The 'Nature' of Money: Does our current money system hinder sustainable development?

Abstract

The economic crisis that started in 2007 draws new attention to the financialization of the economy and in particular to the concept of debt. Simultaneously, rising energy and commodity prices are yet another indication for concern about a growing population, emissions and resource exploitation that is burdening the Earth. This thesis provides an extensive overview and analysis of the relevant literature, followed by the application of economist Steve Keen’s model of the role of money in a simple credit economy. It is used to test whether the money system is viable and/or has inherent mechanisms that hinder sustainable development. Both methods aim to be a springboard from which further research can be undertaken as this remains a topic alive with uncertainty. I find that although the money system does not mechanically prevent sustainable development, it does enable and promote a tendency towards inequality, a growth imperative, and an economically unsustainable debt burden. It thus does hinder sustainable development.