John Theaker visits Schumacher College, where leading economic thinkers are proposing an alternative to the current financial system
As Einstein famously said, “We cannot solve our problems with the same thinking we used when we created them.” Where better then, to find a wise and intelligent rethink of the global financial system than Schumacher College in Devon.
The college is named after EF Schumacher, who famously argued in 1973, in his seminal book Small is Beautiful, for an economy based on small scale, labour intensive, energy efficient, environmentally sound and locally controlled technologies. At a time when leaders of large centralised systems in finance, media and politics are demonstrating a failure of integrity and a lack of ability to manage their global empires, Schumacher’s ideas seem more relevant than ever.
In July this year, a team of leading economic thinkers and innovators gathered with participants from around the world at Schumacher College. What emerged from the course, titled Rethinking Finance, was a calm conviction that there is light at the end of the tunnel. The solutions we discovered involve an evolution of how we view our relationship with money, as well as important systemic changes.
As Satish Kumar, the co-founder of Schumacher College says, the fundamental crisis is that money has assumed overriding importance to all human beings, beyond people and nature.
“Have the olive trees of Greece stopped producing olives?” Satish asks. “Have the chefs of Greece forgotten how to make Moussaka? Has the sea of Greece denied people the ability to bathe in it? Yet we see people rioting and killing each other over money. The original meaning of the word economy, to which we now need to return, was to manage one’s home – from the Greek words ‘ecos,’ (home) and ‘nomos,’ (manage). Instead, in the modern world, economy is all too often about one thing: money.”
Satish points out that three things make a successful economy: land, people and money – and money is there to serve the other two. When we realise that ecological and human values are the only true values worth holding, then we will begin to really solve the financial crises of our times.
World-renowned futurist, systems thinker and founder of Ethical Markets Media, Dr Hazel Henderson, was a guest lecturer on the course. She believes that we are in a major economic transition from the old industrial, fossil fuel driven economy, towards an ecologically sustainable age powered by renewable energy. The world is in a transition of consciousness and technology and the tipping point is upon us.
The myth of scarcity
Money in the modern world is largely information – 98% of all money is literally digital – and information is fundamentally abundant. However, Hazel argues that those who hold economic power are distorting the inherent abundance of the financial system for their own ends, at the expense of the majority.
Although often hand picked from the world’s top universities, the highly trained specialists who run the system have little knowledge of the planet’s natural ecological and social systems that the monetary system was fundamentally created to support.
Also lecturing during the Schumacher course, Nathalie Buschor, a senior coach and consultant to banks, explained the realities of the recruitment and training policies at big investment banks. Through detailed psychological profiling and relentless pressure to win or be fired, they breed a rarefied group, of mainly men, to whom financial gain is the virtually the only focus of life. As Steinbeck writes in The Grapes of Wrath: “They breathe profits; they eat the interest on money. If they don’t get it, they die the way you die without air.”
Nevertheless, Hazel suggests that the global financial system is a truly remarkable global commons that is increasingly being harnessed for good; something attested to by the Green Transition Score Card, a new scheme established by Hazel for measuring the growth of green investment worldwide. This growing economy will be decentralised, community-based and democratic; more along the lines that Schumacher would have approved of.
“It’s amazing how business has woken up to sustainability,” agrees Tessa Tenant, a global expert in socially responsible investment, who also lectured on the course.
Banking that serves society
Undeniably, there has to be reform of the banking system, which is now holding up the green transition, Tessa argues. “It is very difficult to get rules agreed and also many people are constantly trying to break the rules that do exist. They have forgotten they are looking after our money!” she says.
What is required, Tessa suggests, is far more transparency. This is the basis of fair capitalism, she believes, and thanks to innovators such as her, we are now seeing massive growth in socially responsible investment. Two key areas that she identifies as needing more work, are: communication of complex financial issues to ordinary people and correct governance of funds.
Also lecturing, Ann Pettifor, director of economic thinktank Policy Research in Macro Economics (PRIME), reminded us that the banking system has been a major civilising advance. It served us well when the system was managed more in the interests of public than private sources and had generally much greater regulation, and when interest rates were lower and stable. What has particularly caused problems and needs to be reined in, Ann says, is capital mobility – the unrestricted way in which people can invest money in whichever markets they choose around the world – and highly fluctuating interest rates.
Ann echoed the words of George Bernard Shaw, who in 1907, wrote: “The universal regard for money is the one helpful fact in our civilisation… It is only when it is cheapened to worthlessness for some and made impossibly dear to others, that it becomes a curse.”
Schumacher College is an environment where love for nature and appreciation and respect for ecology are built into the very fabric of the organisation. Just being there, I felt uplifted, inspired and found a spontaneous determination to try to live my life with a little more balance, creativity and sustainability.
In Schumacher College, I suspect, we can find a vital ingredient for the successful transition of our society. At the heart of the college is Satish Kumar, a man whose passion for peace and ecological harmony burns brightly. But most of all he is courageous. “We live in society of timid people,” he says. As he reminded us all, great change is born of such courage and thankfully that is something we don’t need money to cultivate.
Schumacher College is running a cluster of short-courses on money and green enterprise over the autumn, and is now enrolling for its 2012 MA programme in Economics for Transition