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BOX 2: Why does our present money system lead to a long-term misuse of resources? The prices set by the market at any given moment have nothing to do with long-run values because of the type of money we use at present. As a result, they are entirely inadequate for determining the development path that we should select. The problem arises because the market is a human construct that works according to rules people have devised for it. Currently, those rules prevent millions of people without money from affecting the price levels in the market. The needs of the unborn cannot be reflected in market prices either. Consequently, the prices that emerge from the market merely reflect the immediate wants of that fraction of the world's present population fortunate enough to have the money to be able to express them. The ideal use of resources over the years can only be assessed in terms of one's objectives. At present, the system's objective is simply to minimise costs from moment to moment in terms of market prices that are largely determined largely by the current pattern of income distribution. This inevitably leads to a gross misallocation of resources in favour of the present. A key step toward sustainability is therefore to establish a unit-of-account currency that represents absolute amounts of something important to the whole world's population, present and future, rather than current transitory price levels determined by a temporary minority. |
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