An odd noise has settled upon the sovereign world, bringing many restless evenings. The droning in our homes is not that of appliances, TV’s or chatbots. It’s more like the rumble of tectonic plates letting us know that human actions have disrupted the very behavior of this planet. Or maybe the call of ancestors mourning the loss of Earth’s biomass and energy. And part of this sound is surely the mortal cry that stems from our misunderstanding of the difference between price and value.
According to the IMF, world production declined $1 trillion in 2022, while the price of food and energy rose 7.3% in wealthier and 9.9% in poorer countries. Inflation, combined with crippling interest rates, has sharply increased the rates of joblessness and inequality, particularly in the Global South. A shortage of currency is causing cuts in public spending in countries representing half a billion people.
More than 50% of the world’s low-income economies, staggering under the high cost of debt, are at risk of default. Central banks are uncertain about hiking interest rates further and triggering recession, while their favored tool of inflation-targeting has not been reliable for many years. Debt restructuring by the G20 has also been delayed, largely through its reluctance to acknowledge that the great wave of globalization has ebbed and the geopolitical terrain is bifurcating.
It’s no secret that dozens of countries in Latin America, Africa and Southeast Asia, which endured major defaults on foreign loans during the 1970s-90s, are now seeking independence from the non-convertibility of their currencies. Brazil, Russia, India, China, and a hundred other states known as BRICS+, are testing the West by working around its sanctions on Russia and teasing the possibility of forming their own monetary system.
This call for a new world order is taking place against the backdrop of global warming, land, water and air pollution, shrinking habitats, plunging biodiversity, soil degradation, species extinction and resource overconsumption. Is the clamor we’re hearing the lament of a planet failing to make the leap from fossil fuels to carbon-free energy and genuine incentives for sustainable equity?
Had the world paid attention fifty years ago, there may have been time to use fossil fuels to build a global infrastructure of wind turbines, solar panels, electric vehicles and other zero-carbon equipment, while edging away from dependence on fossil fuels. But the oil industry, governments and banks discouraged the idea of investing in the renewable energy industry and spurring it to produce enough power to grow and regenerate itself.
Now that the market can no longer rely on cheap and abundant supplies of fossil fuel, nations face the predicament of reducing their use of dirty energy while increasing clean energy production at the same time. Bottom line: either we get our signals straight or we default on the biophysical value of life.
It has long been known that the price of a commodity on an economic balance sheet does not express its intrinsic value as a resource. A century ago, Irving Fisher proposed an accounting system to connect economics with nature, and many technicians since the 1970s have been investigating such possibilities.
In January, three US agencies — the Office of Science and Technology, Office of Management and Budget, and Department of Commerce — announced a program for quantifying the value of ‘natural capital’. Their proposal, National Strategy to Develop Statistics for Environmental-Economic Decisions, aims to replace the indicator of Gross Domestic Product by 2036 with a new standard arising from the interrelation of ecology and economy.
Perhaps a conflict-ridden world is still avoidable if the complex measures of nature can be orchestrated to end the noise within the economic system. As we hold our breath and dream, the growing crescendo for monetary de-dollarization and the drumbeat of war from high-powered militaries are scattering the world’s supply chains and compelling nations to increase their use of rapidly declining fossil fuels.
Then in the foreground appears a chorus of the Anthropocene, ancestors and analysts imploring: “How will natural capital end this dissonance when the value you add to the market is still removing value from nature without replenishing it?” For land’s sakes, could these be the voices keeping us up at night?
James Quilligan has been an analyst in the field of international economic development since 1975. From 1978-1984, he was a researcher and press secretary for the Independent Commission on International Development Issues, chaired by West German Chancellor Willy Brandt. He is a founder and former Managing Director of Economic Democracy Advocates, which promotes equitable and sustainable resource management.
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