Is Our Monetary Structure a Systemic Cause for Financial Instability?

Here is a paper by Bernard Lietaer and others which points to some important parallels between the (monetary) economy and natural eco-systems.

The authors come to a rather surprising conclusion: Increased efficiency is not in the interests of a well working economic system. There rather should be a balance between efficiency and resiliency, and one of the characteristics that lead to increased resiliency is greater diversity. An obvious implication is that a proliferation of p2p currencies will lead to a more stable economic system.
Abstract

Fundamental laws govern all complex flow systems, including natural ecosystems, economic and financial systems.  Natural ecosystems are practical exemplars of sustainability: enduring, vital, adaptive. The sustainability of any complex flow system can be measured with a single metric as an emergent property of its structural diversity and interconnectivity; it requires a balance in emphasis between efficiency and resilience.

The urgent message for economics from nature is that the monoculture of national currencies, justified on the basis of market efficiency, generates structural instability in our global financial system. Economic sustainability therefore requires diversification in types of currencies, specifically through complementary currencies.
– – –

Viewing economies as flow systems ties directly into money’s primary function as medium of exchange. In this view, money is to the real economy like biomass in an ecosystem: it is an essential vehicle for catalyzing processes, allocating resources, and generally allowing the exchange system to work as a synergetic whole. The connection to structure is immediately apparent. In economies, as in ecosystems and living organisms, the health of the whole depends heavily on the structure by which the catalyzing medium, in this case, money, circulates among businesses and individuals.  Money must continue to circulate in sufficiency to all corners of the whole because poor circulation will strangle either the supply side or the demand side of the economy, or both…

http://www.scribd.com/doc/26248658/Is-Our-Monetary-Structure-a-Systemic-Cause-for-Financial-Instability-Bernard-Lietaer

Leave A Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.