Towards a new approach to income distribution and enviromental sustainability

The paper argues that, in contemporary market economies, most production is debt financed. In order to pay off these debts, there is a necessity for economic growth that results in enormous waste of human effort and a misuse of the earth's resources. The Douglas-Orage Social Credit analysis, which attracted world-wide attention during the 1920s and 1930s, concluded that the pressure for economic growth, induced by the role of finance, led inevitably to economic and military rivalry between nations, and to long run environmental degradation, because short run maximization decisions squander non-sustainable resources, whilst ignoring the 'third party' social benefits and costs that arise out of the process of exchange. The Draft Mining Scheme put forward by Douglas and Orage in 1920 sought to avoid these difficulties by devolving responsibility for finance to industrially based local producers' banks. Such a financial system could create a framework under which ecological sustainability becomes economically viable. Economic developments over the decades since the Douglas-Orage texts were published have emphasized the need to remove the dominant role of finance in determining economic and industrial policy. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.