‘Stabilising money requires stabilising the biosphere’

September 22, 2022|Written by Jamie Woolley

Central banks rarely feature in fiction, but Kim Stanley Robinson – bestselling author of the Mars trilogy – put them at the heart of his recent novel, The Ministry for the Future. Published in 2020, it paints a picture of the very near future in which the climate crisis is bearing down hard on humanity, and one of the fixes Robinson explores is to rethink the global financial system.

Here, Robinson explains why central banks need to be involved in devising solutions to our environmental problems, and discusses the irony of maintaining financial stability to keep the planet habitable.

What was your rationale for putting central banks at the heart of a near-future novel about climate change?

A couple of factors. One, the job of rapid decarbonisation of our civilisation, and all the other things we need to do to dodge the mass extinction event we have begun, is really immense. It will therefore take a huge amount of money, representing human time and effort.

Also, a lot of this work isn’t necessarily profitable. Individuals are not clamouring to buy what is in effect a giant sewage system for the world, even if they like the idea of the result. Put these two factors together and we’re in big trouble, which we are. The central banks, being the creators and guarantors of money itself, need to be involved if we are to succeed.

A theme explored in the novel is the challenge of devising metrics to calculate the risk that biodiversity loss poses to the financial system. How do you think the natural world can be described in ways the financial system can interpret?

Maybe it would be best to describe the natural world as foundational, indispensable and irreplaceable, such that its financial value to us is infinity. Then solve for that, meaning that we recognise the necessity of the biosphere to human life, and then arrange a financial system that works to protect the biosphere first.

Part of the biosphere is human welfare of course, so the human can be included, but the extent of care has to be for the entire biosphere, this being the larger reach of humanity’s body.

Of course this doesn’t quite answer the question, but it might set axioms that underpin more specific answers. Paying the true costs, never thinking there are externalities, regarding profit as currently calculated as being some sort of measure of damage and injustice, rather than a goal… My list of changes would be very substantial, for sure.

Cover of The Ministry for the Future by Kim Stanley Robinson

The novel also touches on the issue of whether central bank mandates allow for them to consider climate and environment. How do you think the real-life debate on mandates has evolved since you were writing those sections?

Truthfully, I wasn’t aware of how much this work had progressed when I wrote my novel. The Network for Greening the Financial System already existed and was working on this problem. Their papers speak of moving away from the idea that money is a neutral political force and that central banks should “create a level playing field” for money, shifting to the realisation that money is always political and can be directed to do good work right from its creation by the central banks.

That said, there is still an older paradigm that says directing money to specific work is fiscal policy, not monetary policy, and should be devised and enacted by legislative bodies. This is true, but banks can do things within their current mandate to help the situation, and we need them to.

What research did you draw on to shape the financial ideas and solutions explored in the novel?

I’ve been reading about economics and finance at an accelerating pace for about 30 years now, asking friends in academia and finance to explain things to me. The Rethinking Capitalism group at the University of California Santa Cruz introduced me to many people and concepts. Leader of the group was Robert Meister, whose latest book, Justice Is an Option, is very interesting on finance and climate justice.

A close colleague of Meister’s, and sort of the heart of that group, was Randy Martin, a professor at New York University before his death and his book The Financialisation of Daily Life was important to a lot of us. Since then Dick Bryan, retired from the economics department at University of Sydney, has been one of my teachers, a friend I’ve kept in touch with.

For other books, I recommend in particular Governing by Debt by Mauricio Lazzarrato and The Ascendancy of Finance by Joseph Vogl.

You’ve previously said that central banks being forced to save the world in order to stabilise interest rates has a certain comedy about it. How do you think this shapes how bankers approach the climate crisis?

Central bankers have to see the truth of this joke, that stabilising money requires stabilising the biosphere. Then private bankers need to realise it too. With the concept in mind, many new actions may come to be seen as not only possible, but necessary.

We are in a climate crisis, and the evidence piles up every year, every season. There’s no denying it any more, and the work of coping has to begin. Money is a big part of that.

This is a big question, but can the environmental crises be adequately addressed from within the capitalist framework?

This is a big question! And no one knows the answer.

It seems like it might be possible for the capitalist framework, as conceived in a kind of Keynesian way, to get the job done. In this imagined solution, governments would call for rapid positive change, create new money to pay for it, and pay private industries and businesses to get the big non-profitable parts of the job done, or started. Then the economy would continue with a multiplier effect in its usual way, but more biospherically friendly.

A series of supermarket shelves seen from above, hundreds of colourful products filling the shelves
‘Weakly-constrained capitalism will be too weak and too slow [to address climate change], and part of the problem itself.’ © Peter Bond
I think that’s what most people in the capitalist world today are hoping for and working toward. But capitalism’s intense drive toward profit and capital accumulation, at the expense of any other value or goal, means that using this system with the principal goal of restoring the carbon balance and saving the creatures of the biosphere from extinction is in effect against the grain of the system.

At best, regulation would have to aim the system properly, away from biosphere destruction and injustice among humans, and see if justice and sustainability could become the goal that capitalism is aimed at, almost like a weapon.

An alternative to this would be to think about the second world war when an overriding crisis caused most governments to seize the economy and order their populations to act as if everyone in the country had been drafted and had to obey laws designed to win the war. In that analogy, you can see it was still a form of capitalism, in that businesses still existed independent of the governments but they worked within sharp constraints to do what the governments required of them. This was a Keynesian economy with a very strong tilt toward government controls, even over prices and wages, and the creation of something very like full employment.

Another alternative would be a world working somewhat in the way China does now – “socialism with Chinese characteristics”, meaning state-owned enterprises that serve society in ways the government has decided are crucial to the population.

So China could test its method of response, while the social democracies could test the strong government-led capitalist response, and places like the US test the weakly-led capitalist response. But I think weakly-constrained capitalism will be too weak and too slow, and part of the problem itself, in that capitalism has not properly valued or priced the biosphere, and always increases inequality among people.

So for me, strong government leadership is necessary now. I feel like it’s an obvious thing to say, but on the other hand the view is not general yet, or at least it has not been acted on yet. But now’s the time. And the central banks are a crucial place to start.

This page was last updated October 5, 2022

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