THE OFFICIALJOURNAL OF THE SOCIAL CREDIT SECRETARIAT £2- ---LTHE

For Political and Economic Realism Volume 77 No.2 March-April 1998

THE MULTILATERAL AGREEMENT ON INVESTMENT:A LEAP IN THE DARK?

Ann McKechin is writing in her capacity asChair oj the Glasgow branch oj the WorldDevelopment Movement (WDM), one if theUK's leading organisations campaigning toimprove the lives oj the world's poorest people.Through national networks oj members andlocal groups, WDM tackles issues includingmultinational companies, debt, the arms tradeand aid. WDM is not a charity but aims tochange the policies oj governments and

\,_.; companies which keep people poor. In theJollowing article, the danger posed by theMultilateral Agreement on Investment isanalysed.

A frightening change is taking place in theway the world economies are beingoperated. With increasing globalisation oftrade and investment, the key decisionsare made not by government but bymultinational companies. Now, behindclosed doors, an agreement is being

inside this issuePAGES 12-13

BOOK REVIEWF.I.A.S.C.O.:

Blood in the Water on Wall Street

PAGES·14-16NEW OPPORTUNITIES FOR

\,_...I SOCIAUNClUSIONThrough Useful and Satisfying

Work, Paid and Unpaid

hatched which is taking this process aterrifying step further.

The Multilateral Agreement onInvestment (MAl) is being negotiated atthe Organisation for Economic Co-operation and Development (OECD)which is the Paris based club of 29 of theworld's richest countries. Apart from thedefence sector, which has an automaticexemption for all countries, the MAlwould allow completely unrestrictedforeign investment, acquisition andownership in any sector of the Britisheconomy. The MAl would be enforcedby an international tribunal, composed oftrade and legal experts, making theirdecisions behind closed doors. Theywould be given the power to challengenational laws in Britain and othercountries, and to award compensation toforeign investors that may amount tomillions of pounds.

Why have the British public heard solittle about these proposals which willhave such a drastic effect on our ability tomake our own economic decisions?Certainly the lack of proper public debateassists those who are most likely tobenefit, namely the multinationalcompanies themselves. A similaragreement was proposed for inclusion in1993 in the Uruguay Round of theGeneral Agreement on Tariffs and Trade(GATT), forerunner of the World TradeOrganisation (WTO), but developingcountries strongly opposed it. The UnitedStates, supported by multinationalcompanies, then pushed for an agreementto be negotiated by the OECD. Secretnegotiations began in 1995 and weresubject to a very rushed timetable (The

Uruguay Round took 10 years incomparison). The draft outlineagreement was not made public untillate last year and then only after acopy was leaked on the World WideWeb.

The agreement was due to be signedin May last year but due to widespreadconcern this has now been postponeduntil this May. In this period over fortyinternational, environment, developmentand consumer organisations including theWorld Development Movementconverged on the OECD in October topress for the suspension of talks and acomplete rethink of the basis ofnegotiation. They called for anyagreement to enforce the responsibilitiesof multinationals rather than simplyextending their rights. Despite theremarkable unity displayed by such a widerange of non-governmental organisations,the OECD refused to consider theirappeal or to commit to publicparticipation in an independent assessmentof the social, developmental andenvironmental impacts of MAL This lackof co-operation has led to many suchorganisations launching campaigns to stopor radically reform the agreement beforeit is due to be signed.

The terms of the MAl would appearto be in direct conflict with the legitimateaims of the majority of our population.Whilst members of the public andgovernments around the world are rightlyconcerned about the impact ofderegulation on food safety, worker'srights, the environment and the welfare ofthe poor and vulnerable amongst oursociety, the MAl would severely restrict

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the ability of nation states to provide a fairregulatory framework for foreigninvestment. Yet a new internationalconsensus is emerging around the vitalneed for a capable and active governmentrole in regulation of the economy. Eventhe World Bank in its 1997 WorldDevelopment Report" The State in aChanging World calls for a stronggovernment role, citing policies the MAl,if implemented, would disallow.

The MAl represents the firstinternational agreement in whichmultinational companies are accordedrights that extend far beyond thoseavailable to governments or individuals.The MAl allows foreign investors to suegovernments in an unaccountableinternational tribunal over any policy orlaw which discriminates against them. Wenow have the prospect of largemultinational companies suingdemocratically elected governments formillions of pounds over policies or lawsdesigned for the benefit of its citizens.There are no corresponding provisions forgovernments or individuals to sue foreigninvestors.

"Yet globalisation means that theworld's multinationals are beyond

the scope of anyone country's laws.The recent court case brought by theUS Attorney General against theMicrosoft Corporation shows the

might of the largest multinationalsagainst even the most poweiful

nation on our earth. })

At the same time there are noresponsibilities required for multi-nationals. Companies can engage in globalmonopolies and unfair trading practiceswithout restriction, since there is nointernational agreement on competition,policy or restrictive business practices.Practices such as transfer pricing to reducetax or discriminatory pricing to eliminatesmall competitors are widespread. Yetglobalisation means that the world'smultinationals are beyond the scope ofanyone country's laws. The recent courtcase brought by the US Attorney Generalagainst the Microsoft Corporation showsthe might of the largest multinationalsagainst even the most powerful nation onour earth. In fact, the annual sales of thelargest eight multinationals exceed the

GDP of the 50 poorest countries.A good example of the problems

which seem certain to arise is a number ofcases which have resulted from theexperience of Canada and Mexico asmembers of the North American FreeTrade Agreement (NAFTA). Canada iscurrently being sued by a USmultinational, Ethyl Corp. for banning atoxic chemical used as an additive inpetrol. The company claims the lawdiscriminates against it and. is using aclause in the agreement to sue for $250million. Apparently, it is likely to win! InMexico, local authorities are being suedfor refusing permission to US companieswho want to set-up toxic waste dumps.MAl negotiators wish to copy thisNAFT A clause which is being used to,raise these court proceedings. As a result ahuge number of laws on public health,worker's rights, local communities, theenvironment and consumer rights couldbe open to challenge.

The MAl will be binding also on localauthorities and the proposed ScottishParliament and Welsh Assembly. Ofparticular concern is the requirement fornon-discrimination against foreigninvestors. Many local authorities areprobably in breach of the current draftMAl through their policies to directincoming investment, support localbusinesses, create jobs, provide skillstraining, and protecting the environment.Potentially this may lead to the world'slargest multinationals suing our localauthorities and regional bodies. Inaddition, regional development agenciesand local authorities would lose powers toprotect local communities frominappropriate foreign investment andpowers to strengthen local indigenouscompanies. Ironically, the US govern-ment has sought exemption from theMAl for all US state and localgovernments following a recent study inthe US which identified hundreds of stateand local laws that could be ruled out byMAL

Our elected bodies could notdiscriminate against companies investingin repressive regimes. The MAl wouldgrant a clean slate to the fly-by-nightcompanies that abuse human rights,workers' rights, or the environment, andthen move on to another country.

The consequences for the developingcountries of the world are even moresevere. Although most of these nations arenot party to the negotiations it is clearfrom a number of statements from OECD

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officials and the large multinationals thatthe real aim of the agreement is toliberalise investment opportunities inthese countries. Non-OECD countrieswill be "invited" to sign the MAl whichis already being seen as a stamp ofVapproval for foreign investment. Most ofthe poorer countries that are desperate toattract foreign investment at any cost willbe under immense pressure to submit tothe MAl terms but will not be able tonegotiate in the present talks.

"Many local authorities areprobablyin breach of the current draft MAl

through their policies to directincoming investment, support localbusinesses, createjobs, provide skills

training, and protecting theenvironment. Potentially this may

lead to the world's largestmultinationals suing our local

authorities and regional bodies. JJ

Infant industries in developingcountries face formidable obstacles inentering the world economy. They aretypically disadvantaged by a relatively"'__;weak domestic infrastructure and tradebarriers. They are also forced to competefrom the earliest stage with largemultinationals, which are able to produceon a massive scale and spread their costsacross global markets. The playing field isnot "level" but policies to assist theseindustries would be prohibited under theMAL

A number of countries haverestrictions on the types of ownershippermitted. An estimated 75% of foreigninvestment is in the form of acquisitions,where a multinational buys a domesticcompany. This is often followed by arationalisation process where the endresult is job losses, lower exports and thetransfer of decision-making functionsoutside the host country. Accordingly,countries such as Indonesia and Kenyahave prohibited outright acquisitionwhilst allowing joint partnerships andpurchase of minority interests. Malaysiahas also used restrictions as a means tospread company ownership more broadly \....)in its society. All these policies placinga restriction on the type of incominginvestment would be prohibited.

The MAl would also prohibit rulesrequiring the employment of nationals,

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requirements for transfer of technologyand local content rules. These measuresencourage the development of a base ofskilled workers and domestic suppliers.The development of such "roots" in theocal economy not only helps

employment and new industry but alsoacts as an anchor for the footlooseassembly plants attracted to the next offerof generous incentives.

It is worth noting that these very samepolicies have been used during thedevelopment of most, if not all OECDmembers. Poorer countries have limitedopportunities for building a strongdomestic economy. By prohibitingpolicies which would enable them to gaina foothold in the global economy, theMAl would make it difficult, if notimpossible, for poorer countries todiversify their economies away fromdependence on commodities andextractive natural resources. Signatories tothe agreement would be effectivelylocked in for a minimum of 20 years asno country can withdraw for five yearsand will be bound by the agreement for afurther 15 years. The MAl will furtherfuel the "race to the bottom" in whichgovernment will be forced to considerabandoning their commitments toeducation, health, social services andenvironmental protection in the scrambleto attract investment. More "trickledown" policies are not the answer toglobal poverty.

"The MAl will further fuel the(raceto the bottom' in which

government will beforced to considerabandoning their commitments to

education, health, social services andenvironmental protection in the

scramble to attract investment. More{trickle down' policies are not the

answer to global poverty. "

In the United Kingdom, negotiationsare being led by the Department of Tradeand Industry. To date their response tothe many concerns which have beenraised against the MAl has been lacklustre.There has been virtually no publicinformation on the proposals or anypolitical debate in Parliament. The WorldDevelopment Movement is certain that ifthere was a proper public debate on theissues, our negotiating stance wouldchange significantly . We believe ourcampaign is vital if we are to prevent ourcountry and others taking a dangerousleap in the dark.

We would encourage you to write toyour MP, and to Margaret Beckett MP,President of the Board of Trade to pressfor:

A delay in signing the agreement toallow sufficient time for informed publicdebate .

• Full participation by developingcountries in any negotiations.• A full analysisof the likely impact onthe poor; on UK social, health andenvironmental policies; on regionaldevelopment agencies; and on thedeveloping nations of the world.• A binding agreement onmultinationals that will establishresponsibilities for multinationals ratherthan strengthen their rights.

Further inJormation on the WDM's campaigncan be obtained fromThe World Development Movement,25 Beehive Place, London, SW9 7QR.Tel: 0171 7376215or at its Web Site -http://www.oneworld.org/wdm/

QUOTE"I sympathise, therefore, with those whowould minimise, rather than with thosewho would maximise, economicentanglement between nations. Ideas,knowledge, art, hospitality, travel - theseare the things which should of theirnature be international. But let goods behomespun whenever it is reasonably andconveniently possible, and, above all, letfinance be primarily national."J. M. Keynes (1933), National SelfSufficiency in D. Moggridge (ed.),The Collected Writings if]. M. Keynes,(London: Macmillan).

•book revieio F.I.A.S.C.O.: Blood in the Water onWall Street.By Frank Partnoy,(London: Profile Books Ltd., 1997)

Reviewed by Alan Armstrong

"There is inherent in the capitalist system atendency to self-destruction. "Joseph Schumpeter

In December 1928, US President CalvinCoolidge in his address to Congresssuggested that "No Congress of theUnited States ever assembled ... has metwith a more pleasing prospect" and thatthey should therefore "regard the presentwith satisfaction and anticipate the futurewith optimism".

Just 22 months later, on Thursday,October 24th, 1929, the Wall StreetCrash began, giving notice of a decade ofdepression that would not lift until theworld prepared again for War.

3

The charge that blew the world towar in 1939 had been lit by a frenzy ofspeculation in increasingly sophisticatedfinancial "securities" (involving a down-payment and borrowing of the 'rest fromthe broker or bank) and in a great varietyof guises. As demand boomed so shareprices soared. Buyers were borrowingmadly to buy equities, not "on the basisof fundamental values but solely onexpectation of capital gains";' In theprocess The New York Times Index ofindustrial common stocks rose from 134at the end of 1924 to 452 on September3rd, 1929. Only some 15% of their totalvalue in September 1929 related to newequities! It was a game which simplycould not go on forever.

Frank Partnoy's book F.I.A.S.C.O.:Blood in the Water on Wall Street - abrilliant "insider's diary, and a shockingeducation in the jungle of high finance inthe 1990s from New York to Tokyo" -helps to confirm, if confirmation is

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needed, that the game is on again!Partnoy, now an assistant professor of

law at the University of San Diego, soldderivatives on Wall Street from 1993 to1995, first for Credit Suisse First Bostonand then for Morgan Stanley. During thattime the seventy or so people he workedwith in the derivatives group at MorganStanley "generated total fees of about $1billion - an average of $15 million aperson". Their earnings alone wereenough he notes to "pay the salaries ofmost of the firm's ten thousandworldwide employees, with plenty leftfor us".

Through the 1920s he suggests thatMorgan Stanley had been a highlyreputable investment bank with areputation for gentility and conservativebusiness practices. By the 1980s however,it was facing stiff competition from otherbanks.

The "partners shifted their focus fromprestige to profits" and by 1994 few otherbanks could match Morgan Stanley'saggressive new sales tactics. Partnoy'sbosses, it seems, were transformed to"feral multimillionaires: half geek, halfwolf' who, when not performing"complex computer calculations" werescreaming that they were going to "ripsomeone's face off' or "blow someoneup".

He explains that derivatives are financialinstruments "whose value is linked to, orderived from, some other security, such as astock or bond." To grasp the conceptPartnoy suggests we simply think aboutoptions and forwards. He tells us that "anoption is the right to buy or sell somethingin the future". The right to buy is a "calloption" and the right to sell is a "putoption". If you know a new Jaguar carmodel will be introduced in a month youmay pay the dealer £1,000 to reserve onefor you at the expected price of say£50,000. When the model arrives in theshowroom you have a call option - theright but not the obligation - to buy one. Ifthe actual price is £60,000 you maydecline to buy and lose your £1,000. Ifhowever the price is only £45,000 youroption is worth about £5,000.

The other type of derivative, a"forward" (or future if traded on anexchange) is an obligation to buy or sellsomething. If you wish a new Jaguarmodel but do not want to pay for anoption you may enter a forward obligationto buy one at the expected price of£50,000. If the new model arrives and ispriced at £40,000 you are obliged to buy

at £50,000 and will have lost £10,000.All derivatives are combinations of

forwards and options and they are tradedon all kinds of financial instruments -stocks, bonds, swaps, market indices etc.As competition between banks and thefinancial institutions becomes moresevere, so greater and greater ingenuitygoes into the creation and sale of newexotic, more profitable and higher riskderivatives. And all the time there is hugepressure to close a sale and to outwit thefinancial regulators.

Successful derivatives salesmen andwomen are paid huge salaries andbonuses, certainly earning high six figuresums and frequently more than a milliondollars a year. When their clients lose,their losses often run to many millions.

On April 12th, 1994, the firstsignificant derivatives losses wereannounced: Gibbons Greetings, Inc.recorded a loss of $20 million and Procterand Gamble confirmed the biggestderivatives loss ever reported by a USindustrial company when it advised itwould take $102 million to "close outtwo losing interest rate swaps".

"The immediate rallying cry ofMorgan Stanley's president, John

Mack, was typical of the mercenariesin the derivatives group ... he told a

group of managing directors,(There's blood in the water. Let's go

kill someone.'"

Suddenly the breathtaking scale ofderivatives sales to corporate Americabecame clear as one major company afteranother acknowledge their exposure. Thebankers' response is captured by Partnoywhen he recalls "the immediate rallyingcry of Morgan Stanley's president, JohnMack, was typical of the mercenaries inthe derivatives group ... he told a groupof managing directors, 'There's blood inthe water. Let's go kill someone.'"

The apparent disdain with which thebankers' clients were held is also evidentin their view of the regulators who lack"both power and money" and are"doomed to remain several steps behindthe finance industry". Indeed he asks is iteven possible that "a $70,000-a-yearSecurities and Exchange Commissioninvestigator could ever catch a $700,000-a-year derivatives salesman?" The answeris clearly no! 4

Meanwhile, losses continued tomount alarmingly. In the Orange Countyfiasco, announced on the 1st December,1994, it was made known that theCounty had "paid Merrill Lynch almost$100 million in fees" while making aU"$1.7 billion loss on derivatives". By1997, in States such as Florida, Louisiana,Ohio, Wisconsin and Wyoming hugederivatives losses were also expected. Andof course derivatives losses were notconfined to the USA. In Britain, BaringsBank and the boroughs of Hammersmithand Pulham, which lost a huge amount ofmoney on various swaps, are examplesthat help confirm the problem is trulyglobal.

In the preface to this astonishing bookwhen Partnoy refers to John Mack'srallying cry that "There is blood in thewater. Let's go kill someone" he alsoconfirms that they did. In fact, he suggestthat the "battlefield of the derivativesworld are littered with our victims. Asyou may have read in the newspapers, atOrange County and Barings Bank andDaiwa Bank and Sumitomo Corporationand perhaps others no one knows aboutyet, a single person lost more than a billiondollars". In his epilogue he notes that "Ina recent survey, seventy percent of V'derivatives professionals said theyexpected large derivatives losses in 1998."

Since then, the collapse of the brokerY amaichi and the subsequent turmoil inSouth East Asia, especially in Japan andSouth Korea, even before 1997 hadclosed, suggest that the financial climatein 1998 may well be much rougher thanthe survey suggested.

J.K. Galbraith surely is right when hecomments that "The world. of highfinance can be understood only when it isrecognised that the greatest admiration isaccorded those who are paving the wayfor the greatest catastrophe"."

We should keep that firmly in mindwhen, as we approach the millennium,our politicians are persuaded yet again bybankers that taxpayers should be asked tobail out the international financial system,or increasingly talk of a new dawn, orsuggest that we ought to "anticipate thefuture with optimism". Nothing short ofa commitment for radical reform of thefractional reserve monetary system wouldjustify that.

1 William Hixson, A Matter of Interest: Re-examiningMoney, Debt and Real Rconomic Growth (New York:Preager, 1991), p. 9l.1 J .K. Galbraith, TI,e World Economy Since the Wars(London: Sinclair Stevenson, 1994), p. 73.

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NEW OPPORTUNITIES FOR SOCIAL INCLUSIONThrough Useful and Satisfying Work, Paid and Unpaid

The November IDecember 1997 issue oJ TSCdealt with Douglas' analysis if the impact oJtechnology on the demand JOTpaid employmentand his related callJor a National Dividend tobe paid to all citizens. The Jollowingpresentation to the EU-Japan symposium is avery interesting development on that theme andshould be if interest to Social Crediters andothers who are concerned, inter alia, about the"unemployment problem".

Presentation to the ED-Japan ClubSymposium, 17-18 November, 1997by James Robertson.

In the first half of the 21st century, twofeatures of the emerging post-moderneconomy are likely to affect the nature ofwork, how it is organised, and ourattitudes to it. These will be:• a growing emphasis on greatereconomic self-reliance - for nations, forregions within nations, for cities anddistricts, for neighbourhood communities,and for people and households; and• a growing emphasis on conservingnatural resources and the environment.

A Historical PerspectiveIn ancient European societies like Greeceand Rome - and in some more recentsocieties most people had to work asslaves. The work of society was organisedon the basis of a superior and asubordinate class - masters and slaves.Then in medieval feudal Europe mostpeople - the "common people", as theywere called - had to work as serfs. Thework of society was still organised on thebasis of a superior and a subordinate class- lords and serfs. ln modern industrialsocieties most people have had to work asemployees. The work of society has stillbeen organised on the basis of a superiorand a subordinate class - employers andemployees.

This has been a historical progressiontowards somewhat greater freedom andequality. But the basic assumption still isthat most people should work as

V subordinates for superiors - employees foran employer - whether in the businesssector, the state sector, the professionalsector or the non-governmental sector.Most people do not have the opportunityto work for themselves and one another,

on work of their own choosing, undertheir own direction, in accordance withtheir own priorities and values.

Is the employment age now ending?Will full employment ever come back? Inmany societies, in fact, full employmentnever existed in the sense of everyonebeing able to get the kind of job thatwould enable them to earn a goodlivelihood. In. countries like South Africawhere I was last year, and India where Ihave just been, it is transparently obviousto the visitor that conventional economicpolicies cannot conceivably create enoughjobs to provide livelihoods for those whoare now unemployed. But even in thosecountries where full employment wasseen in the recent past as a feasible goal -in Europe, North America and other richindustrial countries - a number of factors,including increasingly intense competitionin a globalised economy, is making it lessand less realistic to hope that employerswill be able to provide jobs for all. Thisapplies to the Anglo-Saxon economies ofthe USA and Britain, where the officialemployment statistics give a misleadinglyrosy picture, as well as to the economiesof continental Europe and Japan whichhave less flexible labour markets.

What Comes After The EmploymentAge?Nobody is suggesting that there will beno more jobs. Employment is not goingto disappear altogether! But we willincreasingly need to recognise thatvaluable work includes more than simplyfinding employers to give people jobs.And we will need to develop ways ofensuring that people who do those kindsof valuable work are properly rewarded interms of livelihood, status and self-esteem.

Other types of valuable work inaddition to employment include:

Self-employment;working in a co-operative or

community enterprise, and taking part indecisions about its operations andmanagement;• voluntary work, in non-business andnon-government organisations - the"third sector"; and• useful unpaid personal work, includingmanaging the household, bringing upchildren, and doing things for relatives,

5

friends and neighbours.In my book Future Work I referred to

work of these kinds as "ownwork". I seethe transition from the age ofemployment to the age of ownwork aspart of the transition from the modern tothe post-modern era. Work - in the senseof socially useful activity which isimportant to the worker - will continueto be a central part of most people's lives.But we should expect a continuing moveaway from employment towardsownwork, blurring the boundary betweenself-chosen work and productive leisure,and perceived by some as a shift from"work" to "activity".

In terms of policy, this means a twin-track approach. We should continuelooking for more effective policies toincrease the supply of jobs. But we shouldalso adopt policies that will reduce thedemand for jobs by encouraging otherforms of work as well. These policiesshould enable increasing numbers ofpeople to organise useful paid and unpaidwork for themselves - enable them toown their work. Society will thenbecome less employer-centred and morepeople-centred than today's societies.Citizens will then be freer than in today'ssocieties from dependency on employersand the state to provide them with jobs.

Against that background, then, theunderlying theme of our approach to thefuture of work should be to encourageself-reliance. We need import-sl;lbstitutionpolicies at every level. At the nationallevel these should help to reduce ourdependence on imports, which we haveto pay for by producing more exports toearn the necessary foreign exchange.Similarly at the levels of city,neighbourhood and household, policiesare needed to enable many of us tobecome less vulnerably dependent onemployers and suppliers of goods andservices based elsewhere.

Two examples of policy approacheson these lines are to do with:• taxes and welfare benefits, and

local economic self-reliance

Taxes and Welfare Benefits.The growing interest in environmentaltaxes or ecotaxes - taxes on the use ofnatural resources and on polluting

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activities - has a direct connection withthe future of work. In this respect socialand economic sustainability are closelylinked to environmental sustainability. Asthe possibilities for introducingenvironmental taxes have been studiedand discussed, it has become increasinglyclear that environmental taxes should bebalanced by the reduction and perhapseventual removal of other taxes, includingtaxes on employment and income andenterprise.

The logic behind such a change issimple: it doesn't make sense to tax peopleon the value they add through usefulwork and enterprise, and fail to tax themon the value they subtract by usingcommon resources and values. (Bycommon resources and values I meanresources and values created by nature orsociety as a whole, and not by the workand skill and enterprise of the individualsor organisations that use them or ownthem. One example is the capacity of theenvironment to absorb pollution andwaste; another is the site value of land.)So the proposal is that people andcompanies should pay society for usingthese common resources - "the polluterpays" in the case of pollution, and thelandowner pays "rent" in the case ofland.

However, there is an importantproblem with environmental taxes. If theyfall directly on consumers; they hurt poorpeople relatively more than richer ones.We had a good example of this a year ortwo ago in Britain. Value Added Tax(VAT) was imposed on householdenergy. Quite naturally, there was a bigpolitical outcry against the regressivenature of the tax.. This problem is onethat has to be solved.

One part of the solution will be tomake sure that ecotaxes on consumers areaccompanied by taxes that fall moreheavily on rich people than on poor. Thesite-value land tax is a good example ofthis. The people who own valuable landare usually richer than people who don't.Another part of the solution is to use someof the revenue from the ecotaxes to reducetheir net impact on poorer people. Studiesin Switzerland and Germany have shownthat, if the revenue from such a tax can bedistributed to everyone in equid shares asan "ecobonus", the regressive effect of thetax can he offser, Apart from the fact thatrich consumers tend to use more energyand resources than poor ones and willtherefore pay more in tax, the ecobonuseswill be relatively more valuable to poorercitizens, since receiving the same amount

of money is worth relatively more to poorpeople than rich people.

I have suggested elsewhere thatecobonuses distributed to all citizens outof the revenue from a growing number ofecotaxes could eventually add up to aCitizen's lncome, which every citizenwould receive as a right of citizenship. Idon't want to go into this in greater detailin this paper. But there are the makingshere of a new package of policies, basedon the following principles:* people should pay society for the valueof the common resources they use;* all citizens should enjoy an equal sharein the resulting public revenue; and* people should not be taxed on the fruitsof their work and skillsand enterprise.

These principles could underpin anew social compact for the postmodernera, whereby basic economic rights wouldbe more fairly shared among all citizens,while hard work and skill and enterprisewould be fully rewarded.

So far as work is concerned, changeson these lines would reduce the presentincentive to replace workers with energy-intensive and capital- intensivemachinery. So they would make it easierfor people to get jobs. By providing abasic income (the Citizen's Income), theywould also make it easier for people to douseful unpaid work and to enjoy alivelihood without having to find full-time paid work.

Local Self-Reliance.Another result of raising the cost ofenergy by taxing it will be to raise thecost of transport. This will make it moreeconomically attractive to produce goodslocally for local consumption. This willcreate additional opportunities for localwork. Indeed, successful localdevelopment, social and economic, islikely to be crucial for the future of work.That has been recognised by theEuropean Commission, for example inDirectorate-General V's sponsorship ofthe recent TASC project on TerritorialAction for Social Cohesion.

In my paper on "New Employmentfor Social Cohesion", written inNovember 1996 for the final TASCseminar, I emphasised the potential role ofgreater local economic self-reliance increating a better future for work.

We need to accept, not only howimportant it will be to enableunemployed local people to use unusedlocal resources to meet unmet local needs,but also how close&, linked this is with

sustainable development and the LocalAgenda 21 initiatives now being pursuedin many countries following the 1992Earth Summit in Rio de Janeiro. Properlyorganised study is needed of the variouspossible ways in which localities couldV/produce locally a larger proportion of thestaples - such as food and energy - neededfor local consumption, of possible ways inwhich local waste could be recycledlocally for local re-use, and of otherpossible ways of using local work toprovide useful local resources.Governments, national and local, willneed to encourage the development ofnew local economic institutions, such aslocal development banks and creditunions - and Local Exchange TradingSystems (LET systems) providing theirmembers with a new medium ofexchange, parallel with and separate fromthe normal currency, to enable them totrade goods and services with oneanother. This is an area in whichexperience and information has built uprapidly in the past few years in Europeancountries - and in USA, Canada, Australiaand New Zealand.

Men's Work and Women's Work

~:~ee~n:u~~~dP::~:~~o~~e;i~o:: ::~\Jneighbourhood, and shared the tasks thathad to be done there. As modern societiesdeveloped, the split between men's workand women's work became wider. Menbegan to take on most of the paid work.This was mostly work done away fromthe home, for employers to whom theworkers sold their working time. It waswork done for the employer's profit, or toachieve the employer's goals andconcerns, not the concerns of the persondoing the work. As time passed, men'spaid work acquired higher status than theunpaid work of women in and around thehome and neighbourhood.

Looking at this objectively now, itseems strange that in industrial societiesthe crucial people-centred work thatwomen have traditionally done - givingbirth to children, looking after them andbringing them up while they are young,caring for other family members,managing the household, and providingmost of the "social glue" that makes theirneighbourhoods into communities - \..-Icame to be seen as having lower statusthan the more impersonal work of men,shuffling things around in factories,shuffling paper. around in offices, andshuffling ideas around in places like

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universities and research institutes.Of course the past half-century or

more has seen in most countries, thoughnot all, the growth of greater equalitybetween men and women. So women

ow enjoy more equal opportunities toco-operate and compete with men in thework of the paid (or formal) economy.But women are still expected to take amuch greater share of responsibility forthe unpaid work of the household andfamily. This means they can often giveless time and energy and commitmentthan men to the paid work of the formaleconomy, and so they continue to be at acareer disadvantage there. It also meansthat the essential work of home andfamily and neighbourhood continues tobe regarded as less important than thepaid work people do for employers.

Conventional economists don'tconsider the household to be a"workplace", although a great deal ofessential work is done there. Conventionaleconomists don't consider the peopledoing that work to be "economicallyactive" - not even members of the"workforce". Conventional economistsconsider people doing that kind of workin the informal economy as thet'economic dependents" of people'working in the formal economy. Theyforget that people's availability for paidwork in the formal economy is dependenton the unpaid basic work of survival andsubsistence which is done to keep thehousehold and family going. The point isthat, because conventional economists areable to count what happens in the formaleconomy - the amount of production, theamount of profit, the rate of economicgrowth, the number of jobs, the revenuefrom taxes, and so on - they regard it asreal; whereas, since they cannot countwhat happens in the informal sector, theyassume it does not exist. If they can'tcount it, it doesn't count.

This brings us back again to thequestion of money and people'sdependence on it. A Citizen's Income, aspart of the package of changes in taxesand benefits I discussed earlier, wouldencourage more people - men, as well aswomen - to undertake the unpaid workinvolved in good parenting and goodhousehold management. That is one

Vspecific proposal. But in what other wayscould we make it easier for more peopleto do the essential unpaid work on whichour societies depend for their survivalnow and for their healthy and sustainablefuture development?

TechnologiesIn order to enable more people to workfor themselves in socially andenvironmentally sustainable ways,technologies need to be developed anddisseminated which are empowering andconserving, i.e. which can be used on ahuman scale by people in theirhouseholds and neighbourhoods, and on alocal scale, to provide necessities of lifesuch as fuel and power. "Soft" energytechnologies - including especiallytechnologies contribu ting to energyefficiency and conservation, and to small-scale renewable energy supply - areamong the most important. Otherexamples include food technologies - fordomestic cooking and small-scale organicfarming and horticulture. Others includetechnologies for maintaining, repairing,reconditioning and recycling equipmentsthat might otherwise be thrown away andreplaced; and information andcommunication technologies which canbe used by individuals and localcommunities for their own purposes.

EducationA big change in education policy shouldaim to equip children, young people andadults to lead self-reliant and conservinglives - develop the practical skills theyneed to manage their own work, theirhousehold and family, their money, theirhealth, and their leisure. Education shouldcease to be mainly about skilling peopleto work for employers. It shouldencourage people to acquire theconfidence and aptitudes to thinkindependently about what kind of life andsociety they want for themselves and theirchildren, and to learn what other peoplein other parts of the world are thinking.Everyone needs to learn the personal andinterpersonal skills to live and work withone another, in the kind of society whichgives everyone maximum freedom solong as they do not use it to diminish thefreedom of others.

Good Work and Bad WorkThis means we cannot ignore thephilosophical, or even theologicalquestions that should underlie ourapproach to the future of work. Is work agood thing or a bad thing? Is it a blessing- a form of prayer to God, as oneChristian teaching tells us? Or is work acurse - laid on the human race followingthe expulsion of Adam and Eve from theGarden of Eden, as another Christianteaching tells us? The answer is that work

7

can be good or bad, depending on whatkind of work it is.

So what is good work? Good work iswork which we do for ourselves, ourfamilies and our societies, because it isvaluable work and we believe it to beworth doing. In a self-reliant andconserving society it will increasingly beseen as work that provides ourselves andother people with the necessities of life,enables us and them to develop ourhuman skills and capacities, and blessingsof Nature. Bad work will be work thatwe do under duress, because we have to,not because it is valuable in itself butbecause it serves the interests of employersand other people on whom we are forcedto depend for our livelihoods andsurvival. Bad work will be seen to includethe kinds of work that damage our ownand other people's health and capacitiesfor self-reliance and self-development, ordamage the natural environment.

We should increasingly perceive theright to do good work as a central part ofthe right to be responsible. And weshould increasingly perceive the right tobe responsible as a central human right.

JAMES ROBERTSON:BIOGRAPHICAL NOTEJames Robertson studied history, philosophy andclassics at Oxford. In the 1950s and 1960s he workedas a British government policy-maker - first ondecolonisation and development, accompanyingPrime Minister Harold Macmillan on his "Wind ofChange" tour of Africa in 1960; then in the CabinetOffice. Then. after three years in managementconsultancy and systems analysis, he set up and led aninter-bank research organisation for the British banks.Between 1965 and 1973 he took part in enquiriesinto British government, civil service and parliament,and London's future as a financial centre.

Since 1973 he has worked independently as awriter and adviser on alternative futures andeconomic and social change. He has lectured in manycountries on the need and scope for a post-modemtransition to socially equitable and ecologicallysustainable development.

Copyright © 1998. Permission granted forreproduction with appropriate credit.

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Recommended Reading--Books by Major C.H. Douglas

Social CreditThe Monopoly oJ CreditEconomic DemocracyWarning DemocracyCredit Power and DemocracyThe Control and Distributionif Production

Eric de MareA Matter oJ Life or Debt

Alan D. ArmstrongTo Restrain the Red HorsesThe Urgent Need Jor RadicalEconomic Rejorm (1996)

THEMONOPOLY

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Eric de Mare

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