5.1. New growth concept

Many economists agree that if we are going to boost growth, consumers must have their wallet out of their pockets. In The Alternative, we will calculate growth in a new and more nuanced way.

Growth must be about our ability to develop society for the better. Therefore, growth must be about better human well-being and happiness, and more environmental and economic sustainability.

So far, society’s economic progress has been calculated on the basis of economic growth through increased production. This has been measured by increased Gross Domestic Product (GDP). The Alternative wants to break with this approach.

Production should not be at the center of our vision for society. Rather, it is the way that we produce and create growth that is the most important. We must find meaning in what we do and measure that which gives us meaning.

The Alternative does not consider GDP as a good measure of success. We believe that GDP measurements alone do not provide a true picture of society’s real condition. What we need to know is whether we as citizens thrive, whether we take good enough care of nature and the environment, and whether our economy creates equality and ensures that money is invested in the right, sustainable initiatives.

The Alternative will therefore introduce a new concept of growth with new goals for sustainable prosperity.

A growth concept that measures well-being and happiness as well as the degree of environmental and economic sustainability

The Alternative wants to set up a commission to examine how a new concept of growth can be put together in such a way as to support a serious sustainable transition. This requires a change so that growth is not measured solely on the basis of economics, but also on social and environmental conditions.

We can measure, among other things, well-being and happiness, but also on the basis of other important parameters, such as high employment, equality, increasing leisure time, community spirit, fulfillment of basic needs, and participation in democracy. These are all elements that contribute to social justice and a meaningful life.

The new concept of growth should also measure, as already mentioned, the degree of environmental sustainability in society. This can be done using existing methods such as the “ecological footprint”, for example – a measurement method that calculates how much of the Earth’s resources a person in a given country consumes.

5.2. Increased public investment in sustainability

The Alternative will make the public sector a much stronger driver in the sustainable transformation than it is today. The public sector must, in all that it does, act on the basis of social, environmental and economic considerations.

Sustainable decisions in the public sector

A law should be adopted that ensures that all public investments and subsidies, purchases and the like, are from now on assessed on the basis of environmental, social and economic considerations. This means that the public sector in particular will provide support to occupations and sectors that create a better environment and a better sense of well-being. Examples could be organic farming, green and socio-economic enterprises, etc.

In general, the public sector should support initiatives that try to find sustainable solutions to our social and climate-related challenges, whether these occur amongst grassroots and volunteer organizations, or at bigger or smaller businesses.

All the initiatives that are currently underway, both locally and nationally, should be helped along the way and, at the same time, be studied so that we can promote the experiences that work, and change those that do not work. In this way, the public sector can be a powerful engine in the transformation of society.

The public sector should not only help others to a sustainable transition. The public sector should also work with sustainability itself, and money should be set aside for this transition. Municipalities should, among other things, have more freedom for long-term investments in new initiatives in the areas of transport, energy, food production and climate adaptation. The municipalities should also have more freedom to support local, social and green initiatives.

For The Alternative, the state and the municipalities can easily be entrepreneurial players in society. The development of the Internet, for example, was in its time only possible because the state invested in the necessary research and technology.

In general, it makes sense that the public sector actively supports research and new technology when it comes to investments in a green transition. It often involves so much basic investment that private companies cannot complete the transition without assistance from the state. Ultimately, this means the difference between a prosperous Denmark in the future and a Denmark that is lagging behind.

Pension funds should invest in sustainability

The pension funds invest a lot of money that fundamentally belongs to all of us. They should therefore be a key player in the transformation of our society. It is inappropriate that the pension funds primarily seek the highest possible return on their investments instead of helping to transform society in a positive way through their investments.

The Alternative wants the law on pension funds to be changed so that the funds use criteria for their investments other than the highest possible return. It should be established by law that investing in sustainability and other socially beneficial investments are equally as important for the board of directors as the direct return. The taxation of pension funds’ investments must also be amended so that sustainable investments are more worthwhile, just as higher taxation should be introduced on financial investments that do not contribute to the transformation of society.

5.3. Businesses and citizens must work for a sustainable transition

We should all be encouraged to help with the green, sustainable transition along the way. Both businesses and citizens should have the room to experiment and the inclination to invest in the development of sustainable solutions.

A very large part of the climate problems that our growth economy has created is attributable to cheap natural resources and the fact that it costs very little to pollute.

Businesses and citizens will, from now on, be required to produce and consume in new ways that take the environment more into account. Today, neither companies nor citizens are encouraged enough to take part in the transition. We believe that it should be easier for both individuals and businesses to make the right environmental choices.

The Alternative will make it more expensive for companies to produce products that pollute the environment, and more expensive for consumers to buy them. Similarly, it should be cheaper to both produce and buy environmentally friendly products. All of this will be resolved through tax policy. Through taxes, goods and services will be drawn in a more environmentally friendly direction, and by shifting tax from labor to wealth, we will create a more stable economy and a fairer distribution of values.

Tax reform for the benefit of the environment and equality

The Alternative believes that we must introduce more green taxes. In this way, we can give companies financial incentives to improve production on environmental grounds. Production must in the future be converted radically to focus far more on recycling. Green taxes give citizens economic incentives to use less energy, buy cars that run longer on less fuel, build homes that are more sustainable, buy organic food, etc.

It is not reasonable, however, for the green taxes to go into a general fund that is used for things other than the green transition. We will redirect green taxes so that citizens and businesses have the opportunity to receive the taxes back if they make green investments. Earmarking the green tax will reward those citizens and businesses that actively work for a sustainable transition. The Alternative believes that this is only fair.

An alternative tax reform will not only address environmental challenges, but also counter the growing inequality in Denmark. One of the fundamental reasons for the growing inequality is that the return on capital is far greater than the return on labor. The consequence is that the rich get richer, while the poor get poorer. The Alternative will shift the tax burden so that labor is taxed less, while capital such as wealth, housing and inheritance are taxed higher and more progressively.

5.4. Stable banking- and finance sector

The finance and banking sector have been far too great and powerful. This is not just a problem for businesses and society, but also for the economy as a whole.

The finance and banking sector prevent the development of sustainable production because they invest most of their money in speculation. This is unfair and inappropriate. It has been difficult for ordinary businesses to borrow money, and especially companies that are working to create new social and environmental solutions.

As a result, it has been difficult to establish new production companies. The finance and banking industry are not consistent with the interests of a sustainable community. On the contrary, it promotes the current system of inequality, rising debt, instability and economic crises. This must change.

Reform of the financial and banking sector

The financial crisis demonstrated how the financial sector could force the entire global economy to its knees. Therefore, the state must take back control over the creation of money from private banks. The Alternative wants to back this process up by dividing the finance and banking sector into two sectors – one with ordinary commercial banks and another with the remaining financial institutions. The commercial banks should exclusively serve households and businesses. It is essential that they are stable and can safeguard the money that is saved. In addition, the possibility should exist to take out loans on reasonable terms. As such, the commercial banks should not work with uncertain speculation.

Such a shift would not only benefit citizens, but also businesses. In order to safeguard citizens’ and commercial enterprises’ money, Denmark’s National Bank should be responsible for ensuring that commercial banks with large deposit deficits are kept under extra supervision. Similarly, the National Bank should ensure that banks in deficit pay an interest penalty, as is already common practice in Sweden. The Alternative wants the same procedure to be introduced in Denmark.

By creating a separation between commercial banks and other financial institutions, we can introduce a state guarantee on all deposits. If a bank goes bankrupt, it should not be citizens’ or businesses’ money that is lost. The Alternative thinks that this is only fair.

Moreover, The Alternative wants to, in the short term, introduce a tax on financial transactions and prohibit speculative ventures such as hedge funds and and private equity funds, as well as those financial instruments that are the reason for the financial crisis. In the longer term, The Alternative will work to introduce stronger capital controls so that private investors and speculators do not have the possibility of creating large adverse effects on the national economies of individual countries. In this way, we can prevent speculation and ensure that we have democratic control over our economy to a higher degree than we do today.

100% reserve requirements for the banking system

In The Alternative, we propose the establishment of a working group to investigate the possibilities of restructuring the monetary system to a “full reserve” banking system. Under such a system, banks can only lend out money that they have already received through customer deposits or through loans from the National Bank. This system would be in line with how most people already believe that the monetary system works.

Banks will obviously still have a role in society, but will now have to offer an incentive for people to choose to place their money with a bank instead of neutrally with the National Bank.  Under the current monetary system, the money supply is created and controlled by the private banks. In practice, every time a person receives a loan, an equivalent amount is added to the person’s account at the same bank, by which new money is created out of nothing. Under current law, this account deposit is a credit note – proof that the person who received the loan can at a later point in time raise “real” money in the form of cash created by the National Bank. In practice, however, it is only gradually that this credit note is used as money.

Apart from the immediate benefits of no longer being forced to loan one’s money to the banks every time a person receives a payment, a payment system that runs directly via the National Bank and bypasses the normal banks will also have a number of secondary effects. It will be easier and faster to transfer money, as transactions will occur without the banks’ bureaucratic and slow settlement systems. As such, it will be much cheaper to transfer money. At the same time, the system gives the individual citizen greater ownership over his or her own money, as one can opt out of being a part of the banks’ credit system.

Societally-speaking, the system will result in a more stable money supply, lower housing prices, greater equity, and profit by creating money that flows to communities instead of a small banking elite.

The challenge of the transition to a money system that is not directly based on debt, is the partial settlement of the current debt in an appropriate manner.

One way of solving this problem could be to support a monetary policy that slowly spends new money that is free of debt in the economy. Such a decision must be taken with caution. A separation must be maintained between those who decide how much money should be spent in the economy, and those who decide what this new money should be spent on. Today it is the big banks that, through their credit ratings, both decide how much money and how new money should be introduced into the economy.

In addition, there is a fear that there will not be enough credit in the system, since most people will just want to keep their money in the National Bank. This is a reflection of just how poorly the banks today perform this task. Only about 12% of bank lending today goes to businesses, of which a large portion is subject to guarantees from the state’s growth funds. Banks today predominantly only lend with security already in existing assets – primarily to housing. A full reserve system should be able to provide better support to new methods of financing entrepreneurs and businesses outside of the traditional banking system, such as crowdfunding, for example.

5.5. Denmark as a pioneer country for sustainable economic policies

Globalization and international competition means that today it is very difficult for a single country like Denmark to undergo a serious sustainable transition. Therefore, The Alternative will also work actively to ensure that a sustainable transition is given a much higher priority internationally.

One of the global challenges that necessarily has to be handled internationally is the fact that businesses today can produce more cheaply in countries with low environmental and social standards. The World Trade Organization (WTO), the EU Treaty, and the future free trade agreement with the United States allows multinational companies unfettered freedom to move money across borders. This undermines nation states’ control over their economies and, by extension, also the transition to a sustainable society. The Alternative will work intensively to change this.

The Alternative will also work for higher environmental and social standards globally, and for multinational companies to take responsibility for the societies of which they are a part. Multinational companies, just like other companies, should ensure proper working conditions, give consideration to the environment and pay taxes. This must be ensured through international law and cooperative agreements that provide financial transparency, a break with tax havens, and an agreement that ensures that multinational companies pay a proportionate amount of tax on their total profits in keeping with their turnover in the countries in which they are engaged.

International sustainability reforms

The Alternative will work to change the rules and priorities of the World Trade Organization and the EU so that sustainability becomes a top priority.

We want to change the current international rules in the WTO, so that a country can, without consequences, declare imported products that are produced under lower environmental or social standards than those applied nationally. Such a change would have two important consequences: 1) it would create incentives to place higher environmental and social standards on national businesses because they would be protected against unfair and unequal competition from abroad; and 2) it would create incentives for foreign manufacturers to improve their environmental and social standards if they want to access the “pioneering countries’” markets.

Denmark should also work through its membership to the EU to ensure that sustainability is given a higher priority than economic growth. The EU is possibly the only organization in the world that has sufficient clout to lead the way when it comes to such necessary global reforms. If the EU takes the lead, there is no doubt that other countries will follow. The EU has a unique historical opportunity to lead mankind, and it is important that the institution does not abandon its citizens at this crucial moment.