e4: economy, ecology, equity and ethics

providing a clear direction for discussion and action
a declaration by a group of leading economists and activists invited by
Schumacher College to take a systemic approach to the economic emergency


building the green new deal
The world is in the grip of a fourfold crunch - the crises of ecology, economy,
equity and ethics. We face these crises with concern and hope: concern for the
misery they are creating and hope that we have the courage to look deeply into
their causes and find lasting solutions.
Governments are putting new money into circulation and bailing out banks;
they are focused exclusively on reflation whatever the cost. At best, this amounts
to short-termism.
So what else can we do?
We need a new approach – to save the economy by investment in saving the
planet through measures that will benefit all of us (including the bankers).
Building on the idea of a green new deal, this document addresses three crucial
questions: What can we do now? What transformation must follow? What might
the future look like?

the policies we need now
First we need a green new deal with a clear focus on green investment.
Investments today determine the shape of the economy tomorrow, and so
must be adapted to future needs. To counter recession, tax relief can be used
to stimulate green demand. We propose the following actions:
- re-regulate the financial sector
- no more absurd credit creation mechanisms
*Limit the capacity of banks to generate unsustainable credit (for example by
ensuring a global framework that reinstates appropriate reserve-requirement
ratios and/or leverage ratios).
*Require transparency of financial instruments and ensure appropriate scale
of financial institutions (for example splitting up too-big-to-fail banks and
tougher auditing).
*Make sustainability and ethical criteria central to pension funds and to
independent credit and risk rating (for example by compulsory carbon
reporting).
- new green investments
- stimulate investments to save the planet
*Set up new, and extend existing credit institutions that drive green and local
investments (for example through lower interest rates).
*Advance green and fair procurement by increased use of the state’s
purchasing power to stimulate information, training and jobs for green
infrastructure, sustainable energy and biodiversity.
*Counter the restrictions on credit by providing safe and sustainable
investment opportunities with state guarantees for projects that have high
sustainability and ethical ratings.
*Provide incentives and investment for ecosystem services and biodiversity
(for example for farmers and for rural and marine regeneration).
*Encourage businesses to help one another through regional complementary
currencies providing liquidity in times when credit is scarce.
- fairer taxes and rising green taxes
- tax bads not goods
*Shift the tax-base from labour to resources.
*Introduce fairer taxes to reduce social inequality).
*Outlaw off-shore tax havens and tax corporate profits in the countries where
they are earned.

The more we increase green investment, the more we need to shrink investment
in unsustainable parts of the economy, or else we risk overshooting ecological
and social limits, and thus trigger new booms and busts. Therefore we need
new principles.

principles of transformation
Today’s economy has two major structural flaws: economics is designed singlemindedly to maximise financial returns and does not recognize ecological limits.
Thus, increasingly, financial capital is growing at the expense of other types of
capital. We need a vision that supports human rights and wellbeing and acknowledges that human beings are part of nature. This leads to an Economy
firmly rooted in Ecology.
The e4declaration recommends eight principles:
1 quality of life
The basic aim of the economy is to meet human needs equitably and to
improve quality of life. To achieve this, we need to measure economic
success by metrics of well-being.
2 ecological realities
The economy must be designed on the basis of ecological systems, with
environmental values playing a central role in reaching economic decisions,
and we must move as rapidly as possible towards a resource-light economy.
3 appropriate scale
Society should aim to develop more direct relationships between buyer and
seller and to meet local needs with local production. At the same time, local
initiatives need to be geared to global realities.
4 optimal diversity
Diverse social, cultural and economic systems are more resilient against sudden collapse. Diversity must be actively promoted, protected and treasured.
5 from ownership to stewardship
Society should support a diversity of business models that encourage individual and mutual ownership, and social entrepreneurship at a small scale, but encourage stewardship and shared ownership on the larger scale.
6 stable and dynamic
The optimum health of any complex system is at a balance point between
efficiency and dynamic resilience.
7 equity
Every single human being has basic rights that must be met by social and
economic systems. The current economic system manufactures poverty
and inequality. Also we must ensure intergenerational equity so that the
young are not compromised by the requirements of the old, and vice versa,
and the rights of future generations are protected.
8 beauty and elegance
Beauty and elegance lift the spirit and enhance human wellbeing.

Monetary systems can and should be redesigned to serve all of these principles
and not simply to maximize financial gains.

glimpses of the future
All aspects of human activity must function in accordance with the eight principles. This section focuses on four key areas to give a flavour of the
changes that can be made, and are already happening, to create a just and
sustainable economy.
food and agriculture
If the food supply chain was designed according to the principles of the four E´s
we could feed everybody to the highest standards of nutrition and gastronomy.
All we really need to do is to develop food and farming expressly to feed people
without wrecking the rest of the world – what has been called ‘Enlightened
Agriculture’. These are the basics:
*Husbandry should be largely traditional – but this does not imply a simple
reversion to the past. We need to build on the traditional crafts with excellent
science and to ease the physical burdens with truly appropriate technologies.
Science and high-tech at present are designed to replace traditional crafts.
In short, we need a ‘new agrarianism’.

*Investing in a truly sustainable organic food system where, as far as possible,
food is produced, prepared and consumed locally. Wealth created from the
food chain should remain within communities.

*Many initiatives are already in train to bring about the necessary
transformation and these must be supported. They include the slow and
organic food movements which foster food culture, and schemes to increase
access to land, such as community-supported agriculture, land trusts and
food co-operatives.

money
Money is a construct and the way it works can be changed. We can create money
systems that are stable and help the real economy to work within ecological
limits, rather than forcing us beyond those limits. We need to:
- Expand accounting to include social and environmental capitals.
- Encourage complementary currencies that promote social and environmental
value as well as supporting geographical areas or economic sectors at
different scales.
- Re-localise the finance system with strong support for community-based
institutions and investments.
- Support and develop the new models of money creation (for example TERRA
Global Reference Currency) and interest-free lending into large scale
experimentation, action research and evaluation. This will replace compound
interest with a more intelligent circulation mechanism
- Ensure finance systems are subordinated to the interests of the community
and of the ecosystem. Chiemgauer currency in Germany, JAK Bank in Sweden,
Wirtshaftsring in Switzerland, and time banks are examples that are already
making money work for people rather than the people working to pay the
costs of money.

governance
We can transform governance through a positive vision of what people want to
see in their local, national and international areas, giving people control of their
own lives. We need to:
- Adopt the principle of subsidiarity so that decisions and responsibility are
taken at the lowest possible level. Communities are already recognising this
need, for example in the Transition Initiatives starting around the world,
connected via a network able to spread benefits through knowledge sharing.

- Introduce a sliding scale of regulation so that the larger an organisation the
more heavily it is regulated.

- Strengthen the rights of stakeholders.

- Decouple governments from corporations.

- Ensure that transnational corporations are accountable and subject to
democratic oversight.

- Introduce maximum & minimum wages with a maximum ratio of difference
between most and least paid.

- Take responsibility for environmental refugees.

- Develop appropriate and effective international institutions for a just
economic and ecological order.

energy
Rapid technical advances and price reductions in large-scale renewables have the
potential to replace coal and nuclear ‘base-load’ generation. This necessary
investment should not overshadow the development of smart local solutions
which are an essential part of providing a resilient energy network. We need to:
- Start a global carbon cap and trade system, based on IPCC science, that internalises the environmental cost of carbon dioxide at source, ensuring that fossil fuels are fully costed.

- Rapidly deploy energy efficiency programmes (for example retrofitting existing housing and other buildings), providing mass employment
opportunities.

- Upgrade the electricity grid to allow contributions from remote large-scale
renewables (for example offshore wind and concentrated solar power).

- Encourage implementation of small scale local renewable, and high efficiency technologies.

- Adopt smart policy measures to support the above actions (for example government guaranteed feed-in tariffs, and roll-out of renewable obligations).

- Remove institutional barriers to sustainable energy (for example by rethinking unfriendly grid tariffs and policies, and re-designing smart local mini-grid systems, already successfully implemented in Woking, UK and many places in Germany).

With the eight principles at the heart of decision making, and by effecting change at all scales as this section begins to explore, we can shape the economy to have people at its centre while recognising our dependence on our planetary home and its diversity of life.

www.e4declaration.org
The e4 declaration is a work-in-progress, providing an important statement of direction for economic change. The continuing task of developing the policies and enabling the change is for us all to undertake. If you support this initiative and the continuing work, please share it widely and send it to the Prime Minister and to the Chancellor of the Exchequer. Ask them to see the economic crisis as an opportunity for change and use it to create a sustainable and just economic order by adopting the principles and policies presented in this declaration.
Please show your support; join the e4 discussion at www.e4declaration.org.

The e4 declaration was issued by Schumacher College
Think Tank on Holistic Economics, November 2008
The Declaration is the collaborative work of the Think Tank participants.
All support the Declaration but not necessarily every detail, and it should not be assumed to be officially endorsed by their respective organisations.
The meeting was attended by:
Victor Anderson Sustainable Development Commission
Tom Andrews Soil Association
David Boyle New Economics Foundation associate and author
Tim Crabtree Centre for Local Food
Cherian Eapen ROY International Children’s Foundation
Brian Goodwin Schumacher College
Oliver Greenfield WWF One Planet
Colin Hines author, Finance for the Future
Nadia Johanisova author
Margrit Kennedy MonNetA
Miriam Kennet Green Economics Institute
Satish Kumar Schumacher College and Resurgence
Ann Pettifor Advocacy International
Julie Richardson Landscope
Wolfgang Sachs Wuppertal Institute
Sulak Sivaraksa Spirit in Education Movement
Per Espen Stoknes Norwegian School of Management
Colin Tudge author
Antony Turner CarbonSense
Stewart Wallis New Economics Foundation
Also in attendance:
Nick Hart–Williams Be the Change, film crew
Fraser Durham CarbonSense, film crew
James Martin-Jones facilitator.
Mark Burton Schumacher College, assistant facilitator