After reading Davis’ piece I feel like the Beckett character who says, “but we haven’t yet tried everything.”

Davis is right that the expansion of centrally monetarized valuation has been a conduit for wealth transfer, but his critique of market schemes is confused and premature. The monetary system and cap’n’trade (in particular) are more oppositional, and complimentary, then presently apparent.

The central banks of the world work from similar premises and fluctuations in currency exchange rates are a relatively minor impediment for wealth transfer. We have more or less one money, the supply of which is controlled ostensibly to control inflation, but more broadly to express total underlying market valuation. Kind of a monetarism/Keynsian hybrid that relies on the quantification judgments of relatively few individuals, though their judgment is constrained by the fact that money itself is a commodity in the marketplace and subject to valuation in comparison to other commodities. Davis highlights the wealthy Middle Eastern approach to banking, but that approach has less to do with our religious leaders than their own religion. But whatever, the Arabs are still buying into our debt-backed money system.

This abstracted idea of money valuation contrasts with the other strand of money theory, which we now associate mostly with “wingnuts” like Ron Paul and late-night infomercials--commodity backed money. Think of cap and trade shares as the modern representation of this idea of commodity-backed quantified valuation.

Obviously these shares are not money, but then neither is gold technically, though that doesn't stop people from hoarding and spending it. Unlike gold and the dollar, however, cap and trade shares are not now readily accessible trading instruments for the public at large--but that barrier is artificially determined by current, and arbitrary, cap and trade structures. There is no reason the gummint couldn’t dole out pollution credits to you and me and the guy in the slum and that we would all be able to park value in them or trade them for dollars. It’s actually a scandal that these shares have been simply given to economic elites in the past. Theft.

Cap and trade systems are part of a broader effort to bring environmental value into the marketplace. Some of these efforts, like carbon offset purchases, rely on the dollar as a valuation mechanism, and as Davis points out, the market erodes the environmental value overtime. Davis is wrong to confuse these purchases with cap and trade. Cap and trade systems are more likely to retain segregation of this value, since the shares hold the quantified value and interface with the dollar. Still, like the many efforts to qualitatively label (“certified organic,” “local,” "renewable") in order to capture environmental value in the marketplace, the more explicitly market based carbon offsets are not antithetical to cap and trade systems even when they presently use the dollar as the quantification tool. I think these systems will inevitably combine. Cap and trade can become a system that mirrors the whole economy, or as small as one commodity, or any size in between. It can encompass peak oil and peak water with one set of points.

The commodity that backs cap and trade systems is not pollution allowances or resources per se, it is the perception of environmental value, an intellectual property as we might say in this internet age, though backed by fiat limitations on real commodities. There are no technical reasons that environmental value cannot be abstracted, or that a single quantified abstracted value system cannot be used to assign value to disparate goods in the marketplace, or that the credits representing this value can’t be distributed at a low level in the economy, or that this system would need to replace current dollar valuation, or that the new credits could not also be used as fungible commodity backed money freely exchangeable with the dollar. Nor is there a contradiction between pursuing such a system at the same time as governments seek to levy taxes and regulation—trades in this system themselves can be taxed in dollars to pay for regulation. Got it? Heh.

My point is that Davis disses current cap and trade systems, but these immature systems are as crude as using cowrie shells to open a checking account. They have more potential for growth and flexibility than he allows. He also doesn’t look at trends within globalization that the not-so-rich have altered for their own ends. For example, the ability to buy fractional time on cell phones (which are far more widespread than the internet), not just to have direct access to market information for small farmers, but (interestingly) to send cell minutes to a remote user as a means of quantified value transfer. There will be increasing opportunities for economic connectedness between elites and the people dwelling in the Blade Runner-like dystopian slums that Davis paints, and any lack of economic inclusiveness will be due to policy failure. Or more to the point—due to a failure of democratic systems to represent the political power of those slum-dwellers. I think assuming that democratic failure, as Davis does implicitly, perhaps underestimates the pluck and power of those folks, and of their numbers.

We have brought only a fraction of the economic power of conservation into the marketplace, and even then we’ve most often mis-measured that value by using the dollar. We don’t know what it would be like to see conservation as economic value, rather than just regulatory cost. And we can’t know what transformation may occur until we have restructured the economic system to segregate and efficiently trade environmental value.

To paraphrase some other bleak clowns: Environmental degradation is always and everywhere a money problem.