Economic Instruments – Stephen Hinton Consulting

How to use Real Capital and its valuation to inform policy

Link here to the full briefing on Research Gate

The table above gives an example of how to use Real Capital accounting to clarify policy. Policy is an asset, liability is shortfall and equity is performance against policy. Find more explanations in the video and briefing.

Is it possible to present information in a rational way, to policy makers, that does not need financial information to be useful to policy makers? Could scientists do this without becoming economists? In an era where scientific advancements shape our understanding of the world, the gap between science and politics remains a significant challenge. This divide often results in politicians struggling to effectively process scientific information and translate it into sound policy decisions – leaving it to economists.

The video explains the main content of the methodology brieifing

Real Capital – an explainer

Explainer: what is real capital. Real capital refers to resources used in producing goods and services without being entirely consumed. It encompasses natural, built, social, and human capital. Mature real capital has the capability to provide necessary services to the intended population. Evaluating the maturity level of capital can guide policy decisions and determine the interplay of different capital types, investment needs, and development goals.

Real capital defined

Real capital is defined as:

Something that is used in the production of
goods and services to society, but not used up.

Note that capital is necessary but not sufficient to provide services. The capital is utilised in the production system. There are several categorisation methods, but I prefer the following as described in the table below:

Three hacks that could put capitalism back into its box

My recent article on how come capitalism is an extractive practice, and the later explainer of how it degrades real capital got, for me at least, a lot of interest. Very few, however, asked what could be done about it. Let’s do just that. We have described the problem, now we can get on and solve it. There are three ways to limit the destructive power of the capitalist form of production and its toxic side kick, free markets .They are surprisingly simple. Read on!

Why are we not at zero carbon emissions already?

In the west we live in a world of bold ideas. One dominating idea is that firms can take care of most things. When there is poor societal performance – high unemployment for example – this is seen as a failure of the market and politicians rush to do something about it.

This powerpoint presentation explains a bit about how market based instruments – a favourite tool of left and right politicians for “nudging” markets to do the right thing – can be applied to the circular economy.

[Link to download the presentation.]

Video Lessons: Sustainability Models and systemic analysis tools

These video lessons take you through a systemic approach to sustainability using as an example the challenge of nitrogen cycle destabilisation and the systems analysis tool KUMU. You should be able to carry out your own analyses after this.

New E-Book – addressing the market failures arising from the structure of the firm

We are in a time of transition. The world no longer seems to present vast frontiers of new forests to fell, mineral wealth under our feet to extract, or of new soils to plough. Instead the Earth has become more like a garden which we realise we need to steward carefully to keep it productive.

We also see another transition, from societies where everyone more or less had the basics to massive inequalities where for instance in the UK, one in 200 is homeless.

At least from a European perspective, where the state is seen as the protector of people and resources, and firms are partners in providing what people need, we can see this a massive market failure.

Why the doughnut needs the bathtub – economic models for real change

Kate Raworth’s Doughnut model of the way an economy should perform is excellent. But it needs an idea of how to control that economy so it performs to requirements. Enter the bath tub.

Kate Raworth has a wonderfully clear and simple concept – that we should arrange the way we run society on the principle that we do not exceed planetary boundaries – in our relation to nature – on one hand, and that we set things up to avoid people suffering and that everyone’s basic needs get fulfilled – the human dimension – on the other. She draws it like a doughnut.

In her excellent book, Doughnut Economics, Kate shows how this task is essentially one for the economy and a question for economics. Doughnut economics gives us a very clear set of requirements for how an economy should work. That immediately brings one to think of money, investments, taxes, banks businesses etc. And that is where the model needs a little help .

Shop your way to fossil freedom

Sixteen-year old Greta Thunberg is asking good questions like “why are we doing nothing about climate change?” She tells it like it is as we stand unmoving – no group wanting to give anything away. Unions rightly take the stance that workers should not pay with lowered standards. Some want to play with small tax adjustments to see the poor OK.

The New Green Deal says “never mind the economics of it – we’ll just invest in the planet we want.” That is good, but you need to make sure people have the money to pay for those new high speed rail services and electric buses.

So. No easy solution? Perhaps there is.

Putting a price on phosphorus: links and publications

Dagram_fosfor2

Phosphorus is mined and processed into fertilizer along with other nutrients like potassium and nitrogen.
Applied to the fields, it is incorporated into vegetables and sold direct or as animal feed.
Phosphorus leaks from agriculture into waterways and is exported to shops as food.
Consumers purchase food for consumption.
Phosphorus leaves the body mainly as urine.
Sewage is processed at water purification plants.
Some phosphorus is dumped as waste from purification, some ends up in waterways.
Eventually phosphorus travels to the sea.
Some phosphorus can be recovered from the sea-bed, most remains in the sea. New technology is being tested to restore seabeds and recover nutrients. Continue reading “Putting a price on phosphorus: links and publications”

Monetary theory and a safe house for humanity

Could it be so that it is a badly-constructed monetary system that is holding humanity back? Money theoretician Marc Gauvin offers some interesting angles on money as a system. He suggests that the money system itself impacts peace negatively, but the system could be adapted to be a peace-promoting tool for humanity. We’ll lay out the ideas here and look forward to hearing your comments in the comments box below.

Could it be so that it is a badly-constructed monetary system that is holding humanity back in its shared project of peace on Earth? Or at least this miss-construction is not doing us any good? Marc Gauvin, money theoretician and author of two websites Money Transparency and Bibo Currency offers some interesting angles on money as a system. In recent correspondence, he suggested that the money system itself impacts peace negatively, but the system could be adapted to be a peace-promoting tool for humanity. We’ll lay out the ideas here and look forward to hearing your comments in the comments box below. Continue reading “Monetary theory and a safe house for humanity”