Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Early Ecological Monetary Theories: Gesell and Soddy on money, growth, and alternative currencies

Vianna Franco Marco, Konrad Lorenz Institute for Evolution and Cognition Research
Oh Yonghyup , University of Antwerp

The relations between monetary systems and environmental concerns have recently resurfaced in contemporary debates in ecological economics on how monetary theories might be conceived as if economic systems as a whole were embedded in the biophysical and social realms, amounting to calls here subsumed under the banner of ''ecological monetary theories.'' Such theories move beyond the focus on green investments in post-Keynesian trends of a so-called ecological macroeconomics, questioning some of the foundations of orthodox monetary thinking in their capacity to address environmental issues. The article pinpoints the main research questions of these ecological monetary theories based on their implications in terms of the environmental sustainability of a given monetary system: (i) the ontology of money, challenging its orthodox conceptualizations as a commodity or medium of exchange as opposed to an endogenous social relation, language or institution expressed in terms of an abstract unit of account; (ii) the monetary growth imperative associated with interest-bearing debt money creation; and (iii) advantages of building an ecosystem of complementary currencies, including proposals for moving away from fiat money and adopting knowledge- and/or renewable energy-based currencies. Subsequently, the article circles back to the intellectual roots of such ideas, with key contributions arising roughly between the late 19th century and the 1920s–a period marked by the establishment of orthodox monetary thought as well as original proposals labeled as heterodox or “heretical.” Finally, the article focuses on the works of Silvio Gesell and Frederick Soddy in connection to the three research questions above, reassessing their proposals as put forth in their own time as well as in light of recent environmental challenges. As a result, we expect to better understand such ideas in their historical and scholarly contexts and, in turn, to enrich arguments made in contemporary debates, which are often based on early formulations and how they relate to or align with biophysical aspects of economic processes, i.e. social provisioning. There are useful insights and perceptions to be gained from intellectual history in times when economic policy is starkly challenged by emerging constraints, which also applies to monetary theories and their at times underestimated role in environmental sustainability.

Area: Eshet Conference

Keywords: Money, Monetary Theory, Ecological Economics, Silvio Gesell, Frederick Soddy

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