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The issue of corporate responsibility has been a pesky and contentious subject for many years. In the wake of a series of environmental disasters, wage disparities and workplace safety rollbacks, the public has grown increasingly weary of a corporate culture that appears to prioritize profits over people.
However, according to a new study conducted by the London School of Economics and Political Science, the root of the problem may stem from the fact that corporations are incentivized by a fiat money system. This system, set up by governments and banks, relies on governments printing money and banks lending it to incentivize companies to compete and find new ways to create wealth.
The fiat money system creates what some have called a “bubble of debt” as companies borrow large amounts of money from banks to fuel their growth. Banks are then able to loan out more money with greater ease and often with less oversight due to inflation, which further inflates the market, creates excessive debt and allows companies to take bigger risks and leverage their investments.
In many cases, these companies take on riskier investments, such as fracking and extractive mining, which can lead to environmental disasters and displacement of vulnerable communities, with little to no accountability. In an effort to combat this, policy-makers and economists have proposed two different approaches to reform.
The first is to create a system of “Promise Taxes” which would require taxes to be paid if certain promises of investment, employment and environmental stewardship were not met. The tax revenue collected would be reinvested into the local economy and would help to create more sustainable businesses and more job stability.
The second approach proposed is the creation of a new form of money to incentivize companies to operate in an ethical and sustainable manner. This new form of money would be backed by commodities or assets, such as gold or Silver, rather than an economy of debt and speculation. This “commodity money” or “safe money” would offer a more stable form of wealth creation, akin to old models of financial exchange. The goal being that by creating this new form of money, companies could be held accountable for their decisions and driven to guarantee safe investments as well as profitable ones.
In conclusion, while it may be difficult to fully stop corporations from taking advantage of existing incentives within the current fiat money system, work is being done to reform and create a new system which will be more stable and less reliant on debt. By reforming the incentives of the current system and introducing new forms of money backed by real assets, we can create a more equitable and sustainable environment in which all of society can flourish.
