SOLVE PRESENTATIONWORLD MONETARY UNIONWINNING PLANNEW ECONOMIC SYSTEMPRESENTATION 2015

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Carbon Price

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WORLD MONETARY UNION

Institutions for Sustainability

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WINNING PLAN

MIT Climate CoLab 2015

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NEW ECONOMIC SYSTEM

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PRESENTATION 2015

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Philosophy

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Please cite this page as:
Chen, D. B. (2016). Global 4C – Monetary and Market Policy for Climate Change Mitigation. www.global4c.org
Youtube videos cited in this webpage do not imply endorsement of Global 4C by the people in those videos or anybody associated with those videos.

School of Athens, fresco by Raffaello Sanzio (1509). Source commons.wikimedia.org

PHILOSOPHY OF PLATONIC ECONOMIC SYMMETRY AND THE REWARD-RESOURCE MODEL FOR DECENTRALISED LIVING NETWORKS

by Delton B. Chen (Feb. 16, 2016)

INTRODUCTION

Here the Global 4C policy is described in context of Plato’s allegory of the cave and philosophy for understanding ‘Form’. It is inferred that the carbon tax (for carbon pollution) and the currency reward (for carbon mitigation) are complementary opposite instruments and reveal Platonic Economic Symmetry. The ‘sun and tree’ coupling are also viewed as a natural analogue for the proposed currency and its administrative system. It appears that the administrative system will mimic the decentralised organic networks of trees, and so naming it the World Tree is a rational choice. A new theory (or hypothesis) is stated that the emergence of decentralised decision-making networks in living plants and in societies is the result of a common relationship, termed here the Reward-Resource Model. The reward-resource model has the potential to influence the scientific worldview on economic management for long-term sustainability. A philosophical statement is then offered, that Global 4C qualifies as a life-affirming and regenerative economic model that can complement orthodox policies for climate mitigation. Plato’s theory of Forms and a new genesis theory further suggest that the Carbon Monetary Standard of Global 4C is also consistent with natural laws and the sacred principles of life.

 

Key Terms

Carbon Monetary Standard [1] A unit of account defined as 100 kg CO2-e verifiably mitigated, and various social agreements that support it.
Commodity Currencies A currency type based on a unit of account that records a commodity. It has economic value and intrinsic value associated with the commodity.
Fiat Currencies A currency type based on a unit of account that records virtually. It has economic value based on monetary policy.
Service Currencies [1] [2] A proposed currency type based on a unit of account that records a service. It has economic value based on monetary policy, and it has intrinsic value associated with the service.
4C Complementary Currencies for Climate Change (4C) is a proposed parallel world currency system based on the Carbon Monetary Standard.
Global 4C [1] [2] The proposed Global 4C Mitigation policy that will implement 4C and manage the economy for strong climate mitigation.
Solar Dollar The proposed trading name of 4C.
World Tree The proposed trading name of the digital administrative system for managing 4C (i.e. Solar Dollars) over computer networks.
Platonic Economic Symmetry A theory proposed here, which states that certain principal pricing instruments express natural symmetry in terms of their form and function, and that these instruments can be used in a complementary policy framework.
Pigovian Family [1] A proposed classification system for market-based environmental policies. A family of policies is defined based on the unit of account and Platonic Economic Symmetry.

 

 

 

CONTENTS

1. PLATO’S ALLEGORY OF THE CAVE
2. PLATO’S ANALOGY OF THE SUN
3. PLATO’S THEORY OF FORMS
4. TREES ARE ANALOGUES FOR DECENTRALISED NETWORKING
5. NATURAL ANALOGUES FOR TAXES AND CURRENCIES
6. PLATONIC ECONOMIC SYMMETRY
7. THEORY OF COLLECTIVE ECONOMIC INTELLIGENCE
8. CONCLUSION
9. REFLECTIONS
REFERENCES

1. PLATO’S ALLEGORY OF THE CAVE

Humanity is perpetuating an economic system that is dysfunctional in terms of greenhouse pollution, economic fragility, and inequality. If a significantly improved economic model were available, even at low initial cost and minimal political effort, how would people react to the model? We address this question in terms of Plato’s allegory of the cave, and assuming that Global 4C is the new model.

In Plato’s allegory of the cave, the people are watching shadows that are cast by a fire onto the cave walls. The people have a limited worldview because their perceptions are based on shadows and animated silhouettes. When the people inside the cave are confronted with information about a world outside the cave, they are initially confused and antagonistic because the message contradicts their current worldview.

If the cave represents the existing economic paradigm, then the shadows are fiat currencies, carbon taxes, and cap-and-trade for carbon pollution. The outside world represents the new economy with sunlight representing service currencies [1] [2] and rewards for carbon mitigation. The new service currency is called the Solar Dollar, and it is associated with the Sun because the Solar Dollar is like sunlight: it is offered universally as a reward for urgently needed climate mitigation services.

Symbolically, the shadows and silhouettes represent the various limitations and false-hopes of fiat banking and orthodox climate policies. Symbolically, the natural landscape outside the cave represents the benefits of the Solar Dollar. These benefits are discussed elsewhere, but are anticipated to include price aggregation, market coordination, cooperative social networks, long-term finance, instantaneous market knowledge, positive social feedbacks, regulation of growth, social cohesion, and financial stability. The benefits could also include a major economic and worldview shift triggered by a scheduled bull market in Solar Dollars. The allegory of the cave is extended below using Plato’s analogy of the Sun and his theory of Forms.

Figure 1. Plato’s allegory of the cave.

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2. PLATO’S ANALOGY OF THE SUN

Plato’s analogy of the Sun can explain the importance of the Solar Dollar. Plato says that just as the Sun illuminates the entire physical world, the ‘good’ illuminates all of reality. According to Plato, the true nature of reality requires a mind that senses goodness.

Figure 2. The Sun at sunset.

“As goodness stands in the intelligible realm to intelligence and the things we know, so in the visible realm the sun stands to sight and the things we see.” – Plato (424-347 BC)

Pojman, Louis (2011). Classics of Philosophy. New York: Oxford University Press, Inc. p. 171.

Using Plato’s analogy of the Sun and sunlight, it is claimed that the Solar Dollar will provide humanity with a truer understanding of reality by bringing more good into the world. The Solar Dollar brings good into the world because the Solar Dollar will be universally offered as a debt-free financial reward for verified greenhouse gas mitigation (an ecosystem service). This reward is the ‘goodness’ that can illuminate climate change science and invite a deeper understanding of money and economics. In this respect, we are interested in the Solar Dollar’s administrative system, influence, and social benefits. To understand the system, influence, and benefits, we may consider Plato’s theory of Forms.

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3. PLATO’S THEORY OF FORMS

Plato theorised that Forms are concepts that are universally true, logical, eternal, and bring understanding. Plato’s Forms are explained here in terms of the relationship between the Eye (the observer), the Sun (the source of light and good), and the Tree (the object with Form). The Eye is only able to comprehend the Tree when light is provided by the Sun. Here it is claimed that the new currency will act like the Sun, because the currency will be offered as a reward that spreads globally (like sunlight). The reward is the sunlight and the good that reveals the Tree. The Tree, in this case, is the administrative system, its influence, and its benefits. As a matter of coincidence, the Tree is also a good metaphor for digital currency networks, because unlike coins and banknotes, digital networks can be used to manage data, communications, and agreements. These properties of digital networks also comprise the Form of the Tree.

 

3.1 Bitcoin Example

If we assume that there is a new digital currency that can be issued as a reward for providing decentralised currency administration, then what is the Form of the administration and benefits? The Form of this administrative system will require specific logical functions, and the most famous example is the Bitcoin blockchain. In this example, the Eye-Sun-Tree represents the market, Bitcoin, and the Bitcoin blockchain. The theory of Forms makes the claim that the market (i.e. observers) can only understand the benefits (the Form) of the Bitcoin blockchain when the market actually trades in Bitcoin. Historically speaking, Plato’s theory is reliable, because many observers and institutions were initially skeptical and critical of Bitcoin. In recent years, most leading institutions and Wall Street investors have accepted the utility of the Bitcoin blockchain, and there is a general expectation within the finance sector that civilisation is on the verge of a new revolution in the decentralisation of financial data and contracts.

3.2 Solar Dollar Proposition

Now consider a new digital currency for strong climate change mitigation. The currency is called the Solar Dollar based on a Carbon Monetary Standard for global mitigation rewards. What is the Form of the administrative system and its benefits? Given that markets are not currently trading Solar Dollars, our policy makers do not currently know its Form. The administrative system is named the World Tree, and our job is to interpret the Form of the World Tree including its influence and social benefits. It just so happens that the logical architecture of the World Tree has a natural analogue – the living tree – because living trees are biological networks that receive energy for carbon bio-sequestration. The natural analogue is explained below. In terms of benefits, the primary benefits could likely be the stabilisation of the climate system, protection of ecosystems and agriculture, and a shifting worldview.

cropped-proposal.png

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4. TREES ARE ANALOGUES FOR DECENTRALISED NETWORKING

Global 4C was explained above using Plato’s allegory of the cave and theory of Forms. Transcending Plato’s theories is another assertion: the logical Form of the World Tree is correlated to the biophysical Form of living trees. It is argued that this correlation is significant because both Forms are networks for promoting carbon sequestration in response to openly available energy and resources. The following is a list of major correlations between living trees and the proposed World Tree:

  1. A diffuse energy supply is available (sunlight vs. currency rewards)
  2. Networks are designed from a blueprint (DNA vs. policy and software)
  3. Intelligence is decentralised (plant cells vs. open-source information)
  4. Decision-making is decentralised (plant cells vs. voluntary human collaboration)
  5. Network structures have a branching topology (tree branches vs. business relationships)
  6. Energy flows through a network (plant material flows vs. currency trading)
  7. Carbon-based sequestration occurs (foliage growth vs. mitigation database growth)
  8. Increasing size increases the energy requirements (growing tree vs. rising mitigation stringency)

Figure 3. Tree network topology.

 

Internet-RootsFigure 4. Comparing (left) the Internet as a network diagram, and (right) the root network of a living plant (reproduced from a TED talk by Stefano Mancuso). Both networks have a decentralised messaging system: IP and DNS for the Internet, and bio-chemical signalling for the plant.

The botanist Stefano Mancuso, who studies plant neurobiology, explains in the following video that plants actually have the ability to communicate for biological organisation, self preservation, and maximising opportunities. He explains that their root networks are strikingly similar to Internet networks. The Internet and plants are also similar because both have the ability to survive major trauma: small parts can survive when larger parts are broken-off or killed. Despite the ubiquity of the Internet, it has no centralised governance and its ability to transmit messages is based on two primary conventions for identification, addressing, and routing information. These conventions are the Internet Protocol (IP) address, and the Domain Name System (DNS). Plants also have a decentralised communication system that operates at the level of cells and is encoded in their DNA.

Stefano Mancuso claims that this similarity of form (i.e. the decentralised network) is the product of the need to survive predation. In this exposition, a new hypothesis is presented – that the fundamental reason that plants have a decentralised structure is because they have evolved under a reward-based resource system. We may call this new theory or hypothesis the reward-resource model. A diffuse ‘reward’ is ‘offered’ by the Sun (as sunlight) and by the Earth (as nutrients) to the plant. If the plant can photosynthesise, then it will receive the natural resources for the manufacture of sugars, leaves, and wood. The plant does not consciously recognise (i.e. it has no brain) that it is subject to a reward-resource model (or to predation), however the natural evolutionary response is for the plant is to evolve as a decentralised network for decision-making. When this feature of evolution is understood in the context of reward-resource models in the economy, a new and revolutionary worldview for the economy is possible. This new worldview for the economy should be as important to civilisation as photosynthesis is to plants. The new worldview should recognise that the logical networks of plants are natural analogues for the socio-economic networks that will emerge when financial rewards are offered globally for ecological services that are needed for a sustainable future. This model for sustainability is not only robust, but it also helps to resolve the mystery behind sustainability as a concept.

The similarity between decentralised information networks (e.g. Internet), decentralised value networks (e.g. Bitcoin), and decentralised living networks (e.g. plants) is a cause for deep reflection. In the following section (see below) the theory called the reward-resource model is described further in context of taxes and currencies. These are primary economic instruments that relate to the theory of networks, and to market-based environmental policy in general.

In the context of the World Tree administrative system, we can ‘play’ with the analogue in search of other metaphors. One such metaphor is the flow of water that can be used to represent the flow of purchasing power of currencies. In a living tree, there are water-pressure gradients created by evapotranspiration, and the pressure gradients are for pulling water up from the soil into the leaves for biological activity and transpirative cooling. Each part of the tree (i.e. leaves, branches, roots, and individual cells) are working together without a central command. Hence the Form of the tree is decentralised. This Form is very relevant to the World Tree, because a business model can be designed to promote decentralised decision making and ‘organic’ economic growth within the global mitigation market: similar to flowing water through a tree and growing the tree. According to Plato’s theory, it is also expected that society will better understand climate change and the economy when trading with Solar Dollars, because society will become more aware of the Form of the World Tree and the Form of regenerative economics.

Table 1. Application of Plato’s theory of Forms to the Global 4C Mitigation policy.

Plato’s Example Plato’s Theory of Form Global 4C Instrument Global 4C Policy Description
Sun Source of Good Solar Dollar The Solar Dollar is a new currency system for globally rewarding carbon mitigation. The unit of account is 100 kg CO2-e verifiably mitigated.
Sunlight The Good Solar Dollar Rewards The Solar Dollar will be issued for verified greenhouse gas mitigation. Solar Dollars will also be traded internationally as a trading currency. The currency will act like sunlight (the good) because it will offer rewards for climate mitigation.
Tree The Object World Tree The World Tree is a digital administrative system for the Solar Dollar. The context of the World Tree is dangerous climate change and a dysfunctional economy. The World Tree includes its influence and benefits for society, the climate, the environment, and economy. The World Tree is a digital network with a logical structure and business relationships that promote decentralised decision-making. It will manage Solar Dollar rewards and trading, a public database, knowledge sharing, collaboration, and will invite exponential patronage.
Eye The Observer Society Society will perceive the Form of the World Tree (structure, influence, and benefits) when the Solar Dollar is issued and traded. By trading the Solar Dollar (the sunlight and the good) society will better understand climate change and the economy. With better understanding and the appropriate unit of account, society can respond more effectively.

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5. NATURAL ANALOGUES FOR TAXES AND CURRENCIES

Here we make a simple statement about the nature (and Form) of taxes and currencies. When currencies are issued as rewards and without debt attached, they create decentralised authority within the marketplace and invite decentralised decision-making. Conversely, the application of taxes requires a political power to have enough centralised authority to enforce the tax. Whilst these ideas may appear simplistic, they have far reaching consequences for almost everything that occurs in the economy.

The tax and the currency instruments create opposite responses, in terms of value transfer, decision-making, and authority. If the unit of account of the tax and the currency are perfectly reversed, the tax and the currency may be termed complementary pairs. This is precisely the situation with the standard carbon tax and the proposed Solar Dollar under the Carbon Monetary Standard. The complementary pair may be visualised in a simple value-flow diagram (see below) that represents taxing carbon pollution and rewarding carbon abatement/sequestration. The tax and the reward are represented by the natural analogues of the Black Hole (value sink for taxes) and the Sun (value source for rewards), respectively. Whilst these analogues may appear frivolous, the implications for the formation of networks are major. We know the Sun is a driver for the evolution of living carbon-based organisms, especially photosynthetic plants and trees. The Sun-Tree couple is a natural analogue for the proposed socio-economic network that will be used to abate/sequester carbon-based greenhouse gasesIt is suggested here that the Solar Dollar and the World Tree can mimic the Sun-Tree analogue, as the World Tree mimics the living tree’s network topology, flow patterns, decentralised-coordination, and carbon-sequestration.

 

FLOWNET-TREE

Figure 5. A tax for carbon (paid in national fiat) and a reward for mitigation (received in service currency) represent a complementary pair of market-based policies in the Pigovian Family [1].

 

Genesis Principle

The physics community have proposed a new theory [3] for abiogenesis – the Genesis of life from non-living material. The theory [3] states that when a group of atoms are exposed to a source of energy (e.g. geothermal heat, solar) the atoms can gradually organise to improve energy dissipation without disobeying the second law of thermodynamics for increasing entropy. The theory [3] proposes that self-replication of carbon-based molecules actually emerged as part of this energy dissipation process, and this probably explains the emergence of RNA, DNA, and the first single-celled organisms, such as Archaea. In light of this knowledge, the Sun-Tree couple takes on a new cultural meaning, because it represents a logical connection to Genesis itself.

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6. PLATONIC ECONOMIC SYMMETRY

A tax can be a powerful instrument for reducing pollution, but only when the government has sufficient political power to implement the tax. The tax is necessary to limit pollution by bad actors, and in this sense, it is argued that the standard carbon tax for pollution and the proposed Solar Dollar currency for mitigation are both necessary (and complementary) policies. The complementary nature of these policies appears consistent with natural laws, and is termed Platonic Economic Symmetry. Platonic symmetry in market-based environmental policies was formally named the ‘Pigovian Family‘ by Chen, Cloud, and van der Beek (2015) [1].

Platonic economic symmetry and the Pigovian Family are concepts that may be supported by ancient eastern philosophy, such as Taoism and the school of Yin and Yang (note that ‘Yang’ is an ancient Chinese word for ‘sun’ or ‘sunlight’). In the following video compilation, Bernard Lietaer talks about the relationship of Taoism to the economy, and the problems associated with a mono-culture economy. Lietaer also talks about the potential roles of new currencies, gold, government, banks, corporations, and society.


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7. THEORY OF COLLECTIVE ECONOMIC INTELLIGENCE

A social justification for the Carbon Monetary Standard is the Beneficiary Pays Principle (BPP) because the approach will provide global rewards for climate mitigation services. The Carbon Standard creates finance for mitigation with monetary policy and a globalised inflation tax. The BPP is considered a complement to the Polluter Pays Principle (PPP) which is currently used (with estimates of the social cost of carbon) to justify carbon taxation. It is the combination of the two principles, the BPP and the PPP, that is recommended to aggregate price signals and create a synergy effect. With a Carbon Monetary Standard, it is further assumed that the whole economy can pay for mitigation services on the basis of a collective but differentiated social responsibility to protect civilisation and the planetary ecosystem. It is claimed here that this collective action, if effective, represents a ‘collective economic intelligence’ because the entire economic system achieves optimal behaviour through the coordination of actors with decentralised and centralised networks.

Living plants provide an example of decentralised intelligence at the cellular level. The origins of this intelligence is the DNA within each plant cell. The Carbon Monetary Standard is envisioned as an economic equivalent of plant DNA. The traditional view is to assume that important fiscal decisions should be centralised in governments and peak institutions. Collective economic intelligence is a ‘systems’ approach that makes the claim that it is possible for civilisation to express significant decision-making potential and mitigation capacity based on decentralised socio-economic networks created through the Carbon Standard. This theory puts greater emphasis on the world economy as having a collective identity and collective responsibilities.

The theory of collective economic intelligence needs to establish causality for the enhanced intelligence. Causality derives from conscious evolution, because the actors within the system (i.e. the policy developers) must first propose new economic policies that can be used to take advantage of decentralised networks and currency systems. This differs somewhat from the living plant analogy because plants do not engineer their own DNA, whereas for the case of the world economy, humanity does have the option to redesign the world economy with new monetary systems and policies. Collective economic intelligence appears to involve a combination of gradual evolution (trail and error) and potential step-changes through major policy changes.

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8. CONCLUSION

The Global 4C policy is presented in terms of Plato’s allegory of the cave and the Eye-Sun-Tree model for understanding Forms. The above discussion argues the case that the key to leaving our ‘cave’ for a new economy is the Carbon Monetary Standard. The complementary nature of carbon taxes and the new Solar Dollar instrument also demonstrates the existence of Platonic Economic Symmetry. It is proposed that global rewards for mitigation (i.e. Solar Dollars) and the Global 4C policy should be studied as a potential policy breakthrough. A new theory (or hypothesis) for justifying this policy, is stated as the the Reward-Resource Model. With this model, it is claimed that decentralised decision-making networks will naturally emerge in living systems (e.g. organisms and societies) when there exists a common relationship, that may be described as the offer of a diffuse reward for a specific type of work. The reward-resource model has the potential to influence the scientific worldview on economic management for long-term sustainability, but it does not explain the origins of life (i.e. abiogenesis). There are physics theories based on the laws of thermodynamics that explain abiogenesis, but these theories are not essential to the successful operation of the Global 4C policy. These theories do, however, show consistency with the Sun-Tree couple that is used as a model for explaining economic systems.

The Sun-Tree couple also appears to be a reasonable natural analogue for Global 4C. This analogue supports the possibility that Global 4C will promote ecological regeneration and life-affirming economic activity whilst also complementing other more orthodox policies for climate mitigation. The monetary approach to climate mitigation policy culminates with the theory that a collective economic intelligence is feasible based on the coordination of market actors with decentralised and centralised socio-economic networks. These ideas are generally missing in the mainstream narrative on climate and economics, despite the fact that the Global 4C policy could be validated relatively quickly using a combination of standard economic principles and methods.

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9. REFLECTIONS

 

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REFERENCES

[1]

Chen D., J. Cloud and J. van der Beek (2015). ‘Global 4C: World Monetary Union for Climate Change Mitigation’. 2015 Canberra Conference on Earth System Governance: ’Democracy and Resilience in the Anthropocene’. Delton B. Chen, Jonathan Cloud, Joel van der Beek (November 20, 2015).
Paper Download

[2]

Chen, van der Beek, Cloud, Jin, Borrego, (2015), World Currencies for Sustainability, World Economics Association (WEA) Conferences, No. 1 2015, Ideas towards a new international financial architecture?, 15th May – 20th July, 2015.
Download Paper

[3]

Wolchover, N. (2014). A New Physics Theory of Life. By: Natalie Wolchover, Quanta Magazine (January 22, 2014). https://www.quantamagazine.org/20140122-a-new-physics-theory-of-life/

[4]

Stefano Mancuso – The roots of plants intelligence TED talks.

www.ted.com/talks/stefano_mancuso_the_roots_of_plant_intelligence#t-644388

[5]

Plato (424-347 BC).

[6]

Pojman, Louis (2011). Classics of Philosophy. New York: Oxford University Press, Inc. p. 171.

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