Accounting and Money for Ministerial Leadership. Nimi Wariboko
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restrictions on its use to mark social boundaries, create separate spheres of exchange and regulate allocations to create differentiation of homogenous money, affirm cultural distinctions, and elaborate the social meaningfulness of money. In this way, she mounted a vigorous assault against the widespread economistic view of money as absolutely fungible, qualitatively neutral, and devoid of any use value. Her research has shown that money is “neither culturally neutral nor socially anonymous. It may well ‘corrupt’ values and convert social ties into numbers, but values and social relations reciprocally transmute money by investing it with meaning and social patterns.”21 In directing attention to monetary exchanges as thickly social, cultural, and relational, Zelizer argues that social ties and economic (monetary) transactions repeatedly mingle. In this vein she rejects the idea of “hostile world”22 and that of “economics-or-nothing reductionism” in economic-sociological analyses.23
Overall, in the sociological investigation of money three key properties of money have emerged to frame the discourse on money. These are unit of account, monetary media, and interpersonal transactions. Unit of account or money of account is the abstract numeraire, the official currency. In the United States the money of account is the dollar. Monetary media relate to the medium, the objects that are used as money. The money of account can be embodied in various material forms like metal coins, paper, or credit cards. The dollar, the money of account, is embodied in a range of objects: gold and silver coins, greenbacks, credit cards, various kinds of e-money, etc. The third property (interpersonal transactions) refers to money’s ability to mediate interactions between people, to “the connections among persons and groups involved in monetary transactions,” and to the way they use money to differentiate one relationship from another.24 Later in this book, I will argue that money is not only a socially contingent phenomenon, but also social relations as constitutive of money itself. The argument is that social relations are by no means secondary, but rather constitutive of money. Money is a social relation.25 In chapters 4 and 10, we will further explore this notion of money as a social relation.
For now, let us take a moment to examine what kind of relationship our monetary system has with the environment, which is an integral part of the web of relationships that make life and human flourishing possible.
Theology in Motion 1: Money and Environmental Pollution
The foundation of the monetary system in the United States is debt. In order to create money, “high-power money,” to put money into circulation the Federal Reserve Board has to buy government securities from the commercial banks, except it wants to literally print money. If the Federal Reserve Board wants to pump $20 billion into the United States economy, it has to buy that amount of government securities from the banks (creating new bank reserves for them) and pay appropriate interest to the commercial banks or their investors. The Fed cannot just create money as the Treasury Department does with its issuance of metal coins, which is debt-and-interest free. The reader who is not familiar with modern monetary economics may rightly ask: Where do the government securities come from in the first place? The Treasury Department of the United States government sells bonds to borrow from the public in order to supplement tax revenues. The banks buy the debt instruments for their use or for their clients and the government pays periodic interest to the investors. From this you can see that the foundation of the money supply in the United States is on debt, not commodity standard. Running an efficient system for generating market-clearing interest rates and payments of interest due on debts is key for the functioning of the whole monetary system.
The interest-based monetary system is one of the contributing factors to ecological non-sustainability of economic growth. It is often rare to find theologians who recognize the crucial link between the damage to the environment and the interest rate. In the market economy, every producer who intends to stay in business has to cover, at the minimum, his or her cost of capital. Let us say that the risk-free, before-tax interest rate on bonds (only a part of the weighted average cost of capital as cost of equity is ignored in this example) is only 4 percent; it means the profit rate has to be higher than this level for private production to go on. This also means at the minimum the economy has to grow at 4 percent to yield this kind of profit irrespective of concern for the environment. Now this is where the argument hits home. If the economy of the United States is growing at 4 percent per year, it will double approximately every eighteen years. (This 4 percent rate does not include allowance for return on equity, a margin for national population growth rate, and the compounding of interest, which is boundless. And if it does, the years will be dramatically less.) Now imagine the huge impact on the environment if Europe and Japan are also growing at the same rate—yet we know the average cost of capital in these societies is more than 4 percent per annum. The monetary system and the whole mechanics of capitalist production system have this built-in power to grow and grow just to make zero return on invested capital.
Now that we have shown that growth is endemic to the system, the question that immediately suggests itself is why does this growth pose a problem to the global environment? Bob Sutcliffe and Elmar Altvater among others have identified four areas of concern or tension in economic growth and environment nexus.26 They argue that universal (global) development at the current levels in USA/Europe/Japan is not materially possible because of the limits of the physical environment. Development as it is currently pursued is unsustainable because of the exhaustion of material resources and the harm done to the earth. Second, economic growth produces pollution and other effects (such as climatic changes and overproduction of waste) that negatively affect human welfare. Third, the use of Gross National Product (GNP) as a measure of development is deeply and methodologically flawed. Negative externalities of pollution are not reckoned in national accounts—thus overestimating national income. Another source of overestimation has to do with the measurement of GNP, which ignores depreciation and amortization of natural capital while incorporating into its calculations depreciation and amortization of “factory” capital stock (capital created by human investment). The final area of concern is distribution and equity between present and future generations and between the rich and poor. This tension is relevant not because of the usual politico-economic issue of fairness but because of the connection between equity and environmental sustainability. With the wanton destruction of the environment and the earth’s patrimony the unborn are subsidizing the present generation. The other issue is between the rich and the poor. It appears that to cater to the poor, to raise the human development level of the poor, more economic growth is needed. The economic growth and development needed to do this appear unsustainable owing to negative environmental impacts inherent in such a move. So it is argued that in order to raise the human development level of the poor, the rich nations and classes (within nations) have to reduce their resource use and waste production.
Is there a way to think about money, monetary thought, and financing schemes that would curb the unavoidable tendency to grow and pollute the environment just to be in one spot of profitability? In order to situate this question in proper discursive framework, one has to examine the fixed idée of economics and the logic of market economy. In their separate works, both Bob Sutcliffe and Elmar Altvater have argued that an examination of obstacles to sustainable development must be properly situated within the grand thought pattern of the West.27 The internal logic of capitalism, Western thought patterns, and the philosophical orientation of economics as a discipline (both neoclassical and Marxian) are a formidable set of obstacles. The whole edifice of economic thought has not seriously considered nature in its model and has discounted the real importance of natural capital. In the dynamics of accumulation, nature has to be transformed in accordance with principles required by capital, “invested with value,” and its intrinsic value is often, implicitly or explicitly, denied. This economistic thinking, which is undergirded by methodological individualism and the “quantitative aggrandizement of value (profit and accumulation),” are veritable obstacles