Mark Garavan

Quantitative Easing – A Simple Proposal

From March this year until September 2016 the ECB will buy €60 billion of assets a month, a total of €1.1 trillion over that period. This money will be channelled into the private financial markets in which bonds and financial instruments are traded. The net effect of Quantitative Easing is most usually to cause an increase in the value of assets. This serves to further enrich those who own assets. In effect, there is a significant transfer of wealth to the already wealthy and away from the poor and wage dependent. This further enhances social inequality and fuels indiscriminate economic growth.

So, is this wise? Is this the outcome we want? A huge amount of capital and investment capacity is being mobilised here. Why not ensure that it serves a socially useful purpose? What we need is greater social equality because this produces better societies for all and ecological well-being where climate change in particular is halted and reversed.

How about a simple proposal? Why not direct all this wealth towards investment solely in a new Green economy? How can this be done? In at least two ways.

First, The ECB’s QE should only be used to buy new Solidarity Bonds issued by the European Investment Bank and European Investment Fund which then should only be used to invest in developing new Green economic activities and Green research. Second, the distribution mechanism should be the nation states but also, if not primarily, new regional co-operatives which co-ordinate local investment programmes in Green energy, food and social network provision. Green here can be defined as carbon-zero or neutral and resource efficient with zero pollution externalities. These co-operatives can act to create direct producer-consumer interactions, and employment which is locally grounded by providing financial supports towards more locally produced and sourced products.

This initiative, to be most effective, should be combined with other co-ordinated Europe-wide initiatives. These would include significant increases in carbon-taxation; far greater regulation of the financial services economy in order to channel investment dramatically away from symbolic financial commodities such as derivatives and systemic tax evasion devices towards the real economy; and the provision of a guaranteed basic income for all. These measures would release further investment funds, direct those funds away from a declining carbon-based economy and boost welfare and economic activity through guaranteed living income.

Business as usual is now not an option simply because ‘business as usual’ not only cannot solve our problems – it has actually created them in the first place. The twin alternatives being presently presented by the political mainstream to resolve the socio-economic crisis of today are each inadequate. We are being presented with a false choice. Austerity causes human suffering, depresses economic activity, adds to social deprivation and enhances social inequality. Indiscriminate growth causes rises in asset values, further debt, grave ecological harm through further resource and carbon use and enhances social inequality.

A new system must impose a clear constraint on growth which is harmful and instead channel capital investment towards growth which yields social and ecological benefits. We need to recover the historical language of solidarity, shared citizenship and reason and apply our values to include all of humanity and all of the bio-systems and life-forms making up our shared planet. As we face the current crises it behoves us to address solutions. Passivity in the face of overwhelming challenges is understandable. What is outlined above is radical but not impossible. Indeed, it is proposed precisely because it is achievable within currently available possibilities. A new world can thus be built based upon present foundations not just on imagined futures. This should make a programme realisable and inspire confidence and hope that it can be done in a practical and considered manner.