Institutional relations: a case study from Brazil.

      A favela in Fortaleza

      A favela in Fortaleza, North East Brazil (photo {CK/MB})

    1. It is probably wrong to look at any of the above types of financial innovation in isolation from their potential institutional context. To illustrate, it is worth considering one of the more successful complementary currencies, the Palma, in the context of its parent organisation, the Banco Palmas13. Conjunto Palmeiras is a favela (usually translated as “shanty town” – at any rate a marginal settlement) in the city of Fortaleza in Ceará state, North East Brazil. The settlement was established after its people were expelled from another area 45 years ago and their history of mutual support in struggle is a key ingredient of their model and its success. A second wave of displacement was a result of the gentrification of parts of the favela, a consequence of the expansion of the city. People were asking, through a series of discussions, debates, assemblies, focus groups and conversation, “why are we poor” and concluded that, part and parcel of the economic exclusion and exploitation of the population was firstly the unequal distribution of the aggregate income of the favela, and secondly that only 20 percent of the money coming into the area circulated within the community – the other 80 per cent was spent on purchases outside the favela.

      We discovered one of the main factors of the impoverishment of the territory, the lack of local consumption caused the loss of our savings and, consequently, of our capacity to generate income and work. Without such savings it becomes impossible to create a strong market under the control of the community and makes us dependent on a system that sees us only as a cheap source of labour.”14

      The Banco Palmas community bank was set up in 1998, setting up a model of development in the area via local production and consumption. A number of different financial services were established to establish a network of producers and consumers in the neighbourhood, with the aim of promoting an “economic citizenship” with the potential of generating prosperity at the local level under the conrol of the inhabitants of the area. These services include, the “social currency” the Palma, circulating in the area (for years this was paper-based but now is also in digital form), but also credit in national currency (the Real) for producers and interest-free credit in Palmas for consumers. The bank also became a “corresponding bank” with mainstream banks, making banking services available to those in the favela: like many areas of the UK, Brazil’s favelas have lacked access to basic financial services15.

      Initially the National Bank opposed the development with a legal challenge, but the Banco Palmas won the case in 2003. After this (and with the installation of the Workers’ Party in power in Brazil), support from beyond Fortaleza, notably from the National Secretary of the Solidarity Economy in the Ministry of Labour, made possible a network of community banks in Brazil on the Banco Palmas model. One consequence has been the establishment of a “certain dependency” on the constraining rules of the commercial banks, “antagonistic and incompatible with the system of financial solidarity of the community banks that promote different financial services, strengthened by local power and guaranteeing an investment in the capacity of the most poor.”

      Following an initial (very) small grant from an NGO, the bank’s operations are funded by a) interest from microcredit loans (up to 3.5% monthly but also as low as 1% depending on size of and purpose of loan) b) fees from the corresponding bank (i.e. Banco Palmas acts as local agent for regional bank to widen access to banking services), and c) commission for changing Palmas to Reais16.

      The scale of operations is significant:

      According to the Banco Palmas (2010), in the previous three years (2007-9), the Instituto Palmas realised 3,139 credit agreements, with a volume of landing of 4,126,712 Reais (approx US$ 2,947,651). 2,500 families benefited, there having been 8,000 jobs maintained and 2,000 generated. Corresponding banking realised 28 million transactions and managed approximately 80 Million Reais17.

      The Banco Palmas is clearly a model of success, and this seems to be due to its combination of multiple services (rather than just a community currency) with a strong local institutional base and partnership with other institutions in the city, region and country.

      The complementary currency itself has declined in importance over the period while levels of overall consumption of goods and services have increased (although it is unclear whether the recent digitisation is to change this) A detailed study18 of the usage and circulation of the Palma found that around half of its usage was accounted for by just 6 economic actors in addition to the Banco Palmas itself: four local stores selling basic consumer items, the neighbourhood petrol station, and a party and décor shop. Previously two sweet shops had also been important in the circulation but no longer accepted the Palma. Only an estimated 13,457 Palmas were in circulation (compare this to the figures above, bearing in mind that the Palma and Real are 1:1 convertible).

      One factor was that there was, at the time of the study, greater prosperity, in part due to the anti-poverty governmental policies and benefits, so less need for the consumer credit offered by the Palma. The bank had also stopped paying part of the salaries of its workers in Palmas. What the study found, however, was that the minority of people that used the Palma did so, not for primarily economic reasons but because of its symbolic and political meaning.

      …there is a sensitive symbolic and political role played by the use of
      currency in the territory, but not translated in terms of volume and frequency of use. For these actors, it is enough to know that the currency exists, which was created by them and that can be accessed when needed.”

      The ensuing minimal but persistent use of the Palma appears to be also a kind of “vote of confidence” in both the favela and the role of Banco Palmas in securing better economic conditions.

      Conclusion: no easy answers.

      It is not easy to transform an economy, locally or nationally so we should beware of supposed magic solutions.

      Community financial institutions such as community banks, could have an important part to play in helping us move towards a regional Viable Economy, but they won’t on their own get us there. Critically, as part and parcel of the capitalist system (albeit a more benign capitalist sub-system) they do not have any kind of automatic bias towards radical/eco-localisation, to reduction of economic material flows, or to the construction of social justice at scale.

      Community currencies and near currencies can act as helpful propaganda aids in increasing awareness and loyalty to the local economy but it seems they generally do little more, except in exceptional circumstances where they could provide a safety net as mainstream systems collapse or fail to deliver, as in the examples of pre Workers party and commodities boom Brazilian favelas and post-dollarisation crisis Argentina.

      Instead we need serious analysis of how the different elements of a transition to a Viable Economy could work together, supporting one another, correcting systemic gaps, and achieving scale, while discriminating against globalised capital and unsustainable levels of material and energy use. That also implies using a variety of economic, social and political frameworks for understanding, underpinned by a sound ecological economic understanding. If you can help with that, do get in touch.

          1. Key take-away messages:

      • Financial innovations are necessary but not sufficient for making a transition to a Viable Economy.

      • Complementary currencies and near currencies need to be part of a system of interlocking initiatives and institutions, all working towards eco-localisation and social justice.

      • Outside crisis situations, complementary currencies and near currencies have a primary role in promoting symbolic identification with a community and its local economy.

      Some rights reserved: Licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

      Steady State Manchester, May 2018.


      1Steady State Manchester (2014). The Viable Economy. Available for download at

      2For this summary of the Viable Economy we are grateful to SSM collective member, James Vandeventer.

      4As outlined in this report from the University of Manchester’ IGAU:

      7The Triodos Bank Innovative Finance ISA goes some way towards this but is not very diversified: Mainstream “ethical investment OEICs (whetehr or not ISA-wrapped) typically invest in larger companies.

      8This revision of the Keynesian multiplier is a concept that we use in our Viable Economy pamphlet. It was originally used by Desai and Riddlestone: Desai, P., & Riddlestone, S. (2007). Bioregional solutions for living on one planet. Totnes, Devon: Green Books for the Schumacher Society.

      9Seyfang, G., & Longhurst, N. (2013). Growing green money? Mapping community currencies for sustainable development. Ecological Economics, 86, 65–77.

      10Dittmer, K. (2013). Local currencies for purposive degrowth? A quality check of some proposals for changing money-as-usual. Journal of Cleaner Production, 54, 3–13.

      Dittmer, K. (2012). Two challenges for creating democratically accountable local currencies to cope  with unvoluntary degrowth: Lessons from Argentina. Presented at the International Degrowth Conference, Venice. Retrieved from

      Seyfang, G., & Longhurst, N. (2013). Growing green money? Mapping community currencies for sustainable development. Ecological Economics, 86, 65–77.

      Marshall, A. P., & O’Neill, D. W. (2018). The Bristol Pound: A Tool for Localisation? Ecological Economics, 146, 273–281.

      Rigo, A. S., & França Filho, G. C. de. (2017). O paradoxo das Palmas: análise do (des)uso da moeda social no “bairro da economia solidária.” Cadernos EBAPE.BR, 15(1), 169–193.

      11See note 10

      12See note 10

      13Banco Palmas: Local currency in Brazil’s favelas

      14Manifesto 20 Anos Banco Palmas Our translation.

      15This was illustrated by a mapping process at the Manchester Community Banking seminar see

      16The plural of Real.

      17Taumaturgo de Sousa, T. (2011). A Economia Solidária Como Meio Para O Desenvolvimento Sustentável- Caso Do Banco Palmas (Tese de Mestrado em Economia e Gestão do Ambiente). Porto, Porto. Retrieved from

      18Rigo, A. S., & França Filho, G. C. de. (2017). O paradoxo das Palmas: análise do (des)uso da moeda social no “bairro da economia solidária.” Cadernos EBAPE.BR, 15(1), 169–193. (Open Access).

      19See note 18: our translation.

Posted in Banking, community, investments and finance, re-localisation, Viable Economy | Tagged , , , , , , , , , , , , | 5 Comments

The Mayor’s Green Summit: a balance sheet.

updated: 28 March, 2018
Also published, 7/4/18 by The Meteor:

I attended the Greater Manchester Mayor’s Green City Summit on 21 March: here is a quick review.   The event was, as you’d expect, a mixed bag, with good and bad aspects. It is too soon to make an assessment but here, from a Viable Economy perspective, are the important points.

The key question: can Greater Manchester keep within the carbon budget?

During his campaign for mayor last year, Andy Burnham had pledged to hold this high profile event, bringing together stakeholders and experts to see how the city region’s ambition to tackle climate change and other environmental issues could be improved. This was him keeping that promise.

Our city is fortunate to have leading climate scientists working here at the University of Manchester’s Tyndall Centre, and their input had been commissioned prior to the event. The result was the SCATTER framework, developed with Anthesis Group, the BEIS and the Core Cities network. Anthesis describes the tool:

Today sees the launch of a UK city-focused low carbon pathway model, SCATTER (Setting City Area Targets and Trajectories for Emissions Reduction). It provides a tool to support cities across the UK to set emission reduction targets and define appropriate pathways to achieve them. The implementation of the model has been piloted by Greater Manchester and will support their vision to develop an ambitious science-based carbon reduction target as part of becoming a leading green city.

I took away a leaflet to take a closer look but on getting home I was disappointed to find there was no weblink to explore the data further. The Anthesis site, at least as yet, lacks any link to the tool itself, and the data from it.

Will this tool be made available to Greater Manchester citizens and organisations?

Kevin Anderson, from the Tyndall centre gave a keynote which pulled no punches. He explained the concept of carbon budgets – the amount of greenhouse gases (measured in carbon dioxide equivalent) that it is possible to emit. He reminded us that we have no more than 4 or 5 years (globally) of emissions left for a better than evens chance of keeping global warming to 1.5 degrees (see the data HERE). As yet (when taking imports, shipping and aviation into account) there has been no significant reduction in the UK’s emissions. It is the cumulative emissions that count, and I will return to this point.

See the Tyndall Centre’s Report: Quantifying the implications of the Paris Agreement for Greater Manchester.

Kevin also identified a number of radical actions that need to be taken, with the emphasis on the those who emit most: In addition to leaving most fossil fuels in the ground (and hence no fracking and the need for our organisations to divest from fossil fuel companies) these emphasised what Greater Manchester institutions and people need to do, including,

  • Massive programme of insulation retrofit for our leaky homes.

  • All new buildings to meet the passivhaus standard for carbon neutrality (or better).
    (Something that should have been in legislation from 2016, but was dumped by George Osborne).

  • Reduced flying, and no business or first class (on trains too) – per person emissions are so much higher.

  • Virtual communication rather than travel.

  • Establishment of healthy air zones.

  • Charging points for electric vehicles and cycles.

  • Building renewable energy generation (solar, wind).

These are eminently do-able actions.

Kevin was followed by Alex Ganotis, leader of Stockport council and Greater Manchester Combined Authority lead on climate change and environment. Alex introduced the SCATTER scenarios. Various interventions and scenarios have been modelled but none of them get us to zero emissions in time (that is by 2040 – the accelerated time scale that was adopted at the event). But it’s worse than that because they all reduce emissions too slowly: the cumulative emissions in the early years will blow the city region’s share of the carbon budget. As Kevin made clear (quoting fellow scientist, Alex Steffen), in the case of climate change, “winning slowly is basically the same thing as losing outright”.

It’s the area under the curve that counts, and as you can see, all the scenarios (the thin lines on the graph) bound a bigger area than the (mauve/grey) carbon budget.

I am far from confident that this issue was recognised by more than a few of the people at the event: it means that early emissions reduction must be considerably ramped up, and Andy and Alex (Ganotis), you can’t do that while you are growing the economy. If you want to expand certain sectors (for example clean energy) then you also have to specify which sectors you will freeze and which you will contract: it’s a finite world and we’ve hit the walls.

Yet, used properly, and critically, in coming months, the SCATTER methodology could help sort out the harsh reality from the self congratulation. An example of how to ramp up the emissions reductions, noted by one of the speakers, was rather than replacing domestic boilers with more efficient gas ones, to go to lower carbon options such as heat pumps or combined heat and power units – one example where technological innovation can really help. Another option would be what some of us called for nine years ago, to first cap airport expansion and then to implement a managed reduction in aviation: certainly challenging given the local authorities dependence on dividend from the airport which they partly own – but you just can’t fudge these issues.

Some good news

It is worth quoting in full the proposals “on the table” at the summit:

  • Ambition for Greater Manchester to become carbon neutral at least a decade earlier than 2050 – using science-based targets to set our ambition and pathway.

  • Public sector agencies to consider vacating premises that do not meet minimum energy performance standards.

  • Move to an emissions-free bus fleet and, if possible, speed up the process using new bus powers available to Mayors.

  • Establish a new public-sector-led commercial model for the Greater Manchester electric vehicle charging network this year, and double the size of the present system.

  • Transform cycling and walking in the city-region by investing up to £50m per year for three years from 2019/20, supporting Chris Boardman’s groundbreaking ‘Made to Move’ report.

  • Use the rewritten Greater Manchester Spatial Framework to specify a date by which all new homes built across Greater Manchester should be net zero carbon.

  • Explore the creation of a Greater Manchester Environment Fund, funded by public and private investment, to support our environment strategy and carbon-neutral ambitions.

  • Develop, this year, a Greater Manchester Infrastructure Strategy to include energy, digital, transport, waste, waste water and natural environment infrastructure.

  • Work with central government to deliver those things that require national action – for example decarbonising the national grid and transport infrastructure.

  • Consider how we develop a Greater Manchester energy company that is able to invest in energy generation and storage to generate revenue for investing in the Greater Manchester Environment Fund.

  • Examine the affordability of retrofitting existing homes to make them more energy efficient, leading to the creation of a potential 55,000 jobs.

Andy Burnham also gave a welcome nod in the direction of the Fossil Free Greater Manchester campaign for the GM Pension Fund (still the dirtiest in the country) to divest from its fossil fuel holdings: “We need to look at the Pension Fund” he said.  (We might note that Sadiq Khan has now made a strong commitment to fossil fuel divestment on the part of the London Assembly and promised to campaign for the other London authorities to follow suit).

At the end of the summit it remained unclear to me which had been adopted and what the process for their development and implementation will be from now. The Mayor and Combined Authority can only do so much, being dependent on central government and other actors in this city and beyond, but the intention to quicken the pace of change and to facilitate the actions of others is very much to be welcomed.

Plastic straws and green space destruction

A further initiative announced was to be the “first UK city-region to ditch single-use plastics”. This may be a little exaggerated: what has been launched is a pledge from the hotel and catering industry:

Greater Manchester’s tourism and hospitality sector will aim to eradicate the use of single use plastics by 2020.  Within the next 6 months, local businesses will set out a plan to achieve this and, as a first step, have begun to replace plastic straws with more sustainable alternatives. This is part of a wider scheme to make our industry more sustainable.”

As of 24 March, 24 businesses had signed up. This is good, and could help bring about a wider change. Plastic not only pollutes but is overwhelmingly based on the pertochemical industry: when burnt, plastic contributes to carbon emissions, while exerting a demand pull on fossil fuel exploitation. Other campaigns are focusing on non-returnable bottles (in the 1970s, as a student, the first environment campaigns I was involved in, against Schweppes and Tesco, were on this question, when single trip containers were a new thing) and on the use of plastics by fast food outlets.

Unfortunately, the initiative was fronted by Gary Neville, a property developer responsible for the St Michaels and Turn Moss plans. The former is an out of scale, city centre development that threatens liveability and heritage resources (even with the revisions following the first wave of objections) and like other city centre developments, has evaded the affordable housing requirement. The latter will fence off and build on green fields in the Mersey Valley. Neville’s invitation to the all male closing platform (where he winged about costs of sustainable initiatives) was a monumental misjudgement that undermined Burnham’s otherwise commendable initiative.

The question of Green Space also raises the question of how the Green City initiative links with other GMCA and Mayoral initiatives and plans, including the Spatial Framework (to be relaunched in July, after Burnham’s demand for a “radical rewrite”, with a three month consultation), the Town Centres Challenge, and the overall GM Strategy.

Large organisations

In the context of commercial interests often undermining environmental and climate initiatives, it was refreshing to learn about some good work by large organisations. There was a lot on display, and I did not get around everything. Inevitably there was some greenwashing: the airport was there showing how incredibly sustainable their operation is (sic). To illustrate the better work, here are two. The GM Fire and Rescue Service is getting on with some really worthwhile things: with reductions in carbon footprint, water use, pollution and resource (fuel and materials) inputs. United Utilities has a number of initiatives from covering clean energy, water catchment and flood management, and water conservation and resilience building.

What now?

Andy Burnham announced a follow up event at which more concrete plans will be shared and feedback given. It would be worth making every effort to make the event truly participative: last week’s summit was far too passive, with the audience sitting for hours being lectured. While there is room for some scene setting and presentation of options and proposals to a large audience, much more can be done to engage the interested and committed audience, using a host of large group facilitation and deliberative methods.  There had been a lot of participative events prior to the day – it is a shame that this approach was not consolidated at the summit itself: there was no attempt even to get audience feedback on the proposals on the table!

There are also plans for a People’s Green Summit, probably in June, to bring the “movement” together with a shared understanding of what we should be campaigning for, to “encourage” the GMCA and other stakeholders to confront the really burning (literally) issues. Watch our events calendar for an announcement.

You can read the official announcements from the Summit here.

Phil Korbel from the Carbon Literacy Project has written a personal reflection on the summit.  It is worth a look, not least because of its insight into some of the political barriers faced in getting commitment to ambitious targets.

Mark H Burton

Posted in Climate Change, environment, event reports, Greater Manchester City Region | Tagged , , , , , | 6 Comments

One cheer for Greater Manchester Pension Fund

The right direction but too vague and too slow.

Fossil Free Greater Manchester today responds to the Greater Manchester Pension Fund’s formal response to its campaign for full divestment of the Fund from the fossil fuel industry.  While the Fund has acknowledged the risks, financial and environmental, from climate change and indicated that it will eventually move to a “net zero carbon” portfolio of investments, the campaign says that it’s proposals for “partial divestment”, though welcome, are too vague and too slow.

You can read the statement from Fossil Free Greater Manchester, and see how you can add your voice to their call, by clicking this link.

As Fossil Free Greater Manchester point out, it must be a bit embarrassing for the GM Mayor to have the country’s dirtiest pension fund in his patch when he is hosting a Green Summit (next Tuesday) to “achieve carbon neutrality for the city region as early as possible”.  This is hardly credible if our pension investments continue to fund yet more fossil fuel exploration and extraction when we all know that more than 80% of known reserves cannot be burnt, if even greater climate chaos than we witness already is to be prevented.

Posted in Greater Manchester City Region, investments and finance, news | Tagged , , , , , , , | Leave a comment

We need to end growth dependency, but how?

Monetary reform would make at best a minor contribution to the task1

Mark H Burton2


There is increasing recognition that endless economic “growth” is neither possible on a finite planet nor a desirable policy aim in social and economic terms. The British NGO, Positive Money, has recently added its voice to this critique, with its report “Ending Growth Dependency”. Positive Money (PM) campaigns for reform of the monetary system, arguing that banks, other than the central bank, should not be allowed to create money. They suggest that this will help end governments’ dependence on “growth”.

This article assesses their proposal in three ways. First it asks whether it characterises the motor of growth in capitalist economies adequately. Secondly it asks whether their proposals are needed in order to control the irresponsible growth of credit and debt. Finally it considers whether it would help prevent and reduce ecological damage. It is concluded that because PM are very selective in both their characterisation of the springs of capitalist accumulation and in their analysis of the impact of economic activity on the ecosystem, they end up proposing a scheme that at best will have little positive impact and could actually make matters worse. Finally, an alternative set of policy innovations, relevant to the growth problematic, is suggested.

       Download this article as a pdf file or read the article below.
See link at the end of the article to read and/or make comments.

[This article is now also available at Resilience: and in Spanish translation, in two parts at Revo – prosperidad sostenible: and ]

Introduction: escaping growth-dependency

It has long been understood that the standard economic prescription of economic “growth”, to fix multiple economic, social and environmental ills, is highly implausible3. This stems from the elementary observation that you cannot expand the material throughput of the economy (the materials and energy it consumes) without coming up against the limits imposed by the biophysical systems of the earth that we all rely on. There are other dimensions to the critique of “growth”, 1) the destabilising economic impacts of the reducing return on investment as materials and energy sources become scarcer, 2) the failure of economic growth to benefit those who are economically and socially disadvantaged, and 3) to deliver increases in well-being for the population as a whole (once a certain overall standard of living has been reached), which supports the idea that we need a different kind of civilisation ethic, one based on sufficiency rather than excess4. Against the implausible wager on “growth”, I and colleagues in Steady State Manchester have argued for a Viable Economy,

… an economy that is resilient and dynamic, providing enough for all, while supporting social well-being. And it must be ecologically viable, not causing further damage to the earth’s fragile systems without which life is not possible.”5

The understanding that you cannot grow the material economy for ever was given a clear focus by the work of Donella Meadows and colleagues in the 1970s with their Limits to Growth report6. That report was criticised, largely on spurious grounds, leading to its eclipse and the dominance of the fudge of “sustainable development”, that you can continue to grow while producing environmental and social benefit. The bankruptcy of that idea is ever more clear as the earth’s ecological and biophysical systems lurch into a series of danger zones of which climate change, biodiversity loss and pressures on freshwater systems are just the most obvious ones.7

Not surprisingly, there is now increasing interest in the Limits to Growth thesis. One new entry to the debate is the British NGO, “Positive Money”, which has just published a report “Escaping Growth Dependency8” (EGD from here on), with the subtitle “Why reforming money will reduce the need to pursue economic growth at any cost to the environment”. It is encouraging to see other campaigning organisations embracing a rejection of “growth” on environmental grounds, but does this intervention really help? I will argue that it makes a number of fundamental errors before briefly outlining what a more adequate approach might look like.

What does Positive Money say?

Positive Money (PM) structures its argument like this (EGD: pp. 5-6):

1) “In Chapter 1 we take a comprehensive look at the problems with endless economic growth, and develop a framework to help understand the challenge. We will distinguish ‘economic growth’ as an abstract statistical measure of the size of the economy from the real tangible resource usage and pollution that this economic growth creates. We look at the reasons why technological progress alone will not enable us to pursue continual economic growth whilst living within the constraints of ecosystems. We then outline the model of a ‘steady state economy’ developed by ecological economists, as this serves as a useful description of the hard constraints that the economy must operate within, and provides a vision of a sustainable economy.”

This section is a good exposition of the impossibility of continuing economic “growth”, including the failure of absolute decoupling of GDP growth from material throughputs (something we have emphasised9) and the basics of the “steady state economy” as proposed by ecological economists like Herman Daly.

2) “In Chapter 2 we explore the political, social and economic sources of our current dependency on growth. We do not attempt to identify which source of growth dependency is strongest or most influential, but each of these sources needs a solution that does not depend on growth.”

This section struck me as rather odd. Rather than describing the sources, or driving forces of growth dependency, the chapter does two things. Firstly it identifies the ideological rationalisations for “growth”, that is the functions that the “growth mantra” has in legitimating the present system with its great inequalities. Secondly it identifies the economic argument that growth reduces the impacts of both inflation and (public and private) debt: a simple arithmetic effect. The style of argument though is “teleological”, seeking a cause in terms of its effects. To be fair they acknowledge this, “There are multiple forces that ‘drive’ or produce growth in GDP, …… [the] drivers are not the focus of this paper. Instead, we are interested in the reasons that drive governments to make continual economic growth an essential policy objective”10. But we do need to identify those drivers, the real causes of the present system’s tendency for continual quantitative growth. Get that identification wrong and the prescriptions are also likely to be wrong.

Now comes the crux of PM’s argument:

3) “In Chapter 3, we focus on the sources of growth dependency generated by the design of the current monetary system. We explain how the design of the current monetary system, in which banks create the majority of new money when they lend, tends to generate high levels of private debt (debt of households and businesses) and high levels of public debt too. We consider why these high levels of debt are a problem.”

As I will explain, this section, while identifying some key elements of the current capitalist system, over-extends these elements, neglecting others.

4) “In Chapter 4 we examine how private and public debt can be reduced and conclude that economic growth is seen as the easiest – and potentially only – solution when operating under the current monetary system.”

This section is a useful exploration of the limited options under the current system to reduce debt where an economy is not growing. It sets the scene for PM’s radical proposal in the next section.

5) “In Chapter 5 we examine how changes to the current monetary system can reduce the level of private and public debt without relying on economic growth. We focus on proposals to transform the nature of money creation, and consider the implications of a ‘sovereign money system’. In a sovereign money system, only the state, via the central bank, is able to create money. Because this money is created without a corresponding private sector debt, it can lead to lower debt levels across the economy, and therefore start to reduce one of our sources of growth dependency.”

This, in summary, is PM’s “solution”. It is distinctive but in its key dimensions it is shared by many commentators and campaigners that focus on the ecology-economy relationship11.

A critique can be made from three angles.

1) Why do capitalist economies grow?

2) How best to manage the provision of credit and control excessive debt?

3) What would be the ecological consequences of PM’s proposals?

1) Why do capitalist economies grow?

This is the big question and it needs answering in some detail before returning to the PM proposition12.

We can use a simple model to understand the heart of the system13. Money capital gets invested (by a capitalist, or an entity acting in the same way as a capitalist) in production. The money pays for materials and for the tools (and machines) that are used by workers to transform them into products that enter the market as commodities. The money also pays the wages of the workers. The commodities are then sold, and here is the first clue to growth: they are sold for more money than that money invested (profit). How can that happen? Karl Marx gave us the answer (in what is rather confusingly known as the “Law of Value”), building on the work of David Ricardo and other classical economists. The second clue to the growth riddle is that workers are paid less than the value of their labour power. The difference is “surplus value”, expropriated by the capitalist. When monetised in the sale of commodities, that surplus value is manifested as profit.

That relation is commonly expressed as,

M – C – M’                      (A1

Where M = money capital and C = commodity. The ‘ represents the increase in capital over that in the first stage M.

The formula can be expanded:

M – C…P…C’ – M’                  (A2

Where C are the commodities bought for transformation (i.e. production P) into the commodities C’ to be sold.

And expanding P gives us the means of production MP and Labour Power LP.

M – C(L+MP)…P…C’ – M’           (A3

And the process continues “Returning with a profit after every circuit, capital ‘ignites itself anew’ like a driving fire that never goes out”14 so we have (in summary form:

M – C…P…C’ – M’ → M’ – C’…P…C” – M” → M” – C”…P…C”’ – M”’            (A4

What was added to this formula in the industrial capitalist revolution was the “energy subsidy” of fossil fuels. In the capitalist economy of production ever since, notwithstanding the growth of renewable energy, the formula is

M-C(L+MP (F))…P…C’-M’                 (A5

where F stands for fossil fuels as a portion of the means of production15.

As Jason Moore points out, capitalism’s endless search is for cheap inputs to this system: labour, food, energy and raw materials16. But the core of it all is the creation of value by labour acting on the material inputs via the means of production fired by concentrated energy: the capitalist extracts surplus value by paying the workers less than the exchange value of the product they make.

But there are two problems, and this takes us back to the concerns of PM. 1) Where does that initial money come from? and 2) Where does the increase in money come from to pay for the new commodities, in other words to monetise the increased value after the production cycle?

1) For the investment into the production process, Capitalists invest some of their own money (sic): they do not spend all the profit they make but plough some back into the business. But that is not enough for the expansion we observe. There is another source: credit. PM identify one source of this, lending by banks. This is not the only source: the savings of workers is used too (for example where pension funds and savings schemes make investments in capitalist production, directly or indirectly). And companies raise capital themselves through share offers and bonds.

In all these cases, there is the expectation of profit. Credit is made available as an advance on the expected realisation of profit, in other words on the basis of surplus value to be extracted.

2) That does not answer the question of where the extra money comes from to monetise the profits and pay the interest17. Where does the money for the expansion of commodity purchases across the economy come from? This comes from several sources. When precious metals underpinned currency, in the early days of capitalism, it was the exploitation of the Americas, particularly the silver mines of Potosí and Zacatecas that provided a boost to this extra source of payment (and investment too)18. The inflow of money from other economies continues to fund expenditure on commodities. But in modern days (and indeed going back to the origins of modern banking when voyages of colonisation and exploitation were financed by credit19) it is the further extension of credit that provides much of the extra money.

PM give almost exclusive attention to bank lending and make the correct observation that, contrary to conventional understanding, most money in circulation is created by private banks through the (now electronic) provision of credit. They are right to see the uncontrolled expansion of credit as a problem and explore a number of dimensions to this. But their analysis gets two things wrong at this stage:

Firstly, PM focuses on the creation of money as credit as a central cause of economic growth when from the above (broadly Marxist) analysis, it is instead a secondary phenomenon, a limiting factor rather than the generative process. The core of capitalist expansion is the productive process with its expropriation and surplus value reinvestment of part of the resulting profits. The operations of the credit system are secondary. As Lapavistas says, drawing on the work of the Japanese Uno school of Marxism,

… finance comprises an integral whole of relations ordered in interconnected layers emerging spontaneously out of real accumulation …. a pyramid of credit relations. The pyramid rises from the elemental relations of trade credit, to the still more complex relations of money market credit, to the still more complex relations of monetary (banking) credit, and finally to relations of central bank credit. The capital (stock) market, on the other hand, exists alongside the pyramid of the credit system, but is connected to the latter through value flows and price determination.”20

There is a paradox here: credit grows out of the system of capitalist accumulation, supporting it, but it also takes on a life of its own, not least under present conditions of financialised capitalism, where the chains of credit, of promises to pay, become ever more convoluted and recursive, and when stretched, cause great instability. Ultimately, if the expansion of money values is not grounded in the expansion of commodity production, then there is always a reckoning, a readjustment:

A debt crisis is not really a crisis of debt but a sign that a country’s production of value can no longer support the previous illusion of wealth”.21

The first error of PM then, is to see the provision of credit as primary, as driving capitalist accumulation, rather than something that emerges from it, more or less keeping pace with it, but far from driving it.

The second error is to focus on only one kind of credit within this Ponzi system, that offered by the banks. Jo Michell makes this point in a critique of PM’s proposals:

… by narrowing the focus to the deposit-issuing banks, PM excludes the rest of the financial system – investment banks, hedge funds, insurance companies, money market funds and many others – from consideration”22.

A further problem is with the empirical claims made by PM: does the creation of credit inevitably lead to a growth imperative? Since we do not have a real comparative case, we have to rely on modelling studies. Inevitably these are simplifications of the real economic and monetary system. In perhaps the most developed of these, Jackson and Victor23 used

a stock-flow consistent (SFC) system dynamics model (FALSTAFF) of a hypothetical closed economy with private ownership and interest-bearing debt. Behavioural aspects of the model included the propensity to consume out of both income and wealth, a simple accelerator model of firms’ investment, and positive requirements on banks for capital adequacy and central bank reserves. Contrary to claims in the literature, we found no evidence of a growth imperative arising from the existence of a debt-based money system per se.

In fact, we presented a variety of scenarios which exemplified quasi-stationary states of various kinds, and which offered resilience from instability in the face of random fluctuations, demand shocks, and exaggerated ‘animal spirits’. We also simulated a transition from a growth-based economy towards such a state. None of the scenarios were sensitive to modest changes in the values for interest rates, capital adequacy requirements or reserve ratios. …..

Specifically, the results in this paper suggest that it is not necessary to eliminate interest-bearing debt per se, if the goal is to achieve a resilient, stationary or quasi-stationary state of the economy. It is also worth reiterating that, aside from the question of interest-bearing money, there exists anumber of other incentives towards growth within the architecture of the capitalist economy. …… They must be taken to include, for instance: profit maximisation (and in particular the pursuit of labour productivity growth) by firms, asset price speculation and consumer aspirations for increased income and wealth. Some of these mechanisms also lead to potential instabilities in the capitalist economy. Many of them are reliant on the existence of credit-based money systems. …. But this logic does not entail that interest-bearing money, in and of itself, creates a growth imperative.”

Jackson and Victor are not hostile to monetary reform proposals and they acknowledge that in this simulation they have not explored some critical elements, such as housing investment and house price inflation24. But they make the important procedural point that studies such as theirs are needed in order to identify where effort should be placed in transforming the economy to escape growth dependency.

There are further problems with PM’s characterisation of the creation of money and the making of profit by the banks and these have been widely aired (they mostly come from a Post-Keynesian perspective) but I will not go into them here25. Suffice it to say that those economists who accept the PM starting point (creation of money by banks) find fault with their other premises and with steps of their argument.

2) How best to manage the provision of credit and control excessive debt?

To summarise the previous section, the capitalist economy has at its heart the motor of continual growth, the reinvestment of profit that has its origin in the production process where the production of value rests on the expropriation of surplus value. Money is created through the extension of credit and this allows the monetisation of surplus value as profit. It also provides some of the seed capital (indeed at times most of it) for the investment in new production. The production of credit is therefore both a facilitating and limiting factor on capitalist accumulation and therefore on what is commonly called economic growth. It is not, however, its root cause.

But PM are on to something: even though the creation of credit, and hence money, by private banks is not the root cause of “growth”, it facilitates it. It also allows, through the expansion of household credit, the purchase of commodities from beyond the UK economy and its international extensions, helping to finance the globally overshooting production frenzy. It contributes to things like the inflation of house prices26, and the conversion of housing equity into money is another driver of household consumption beyond what the productive economy can fund27. All this consumption is reflected in the country’s national accounts as GDP and indeed house prices, through their representation in “imputed rent”, inflate it too.

Leaving to one side the need to control other sources of credit expansion, what should be done about the irresponsible creation of credit by the banks? PM’s solution is drastic. They want to nationalise, not the banks, but the creation of money. And they want to de-link the use of money as payment from money as a source of credit. The Bank of England (our Central Bank) would have the sole right to create money. Banks would act as its agents. The Bank of England would create money in the government’s account, which then would be spent into the economy. This money entering the economy would therefore be “debt free”.

It is debatable whether this would have the intended consequences. PM set out a variety of benefits, with a particular emphasis on levels of both public and private debt. Yet their appetite for system change is strictly limited. At no point do they make a criticism of the system of capitalist accumulation. Their treatment seems to fall between wanting to improve its operation (for example ensuring credit for the “real economy”, preventing debt from causing recession) yet at the same time they want to fetter a key element in its financing. Nowhere is a moral case made about the appropriation of surplus value, neither in our low wage economy nor in the global South with its super-exploitation along the supply chains that nourish the British economy28. Instead we are offered a reformist package that harnesses the kind of monetarist thinking29 discredited in the first phase of neoliberalism to what looks like a social democratic project of mitigated capitalism.

How best to manage the provision of credit and control excessive debt depends on what the objectives are. “Debt-free money” is PM’s rallying cry, yet can such a thing exist? With banks as agents of a central bank, they would still be lending money, it would just be from a payment account held in their own name: the debt would be to the central bank. This is the inescapable reality of lending.

Consider this alternative scenario: a community-based bank is set up. It is financed by local people’s savings, local business deposits, and some seed funding from anchor institutions. It offers loans to local businesses, with strict environmental and social criteria. But the money it lends out is not (directly) restricted by the money deposited with it. Instead it can lend more than it has in its own account. But it is not going to do that to the extent that it is over-stretched. This is due to a) the terms of its banking licence which require sufficient reserves, and b) its own constitution and governance safeguards. The result is that the local economy has a sound source of ethical credit. The risks of over-extension are managed by the application of sound criteria and access to reserves to manage fluctuations in demand for repayment of deposits. Neither the money nor the bank is nationalised but nor is either private.

Now consider that model extended across the country. These banks are linked together to pool risks but they work in their communities, using local knowledge to make loans that those local economies and communities need.

Rules are established to regulate the setting of interest rates and to ensure the banks do not over-stretch themselves. These are made locally but there is national legislation that sets the overall parameters. Credit is quite cheap but not given out willy-nilly (there are no shareholders who have to be paid on the basis of the “spread” between deposits and loans).

Bundling up of liabilities is prohibited and so is speculative lending on housing.

These banks look like a cross between mutual building societies and savings banks. They make a profit but this is returned to the community after necessary investment in the bank’s operations (e.g. opening a new branch, upgrading IT systems).

The government centrally takes part in the financing of appropriate economic activity by issuing a series of bonds. These are a safe haven for savings and appear as public debt in the national accounts. They (and similar vehicles) are also used by the local community banks to deposit money that they cannot immediately invest locally.

Not all features are described here but these are the elements of a sound, responsible and safe banking system. These banks do create money when they lend. But they lend responsibly. Their operations are governed properly. They do not speculate and create financial bubbles. Debt and credit are parts of the system. Elements of this system already exist, and in other countries, such as Germany, something not dissimilar is a third part of the overall banking system30.

The point is that such a system could be created without adopting the proposals for “Sovereign Money” from PM. Their proposals would not necessarily produce these benefits. In their system31, decisions on the creation of credit would either be taken by the private banks, operating as agents of government/central bank, or by some kind of committee at national level – probably a combination of both. In the alternative system I have sketched, these decisions would be taken by local bankers, working to a social and environmental mission, knowledgeable of the local economy and its needs and governed by an appropriate local board which could be elected.

This alternative system could be established under actually existing British capitalism, but would also be compatible with and indeed supportive of the erosion of that system of capital accumulation based on exploitation. It could also be pro-ecological by design, for example by favouring production that is consistent with Daly’s principles for a steady state economy32.

On the basis of this short thought excursion, I conclude that PM’s proposals are largely irrelevant to the creation of an ecologically, socially and economically responsible banking system: a viable money economy. Moreover, by proposing a simplistic “magic bullet” they distract from the kind of monetary reform that is needed.

The above banking model does not, of course deal directly with the capitalist motor of expansion. This requires detailed separate treatment but the key lies in the ownership of the means of production33. Surplus would have to be democratically applied to social priorities and excessive value neutralised, destroyed, or spent34, for example by a levy on profits to fund cultural activities that are, for capitalist accumulation, “unproductive”, or (less imaginatively) by a tax whose proceeds are then written off, or by currency devaluation. Not all private business is actually capitalist in the (dynamic) sense of ever-expanding capital. Many, perhaps most, family run firms and social enterprises, for example, do not continually expand their operations but are content with a reasonably constant level of profit.

3) What would be the ecological consequences of PM’s proposals?

Monetary reform (typically 100 percent reserve banking, sovereign money, or similar) is a common denominator of many “green” policy proposals. But there has been little in the way of critical examination35. Indeed, our group, Steady State Manchester caused some surprise when we made it clear in our Viable Economy pamphlet that we were, at best, agnostic on the matter36. PM do not consider the ecological consequences of their proposal directly. However, their argument can be reconstructed and depicted like this:


Sovereign money

Less private and public debt

Less government requirement for economic “growth”

Less damage to the ecosystem

We might add:


Sovereign money

Less availability of credit 37

Less non-necessary consumption

Less damage to the ecosystem

but although high levels of consumer credit undoubtedly do drive consumption (which shows in the GDP statistic), PM do not make this second argument in their paper.

To approach the question “What would be the ecological consequences of PM’s proposals?”, I will first consider the plausibility of a significant reduction in damage if PM’s logic in sequence E1 is followed. Then I will consider briefly the impact according to sequence E2. Finally, true to ecological thinking, I will consider the likely unintended consequences of the sovereign money scheme.

The total amount of new private debt, as credit, would be capped at the level of total current savings, so other things being equal, private debt levels should not rise further, and as existing debts are paid off, they would fall (the recession had the same effect at first– people began to pay off their debts and to save more). PM also suggest a second way in which debt levels would be reduced (“Conversion Liability”). On repayment of debt to banks, the money would appear on the books of the Central Bank and not be destroyed “… in effect, the central bank has taken on banks’ liabilities to their customers”38. So, they argue:

The effect of this is that, over around 20 years, repayments equivalent to around half of private sector debt – around £50 billion per year …..– would be recycled back into the economy as additional spending, through the government, which comes with no additional private sector debt. Part of this additional spending can be used to pay down existing household debt, enabling a significant level of debt reduction overall.39

Assuming the second and third “causality arrows” in sequences E1 and E2 are operative, then some ecological damage will be mitigated. How much remains a moot point.

This is not a rapid solution, and time-scales like 20 years have to be evaluated against the absolute urgency of addressing the disastrous material flows through the economy that leading planetary ecosystems to the point of collapse. Yet PM indicate that this “Conversion Liability” feature is the greater part of the debt reduction that is to be expected from their proposed reform. There are other ways of reducing household debt, in particular. Some of these are mentioned by PM and dismissed as requiring economic “growth”. But debt forgiveness and mortgage default relief could be ways of soaking up the excess capital accumulation that the capitalist mode of production is generating, and which otherwise go into property and financial speculation40. Alternatively it might be done through a mechanism like PM’s Sovereign Money Creation (or the various alternative Quantitative Easing models that have been floated by others), although there are problems with all of these41.

For the reasons outlined above, it is an ecological priority to cap consumer credit, in order to limit unnecessary consumption and hence help reign in the overshooting material flows of the global economy. But the first step of the sequence (establishing a sovereign money system) is not a necessary condition. Instead, it would be simpler to do things like limiting the amount of consumer credit that banks can extend, requiring, for example, stringent assessments in relation to ability to repay and a variety of support services (funded by the banks) to help consumers to manage and reduce their debts. Similarly, policies such as establishing a land value tax, mandating a greater supply of social housing and controlling speculation in housing, would all help control house price inflation and hence household indebtedness, as well as the use of equity release to fund excessive consumption (the impact of aviation and cruise ships comes to mind as asset rich older people monetise their homes). Furthermore, following the argument that “growth” means redressing inequality is forever postponed, then why not tackle inequality head on, through pre- and re-distribution, rather than via a monetary device of uncertain impact? Capping high incomes will have a disproportionate impact on material and energy hungry consumption42.

As for unintended consequences, by substituting bank credit with government/central bank “sovereign money”, the problem of economic growth remains, even were that sovereign money to be largely directed at green, pro-social investments43. How plausible is this, given the penetration and capture of State institutions by capitalist interests? That doesn’t mean we shouldn’t campaign for State investment in all the desirable things needed for an ecologically and socially viable economy, but we shouldn’t have illusions about the likelihood of success. And under the PM proposals this creation of money will be steered by an independent committee, accountable to parliament (and presumably open to “capture” by corporate interests at both levels). Allocation (prioritisation etc.) will be by the government: we can imagine the consequences of that under circumstances like the present with climate change denialists and fracking enthusiasts in positions of power.

But even if there were a good match between allocation of investment and the ecological priorities for investment, there could still be problems with injecting large amounts of money into the economy. This is the paradox of all Green Keynesianism44: government spending causes investment in the “real economy” which might be targeted on good things like environmental protection, clean energy, health, housing and education, but due to the multiplier effect, the money gets spent and re-spent, and as incomes increase due to the economy taking off, more and more of that expenditure will be on high energy, high extraction, high waste consumption. Moreover, improving energy and material efficiency, in the absence of caps on energy and other resource inputs, leads to the rebound effect of expanded consumption of those inputs (the “Jevons paradox”) due to the release of money previously tied up in energy and material purchase (to which it returns as more inputs are demanded).

PM do note that their proposals are not sufficient in themselves to deal with growth dependency. “Weaning governments off their fixation on growth will not be easy as it is so ingrained in the current system – nor are they sufficient to deal with the ecological crisis.” They argue that their monetary reform proposals “can provide governments with tools to tackle all other sources of growth dependency, so there is then no excuse about getting to the root of some of these causes.”45 Yet this leaves unsaid what the root of the problem is. If the alternative analysis of this article is correct, that the priority is to tackle the motor of value creation, production, especially wasteful and unneeded production which drives destructive extraction46 and pollution. Monetary reform can only be a supplementary tool for doing that.


Because PM are so selective in both their characterisation of the springs of capitalist accumulation and in their analysis of the impact of economic activity on the ecosystem, they end up proposing a scheme that at best will have little positive impact and could actually make matters worse.

An adequate approach would have to do at least the following47:

  1. Design and implement effective resource input caps.

  2. Selectively curb highly polluting industries.

  3. Strengthen local economies, shortening supply chains, reducing vulnerability, while fostering an ethic of sufficiency or enough.

  4. Change the structures of ownership so investment decisions are not based on returns to shareholders.

  5. Focus surplus on social need, destroying unneeded surplus.

  6. Bring most banking into public ownership, generally with State ownership of central institutions and mutual and co–operative ownership at the local and regional level.

  7. Regulate banking and the rest of the financial industry, preventing speculation (as opposed to making sound investment decisions based on returns from pro-social and pro-environmental production).

  8. Reform housing policy with expansion of the proportion of affordable rented accommodation and taxation of land value.

Would this be compatible with capitalism? It probably would not be in the longer term, although it could be compatible with those forms of private enterprise and markets that do not demand or entail endless (capital) expansion.


1 Some rights reserved: Licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
I am grateful to Carolyn Kagan, Ben Irvine and Roger Bysouth for helpful comments on earlier drafts.

2 mark.burton{AT}

3 e.g. Boulding, K. E. The Economics of the Coming Spaceship Earth in Environmental Quality Issues in a Growing Economy (ed. Daly, H. E.) (Johns Hopkins University Press, 1966); Georgescu-Roegen, N. (1971). The entropy law and the economic process. Cambridge, Mass: Harvard University Press.; Daly, H. E. (1973). Toward a steady-state economy. San Francisco: Freeman.

4 Burton, M., & Steady State Manchester. (2012). In Place of Growth: Practical steps to a Manchester where people thrive without harming the planet. Manchester: Steady State Manchester.

5 Burton, M., Irvine, B., & Emanuel, J. (2014). The Viable Economy. Manchester: Steady State Manchester.

6 Meadows, D. H., Meadows, D. L., Randers, J., & Behrens, W. W. (1974). The Limits to growth : a report for the Club of Rome’s project on the predicament of mankind. London: Pan Books. Retrieved from; Meadows, D. H., Randers, J., & Meadows, D. L. (2005). Limits to Growth : the 30-Year Update. London: Earthscan; see also Jackson, T., & Webster, R. (2016). Limits Revisited: A review of the limits to growth debate (p. 24). London: All-Party Parliamentary Group on Limits to Growth.

7 Rockström, J., Steffen, W., Noone, K., Persson, Å., Chapin, F. S., Lambin, E. F., … Foley, J. A. (2009). A safe operating space for humanity. Nature, 461(7263), 472–475.
Steffen, W., Richardson, K., Rockstrom, J., Cornell, S. E., Fetzer, I., Bennett, E. M., … Sorlin, S. (2015). Planetary boundaries: Guiding human development on a changing planet. Science, 347(6223), 1259855–1259855.

8 Positive Money. (2018). Escaping Growth Dependency: Positive Money’s latest research paper. London: Positive Money. Retrieved from

10 EGD: p.17

11 It is not quite the same as, but is related to, the 100% or Full, Reserve Banking (FRB) proposals that date back to the Chicago Plan of the 1930s and was popularised by Milton Friedman. FRB is also supported by some ecological economists, including Herman Daly, and by the England and Wales Green Party. Martin Wolf, the senior Financial Times correspondent, also supports the idea. There is debate as to how different the Sovereign Money idea is from FRB, see Dittmer, K. (2015). 100 percent reserve banking: A critical review of green perspectives. Ecological Economics, 109, 9–16.

12 For a consideration of capitalism’s incompatibility with a steady state economy: Blauwhof, F. B. (2012). Overcoming accumulation: Is a capitalist steady-state economy possible? Ecological Economics, 84, 254–261.

13 In addition to the sources cited in relation to specific points, the following discussion draws on a a variety of works, including: Wallerstein, I. (1996). Historical Capitalism, with Capitalist Civilization. London: Verso; Burkett, P. (2009). Marxism and ecological economics : toward a red and green political economy. Haymarket Books; Lapavitsas, C. (2013). Profiting without producing: how finance exploits us all. London ; New York: Verso; Norfield, T. (2017). The City: London and the global power of finance. London: Verso; Bellamy Foster, J., Clark, B., & York, R. (2011). The Ecological Rift: Capitalism’s War on the Earth. New York: New York University Press / Monthly Review Press; Harvey, D. (2010). The enigma of capital : and the crises of capitalism. Oxford [England]; New York: Oxford University Press; Kallis, G., & Swyngedouw, E. (2017). Do Bees Produce Value? A Conversation Between an Ecological Economist and a Marxist Geographer. Capitalism Nature Socialism, 1–15.; Dussel, E. (2001). The Four Drafts of Capital: Toward a New Interpretation of the Dialectical Thought of Marx. Rethinking Marxism: A Journal of Economics, Culture & Society, 13(1), 10–26; Dussel, E. (2014). 16 tesis de economía política: interpretación filosófica. Mexico City: Siglo XXI; and of course Marx, especially Marx, K. (1963). Theories of surplus-value volume IV of capital. Moscow: Progress Publishers e-version available at

14 Malm, A. (2016). Fossil capital: the rise of steam-power and the roots of global warming. London ; New York: Verso.

15 From Malm (2016) work cited.

16 Moore, J. W. (2015). Capitalism in the web of life: ecology and the accumulation of capital (1st Edition). New York: Verso.   See also

17 This is known as the “profits puzzle”, something that has defeated many economists. For an interesting discussion, see Tomasson, G., & Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. Munich Personal RePEc Archive. Retrieved from

18 Dussel (2014) work cited: p. 11.

19 Gelderblom, O. (2013). Cities of commerce: the institutional foundations of international trade in the Low Countries, 1250-1650. Princeton NJ: Princeton University Press.

20 Lapavitsas, C. (2013). Profiting without producing: how finance exploits us all. London ; New York: Verso. p. 122-123. For a diagramatic depiction of some parts of this system (in Spanish) see Dussel, E. (2014). 16 tesis de economía política: interpretación filosófica. Mexico City: Siglo XXI. p. 116. Dussel notes: “The fetishisation [of financial credit] is progressive; that is to say, living labour is made progressively more invisible” p. 128.

21 Norfield, T. (2017). The City: London and the global power of finance. London: Verso. p. 151

22 Michell, J. (2017, January 18). Full Reserve Banking: The Wrong Cure for the Wrong Disease. Retrieved February 14, 2018, from See also Norfield, T. (2017). The City: London and the global power of finance. London: Verso for an accessible exploration of the financial system, contextualised within actually existing imperialism.
There is an echo of the pioneer of Marxist studies of finance, Rudoph Hilferding, in PM’s approach. Hilferding also over-emphasised the role of private banks in the financing of capitalism see Norfield, (2017) work cited pp. 92-95.

23 Jackson, T., & Victor, P. A. (2015). Credit creation and the ‘growth imperative’ – a quasi- stationary economy with debt-based money. (PASSAGE Working Paper). Guildford: University of Surrey. Retrieved from A version also published as Jackson, T., & Victor, P. A. (2015). Does credit create a ‘growth imperative’? A quasi-stationary economy with interest-bearing debt. Ecological Economics, 120, 32–48.

24 The reader can make some explorations using the online simulation programme.

25 Michell, J. (2017, January 18). Full Reserve Banking: The Wrong Cure for the Wrong Disease. Retrieved February 14, 2018, from
Pettifor, A. (2017). The production of money: how to break the power of bankers. London: Verso. Chapter 6.
Schlichter, D. (n.d.). Incredible confusions Part 1: ‘Positive Money’ and the fallacy of the need for a state money producer. Retrieved February 14, 2018, from
Fontana, G., & Sawyer, M. (2016). Full Reserve Banking: More ‘Cranks’ Than ‘Brave Heretics.’ Cambridge Journal of Economics, 40(5), 1333–1350.

27 Folkman, P., Froud, J., Johal, S., Tomaney, J., & Williams, K. (2016). Manchester Transformed: Why we need a reset of city region policy (CRESC Public Interest Report) (p. 61). Manchester: Centre for Research on Socio-Cultural Change (CRESC), University of Manchester. (p. 18)

28 Smith, J. (2012). The GDP Illusion: Value Added versus Value Capture. Monthly Review, 64(3), 86–102; Smith, J. (2016). Imperialism in the twenty-first century: globalization, super-exploitation, and capitalism’s final crisis. New York: Monthly Review Press.

29 PM denies that their plan is monetarist.

30 C. Choulet. (2016). German Sparkassen: a model to follow? BNP Paribas (not necessarily a disinterested source, but the information on the workings of the system is valuable).

31 PM do acknowledge the need for wider system change, with similar elements to those described here, but they choose to focus on the the chimera of “debt-free money” instead.

32 Explained in EGD pp 11-13. Original source, Daly, H. E., & Farley, J. (2011). Ecological economics : principles and applications. Washington, D.C: Island Press.

33 Labour’s new thinking on alternative forms of ownership is relevant to this question: The Labour Party. (2017). Alternative Models of Ownership: Report to the Shadow Chancellor of the Exchequer and Shadow Secretary of State for Business, Energy and Industrial Strategy. London.

34 For a discussion of this idea, termed “dépense” in the degrowth movement: D’Alisa, G., Kallis, G., & Demaria, F. (2014). From austerity to dépense. In G. D’Alisa, F. Demaria, & G. Kallis (Eds.), Degrowth: a vocabulary for a new era (pp. 215–220). Abingdon, Oxon ; New York, NY: Routledge.

35 Dittmer’s (2015) article is an exception. He reviewed the related proposal of 100 percent reserve banking (100RB). This is not exactly the same as PM’s “sovereign money”. However it is of note that Herman Daly, who promoted 100RB is also credited with advising on PM’s Escaping Debt Dependency paper, under review here. Martin Wolf (2013, cited by Dittmer) concluded that the difference was “not at all important” and indeed there is a lot of overlap: both aim to, in Daly’s words, Nationalise money, not banks”. Dittmer identified significant gaps in both argument and evidence in relation to three groups of “green arguments” in favour 100RB, two of which (better prioritisation of environment in allocation/investment decisions, and reduction of overall debt levels) relate to the politics of the capitalist State, which I have explored here. The other argument, that investments could be reduced by the squeeze on credit (limited by deposits), could go either way – depending on interest rates: interest rates are likely to be highly volatile under a 100RB system. I am unclear whether that would be the case for PM’s model. Dittmer, K. (2015). 100 percent reserve banking: A critical review of green perspectives. Ecological Economics, 109, 9–16.

36 Burton, M., Irvine, B., & Emanuel, J. (2014). The Viable Economy (1st ed.). Manchester: Steady State Manchester.

37 This is something of a simplification – there are other circuits involved. For example, there is also a significant transmission through credit to inflated unproductive housing asset prices leading to an increased requirement for income to maintain living standards, via earnings but also via further expansion of consumer credit This is true for both working class home owners and for renters (~40% of households in the UK). This has also been a large value transfer to the asset owning class, facilitating their luxury consumption and growing the amount of money capital (invested wealth) which seeks re-valorization.

38  EGD p. 55.

39 EGD p. 56.

40 Harvey, D. (2001). Globalization and the spatial fix”’. Geographische Revue, 3(2), 23–30.
Harvey, D. (2010). The enigma of capital : and the crises of capitalism. Oxford [England]; New York: Oxford University Press.

41 Pettifor, A. (2017). The production of money: how to break the power of bankers. London: Verso. pp. 117-129.

43 Such money in any case, in subsequent iterations of the cycles of production and exchange, goes into the pockets of consumers in the form of increased wages. This undermines the argument that reflation of the economy need not have environmental consequences so long as the money goes on pro-environmental investments.

44 Cato, M. S. (2014). The paradox of Green Keynesianism. In J. Blewitt & R. Cunningham (Eds.), “The Post-Growth Project: How the End of Economic Growth Could Bring a Fairer and Happier Society.” London: London Publishing Partnership. Retrieved from

45 EGD, p. 59.

46 Acosta, A. (2016, March). Post-Growth and Post-Extractivism Two sides of the same cultural transformation. Retrieved May 3, 2016, from

47 Most of which we have previously advocated in our publications, especially The Viable Economy and Policies for the City Region
For additional national level policy proposals see

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Is the UK Labour party facing up to a post-growth future?

Logo of the Clarion club: cycling socialists.

Logo of the Clarion club: cycling socialists. Via Working Class Movement Library

Following recent short articles on this theme, here is a longer, more analytic treatment. A personal perspective from the author.  Download the full article as a pdf file.

Is the UK Labour party facing up to a post-growth future?

by Mark H Burton1

For longer than most of us have been around, the major political parties have been united by the goal of making more economic “growth” happen. They have been divided on the means, but there has been little or no disagreement about the goal. Only the Green Party has taken a somewhat different line, at times questioning the primary goal of “growth”, although I would argue that, even in their case, this focus has been inconsistent and poorly developed2.

In a recent piece for the Labour affiliated socialist society SERA (“Labour’s Environment Campaign”), Labour front bencher, Chi Onwurah, in a piece I have replied to3, argues that this is what distinguishes Labour from the Greens:

But what distinguishes us from the Green Party is their belief that economic growth and environmental sustainability cannot go hand in hand, that sustainability means abandoning the quest for greater economic prosperity and achieving a ‘steady-state’ of zero growth.”

However, there are indications that some sections of the Labour movement are at last beginning to accept that the pursuit of economic growth is highly problematic, and beginning to explore some alternatives. This ought not to be surprising, given the influence of the ecology movement on the New Left of late 60s and 70s. The New Left had some influence on Labour via things like the Greater London Council administration and the Institute for Workers Control, as well as through the influx of activists, feminist, Marxist, environmentalist, pacifist. However, the influence was marginalised both what Raymond Williams4 called the “productivism” of the mainstream labour movement and Labour’s neoliberal turn under Kinnock and Blair5.

I’ll review the evidence, or rather the straws in the wind, for an opening to the critique of “growth”,consider why it has been difficult for Labour politicians to accept the idea of a steady state economy, post-growth or degrowth, and finally look at what a Labour post-growth approach might look like6. I will draw upon things I’ve written elsewhere but also add in some new material.

Download the full article (pdf file).

1Collective member, Steady State Manchester – mark.burton{AT}

2See the party’s policy page on the economy: there are scattered references questioning growth and GDP but nothing like a coherent critique and counter-proposal:

3My response was published by SERA (and the piece by Onwurah is referenced there too):
It was somewhat shortened and the title changed by the SERA editor: the original piece is here:

4Williams, R. (1982). Socialism and Ecology. London: SERA. Reprinted in Resources for Hope, London, Verso, 1989.

5Going further back, the socialisms of William Morris and Robert Blatchford both had a strong ecological streak as did what were arguably even earlier roots of the British socialist consciousness in the peasants’ revolt and the mobilisation of Diggers and Levellers during the English revolution.

6For convenience I will use these terms, degrowth, post-growth and refer to the Limits to Growth and the Steady State Economy in a rather interchangeable way: there are, however some distinctions among them. See Kerschner, C. (2010). Economic de-growth vs. steady-state economy. Journal of Cleaner Production, 18(6), 544–551.; Demaria, F., Schneider, F., Sekulova, F., & Martinez-Alier, J. (2013). What is Degrowth? From an Activist Slogan to a Social Movement. Environmental Values, 22(2), 191–215.
For an overview of degrowth as a community of ideas and practice, see D’Alisa, G., Demaria, F., & Kallis, G. (Eds.). (2014). Degrowth: a vocabulary for a new era. Abingdon, Routledge.

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Practical degrowth for Labour

The article below is a slightly longer version of the piece published on the SERA (Labour Environment Campaign) website on 17 December, 2017.  See also this piece, also by Mark, which was  carried on the Left Foot Forward website, in response to John McDonnell’s speech which acknowledged the Limits to Growth.    Look out for a longer, more analytical piece coming soon!  SSM is a non-party group (collective members are members of more than one party, and of none)  but we think it important to be aware of, and engage with political actors – parties, other organisations and individuals.

Practical degrowth for Labour: a response to Chi Onwurah

Mark H Burton

As the size of the world economy has grown, so too has the pressure it places on our ecosystems. The consequences of that pressure are now becoming all too apparent. John McDonnell

Chi Onwurah praises economic growth but unfortunately combines a number of misunderstandings of the steady state and degrowth approach.

Every day the evidence mounts that industrial civilisation has reached a state of ecological overshoot and is heading for collapse. Climate change is the most obvious aspect, as scientists from Stockholm’s Resilience Centre have made clear with the concept of Planetary Boundaries. In 2015 they found that four of these planetary boundaries had already been crossed. Biodiversity loss, damage to phosphorous and nitrogen cycles, climate change and land use have all reached dangerous levels.

This scenario was presented by the “Limits to Growth” scientists in 1972. It was confirmed in their update report of 2004 and by University of Melbourne studies in 2008 and 2014. What other economic forecasting model has been so accurate over such a long time-scale?

Chi distances the Labour Party from the Green Party on economic growth. Eight Labour MPs including Daniel Zeichner and Barry Gardiner are on the All Party Parliamentary Group on Limits to Growth, chaired by Caroline Lucas. The possibility of economic growth on a finite planet is not a question of party affiliation but of scientific evidence: there is some evidence, probably temporary, of decoupling of CO2 emissions from GDP growth, in a few economies, at far less than the annual rate needed to mitigate climate change. There is none on other material use.

Solar energy is great but materials can’t be synthesised from sunlight and there are increasing carbon emissions from concrete and steel production, deforestation and soil destruction.

Technology can facilitate economic and social change but the economy is material, embedded in the ecosystem. ICT relies on vast expenditures of energy, copper, rare earths, water, and so on, which all impose limits on scale.

The present economic model depends on treadmill growth but degrowth to a steady state economy could be a planned, managed process. Socialists believe in taking control of the economy rather than it commanding us. Ecological economists Peter Victor and Tim Jackson have demonstrated that ceasing GDP growth needn’t increase poverty and unemployment. It does mean rejecting some shibboleths like the desirability of increasing productivity. But planetary limits do mean a radical reduction of consumption which can only be achieved fairly with planning and redistribution. This could mean escape from the treadmill of competition for status via consumption, with its deadly societal consequences, instead nurturing people’s capacities, conviviality, solidarity and stewardship.

Does it mean turning our backs on the global South? No, our wealth has been acquired through exploitation of those regions in concert with exploitation of workers here, and our prosperity still depends on exploitation those in the Global South. Our growth economy, with its insatiable consumption, continues to ravage the South through resource theft, hyper-exploitation, dispossession, rigged trading mechanisms and more. Degrowth could be a win-win, strengthening both our economies and those of the global South, freeing them from the malign environmental, social and economic impacts of extractivism.

Some sectors will have to grow, the “replacement economy” of socially and environmentally benign production. Whilst much of Labour’s economic and industrial approach is appropriate, it is only ecologically realistic if the aggregate level of resource throughput decreases and then stays stable. You can’t have that and overall growth.

Repeating the mantra of “growth” avoids devising and securing support for unprecedented and innovative policies. Like these:

1. Stop subsidizing and investing in activities that are highly polluting, moving liberated public funds towards clean production.

2. Sharing work-and resources, reducing the working week to some 32 hours, supporting employers to facilitate job-sharing, with income loss for the top 10% only.

3. Minimum and maximum income. High incomes mean disproportionate resource use: cap them but also set a floor.

4. Tax reform for a progressive system that taxes use of energy and resources, wealth, property and land value.

5. Control money creation, regulating bank lending for tight but cheap credit.

6. Citizen debt audit: “pardon” unpayable household debts.

7. Support the alternative, solidarity society through subsidies and tax exemptions for co-operatives, social enterprises, community land trusts, opening up resources to community groups.

8. Optimise buildings. Retrofit, refurbish, downsize and share, saving fuel costs and emissions. Expropriate vacant housing. Respond to any remaining need by building low energy social housing, within already urbanised areas.

9. Curb advertising, reducing the incessant promotion of consumption.

10. Establish environmental limits, via absolute and diminishing caps on the CO2 that can be produced and the material resources the country uses, including emissions and materials embedded in imported products.

11. Abolish the misleading GDP indicator. Focus on real things- jobs, incomes, activity, investment, care, health, wellbeing and environmental restoration.

This isn’t a full programme for a steady state economy but it demonstrates how, far from suggesting something impractical and unpopular, SERA could and should promote a genuinely ecological literate and socialist approach: degrowth.

* Some of the ideas in this list first appeared in a piece by Giorgos Kallis.  Some have been reframed for the British context.  Others have been added here. Other notable attempts to construct a practical post-growth/degrowth/steady state policy set include those in the 2010 Enough is Enough report and the subsequent book by O’Neill, Deitz and Jones.

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