Thank you John. Your message is becoming more articulate, deeper, and may we hope more influential, with every writing. You are truly at the vanguard, and I have a sincere appreciation for how you recognize each shoulder you stand upon so reverently, and continue to recognize and bring attention to the many that are along side of you - a growing tide of intellect, comprehension, and compassion.
As I read this piece, I got an amazing forgotten insight to my long devotion to systems theory, ecological awareness, new paradigm generally, and specifically to the all the kin of ecological economics - I taught from Odum's text and papers in 1976, as a TA in Field Ecology at Providence College, under the tutelage of Gene "Doc" Donahue.
To me, the increasing diversity-biomass-information density of your new map illustrates Fritjof Capra's "system conception of life -- life organizes itself in networks, and these living networks are inherently regenerative, creative and intelligent."
Thank you John for your insightful article. I understand and agree with your analysis of the materialist paradigm, and that a different map is needed to direct our action through a shift from the materialist paradigm to a generative paradigm
In my recent article, "Systems thinking for solving the climate crisis," I applied Dana Meadows's systems thinking to design such an action map, usable by people everywhere, for shifting from the materialist paradigm (which I call "economic decision-making") to a generative paradigm (which I call "regenerative decision-making"). I invite you to take a look:
Thank you John for this thoughtful piece. I was especially struck by your statement, "The purpose of capital is to serve life, not the other way around." That simple shift in perspective changes the questions we ask about economics.
I believe if we are entering a true phase shift, then the transformation will require more than new policies, it will require a new consciousness that recognizes our interdependence with one another and with the living systems that sustain us.
Left brain hemisphere preference. Which is funny because I was born left handed but then my grandmother taught me righthandness (she got put through hell in 1930s German schooling for herself being born left handed among other things) and nowadays I write right hand first and am considered empathic to a fault by everyone else around me. Analytic too.
This is a remarkably clear and concise post John, and right on "the money." I'm excited to see one of the Odum brothers mentioned as well. The other brother, Howard also wrote a very remarkably clear and spot on article back in the 1970s, and you might want to reference it in the paper you're writing now. "Energy, Ecology, and Economics, by H.T. Odum.
The need to question the doughnut seems important to me - I always felt it was a reductionist approach even if Kate made an important contribution against GDP (later she started speaking about regeneration but too late, as the paradigm shift requires changing the graphic, as you say). Your graph is not an easy one for mainstream economists to buy. Above all, the theoretical discussion needs to happen and you are making a tremendous move in that direction, @John!
Although I don’t understand everything you are writing, I understand enough to want to support you in spreading your thinking and help in the paradigm shift.
Thank you Donna! Communicating across paradigms is not something we humans know much about. My apologies I’m still a learner. But please know it has little to do with intelligence and far more to do with perception.
thank you for this piece. It's one of the clearest articulations I've read of why the "grow more" vs. "shrink and share" framing is a false choice.
Your core insight; that a mature living system does not simply do more with less, but does more with less through superior organization is genuinely profound. The Odum data on ecosystem succession provides a much-needed empirical anchor for what has too often remained a philosophical intuition. If we can design economies that follow that same pattern, we have a plausible path out of the polycrisis.
But I want to press you on one question that your article gestures toward but does not fully resolve: What is the mechanism that enables this phase shift?
You acknowledge that ecosystems achieve this through "the slow, blind accounting of natural selection," but that "modern economies don't yet have the mechanism. It will have to be designed in, on purpose." This is the crux. And I believe the missing piece, the enabling condition that makes the rest of your framework viable is sovereign money.
Here is why I think this matters for your argument:
1. The Doughnut Needs a Monetary Architecture
You correctly note that Kate Raworth's doughnut is "based on a splice, not one comprehensive analysis of a real complex system." The outer ring comes from planetary boundaries, the inner from political negotiation. But what holds the two together? What ensures that the economy actually operates within the doughnut, rather than crashing through the ceiling or collapsing below the floor?
The answer is not simply better policy or smarter regulation. It is control over the money supply. As long as money is created primarily by private banks as interest-bearing debt, the system has an inherent growth imperative. Banks must lend more to service existing debt; economies must grow to repay interest; and the financial algorithm you rightly critique becomes a structural constraint, not a policy choice.
Sovereign money, where the state, not private banks, creates and issues the currency—removes that imperative. It allows a nation to align its money supply with genuine social and ecological goals, rather than with the profit-maximization logic of private credit creation.
2. Organization Requires Investment, and Investment Requires Money
Your phase shift hinges on "organization substituting for extraction and throughput." But building organization, better infrastructure, more resilient supply chains, regenerative agriculture, circular industrial systems, requires upfront investment. That investment must be financed.
Under our current system, that financing comes with interest, which demands future growth to service. Under a sovereign money system, the state can invest directly in the organizational infrastructure you describe, without incurring the compounding debt that locks us into the growth treadmill. This is not "printing money" in the reckless sense; it is issuing currency backed by the productive capacity of the nation, in service of a deliberate industrial and ecological strategy.
3. The Wealth Concentration Problem Is a Monetary Problem
You highlight the "unforgiving finance algorithm" that is "increasingly concentrating wealth and power among the tiny slice of humanity." This is not an accident of capitalism; it is a feature of a system where private banks capture the seigniorage and distribute it to their shareholders and executives.
Sovereign money returns that seigniorage to the public. It does not eliminate wealth inequality overnight, but it removes the primary structural driver of it: the private monopoly on money creation. Combined with the redistributive policies you mention, it makes the "social floor" of the doughnut genuinely achievable.
4. My Question to You
You write that your view "sits outside the modern age paradigm of materialism." Sovereign money also sits outside that paradigm, not because it is anti-materialist, but because it recognizes that money is not a thing (a commodity to be mined or traded) but a social technology: an accounting system that can be designed to serve life rather than extraction.
So my question is this: Are you ready to support sovereign money as the enabling condition for the phase shift you describe?
Your regenerative economics framework is powerful, but without a monetary architecture that frees us from the debt-growth imperative, I fear it remains a beautiful map with no engine. Sovereign money is the engine. It is the mechanism that allows us to design the organization you call for, on purpose, at scale.
I would be happy to share my own framework with you, a detailed proposal for how sovereign money can be implemented as the fiscal policy backbone of a regenerative economy. I believe it aligns directly with your vision, and I would value your critical engagement with it.
If it is not obvious, I am not an academic, I am an old hippy who has read a lot about money. But I am a member of The American Monetary Institute and (a former President of) The Alliance For Just Money as well as IMMR, the International Movement for Monetary Reform. These organizations have a lot of academic members.
Let me know if you are open to that conversation. The phase shift is coming, one way or another. The question is whether we will steer it consciously or be swept along by forces we refuse to name.
Thanks howard. The old hippies had a lot of good things to say! Snd still do.
I have not thought abut money as much as you have. But I think I get the argument about sovereign money. Here are my challenges:
1. Does sovereign money not assume a wise and functioning democracy?
2. Investment requires capital not debt per se. Debt demands equity “below it” in the form of investment equity or some other form of risk cushion (government commitments for example).
- so private investment is really determined by the much higher return requirements of equity, not the interest on the debt.
- agree, sovereign money could do lots/most/all of the investment required in an economy. But hard to imagine that turning out well either. (See point 1)
- where would private capital go in this scenario?
I don’t have a satisfactory answer to your question. But I believe it begins with getting clear in the design principles, if we accept the economy must behave like a living system. Maybe we don’t actually need to control the mechanism at all. Just honor the principles as an airplane designer must honor the law of gravity. May the best plane emerge!
Actually I wasn’t fair to my view on this. I have an entire chapter in my book on the need for an institution of the commons - natural and technological - governed separately from the public sector. This is essential. Then if we treat sovereign money as a commons, I could imagine it’s intelligent use. Meanwhile the economy could do what it does within the bounds of the commons. Guard rails and money pumps serving as the self orgs isn’t snd self fueling qualities of a healthy system
Thank you for this. Your response is exactly the kind of engagement I was hoping for, curious, honest, and willing to sit with the tension. You've named the real challenges, and I take them seriously.
Let me work through your three challenges, and then I want to show you why I think your own framework already contains the answer.
Challenge 1: "Does sovereign money not assume a wise and functioning democracy?"
This is the hardest question, and you're right to ask it.
The short answer is: yes, it does assume that, but so does every alternative.
The current system assumes a wise and functioning democracy too. It just assumes it less explicitly. The Federal Reserve is nominally independent, but it answers to no one. Congress has delegated its constitutional power to create money to a private banking cartel, and we call that "stability."
The choice is not between sovereign money with a flawed democracy and the current system with a flawless one. The choice is between:
1. A system where money creation is explicitly democratic and accountable, even if imperfect
2. A system where money creation is implicitly privatized and unaccountable, and we pretend otherwise
The Grangers, the Populists, the Greenbackers, they all faced this same objection. "You can't trust the government with money." And yet, the government they didn't trust gave us the greenbacks that financed the Union victory, the Homestead Act, the land-grant colleges, and the transcontinental railroad. The private bankers they did trust gave us the Panic of 1873, the Panic of 1893, and the Great Depression.
The question is not whether democracy is wise enough for sovereign money. The question is whether we can afford to leave money creation in the hands of an unaccountable private cartel.
The answer, I think, is that sovereign money is not a solution to the problem of democracy. It is a tool for making democracy more functional. When the people control the money supply, they have a lever over policy that they currently lack. The Gilens & Page study proved that policy responds only to money. Sovereign money would give the other public a say in the most fundamental economic question: who creates the money, and for what purpose?
You wrote in Regenerative Economics that the economy should work like a living system, able to adapt, evolve, and sustain life. A living system does not have a "wise and functioning" central planner. It has feedback loops. Sovereign money, properly designed with democratic checks and citizen oversight, is a feedback loop. It is not a solution to the problem of democracy; it is a condition for democracy to work.
Challenge 2: "Investment requires capital not debt per se."
You're right about the capital structure. Debt demands equity beneath it as a risk cushion. Private investment is driven by equity return requirements, not just interest rates. And yes, sovereign money could do much of the investment required in an economy but you're skeptical that would turn out well.
Let me offer a different framing.
Sovereign money does not replace private capital. It repositions it.
Right now, private capital sits above public money. The government borrows from private banks, which creates debt that must be serviced with interest. That interest flows to the creditor class. The government is perpetually in debt to the very institutions it is supposed to regulate.
Under sovereign money, the government creates money directly, interest-free, and spends it into circulation. This does not eliminate private capital. It changes the relationship between public and private.
In this new configuration, private capital is still essential. It provides the risk capital for innovation, the equity cushion you mentioned, the dynamic experimentation that markets are good at. But it does so within a framework set by public money. The public sector provides the infrastructure, the monetary foundation, the commons, the guardrails. The private sector operates within those guardrails.
You wrote that "the purpose of capital is to serve life, and not the other way around". Sovereign money is the mechanism that enforces that priority. It ensures that the monetary system serves the public good, rather than private profit.
As for whether it would "turn out well" you're right to be skeptical. Any system can be abused. But the current system has already turned out badly. It has produced a polycrisis of ecological collapse, extreme inequality, and political dysfunction. Sovereign money is not a guarantee of good outcomes but it is the necessary condition for good outcomes. Without it, we are negotiating with the bond market, not governing.
Challenge 3: "Where would private capital go in this scenario?"
This is the question that keeps finance people up at night. And it's a fair one.
Private capital would go where it should go: to productive enterprise that generates returns, not speculation. The difference is that those returns would be generated within an economy that is not structurally dependent on debt and growth.
Under sovereign money:
• Infrastructure investment would be publicly financed, not private debt financed. This frees private capital for innovation, entrepreneurship, and high-risk ventures.
• The commons would be publicly owned and managed, generating revenue that flows back to citizens. This provides a stable foundation for private enterprise.
• The debt-growth imperative would be removed. Private capital would no longer be competing with a public sector that is perpetually borrowing at interest.
You yourself have written about the need for an "institution of the commons", natural and technological, that is governed separately from the public sector. In your framework, this institution would mediate between the private and public sectors and would be "collectively larger and more valuable than the entire private sector".
This is where sovereign money and your commons framework intersect perfectly.
If we treat sovereign money as a commons, as a public good, governed democratically, with clear rules and guardrails, then private capital operates within that commons. It does not control it. It is enabled by it.
This is not a zero-sum game. It is a phase shift, exactly the kind of metamorphosis you've written about. The caterpillar's immune system dissolves before something new can form. The current financial system is the immune system. Sovereign money is the dissolution. What emerges is something new: an economy where private capital serves life, rather than the other way around.
Where Your Framework Already Points the Way
You wrote: "I have an entire chapter in my book on the need for an institution of the commons - natural and technological - governed separately from the public sector. This is essential. Then if we treat sovereign money as a commons, I could imagine it's intelligent use."
This is the bridge. You've already built it. You just haven't fully crossed it yet.
The institution of the commons is the governance structure for sovereign money. It is the democratic check that addresses your first challenge. It is the risk cushion that addresses your second. It is the framework that gives private capital a clear role while ensuring it serves the public good.
The question is not whether sovereign money is a good idea. The question is whether we can design it as a commons with the same care and intention that you bring to the design of regenerative economies.
I believe we can. And I believe the AMI conference is the place to have that conversation.
A Final Thought
You wrote: "Maybe we don't actually need to control the mechanism at all. Just honor the principles as an airplane designer must honor the law of gravity. May the best plane emerge!"
I love this. And I think it's exactly right, if the mechanism is designed properly.
An airplane designer does not control gravity. But they do design the plane to honor the laws of gravity. They build the wings, the control surfaces, the structural integrity. They create the conditions for flight.
Sovereign money is not about controlling the mechanism. It is about designing the mechanism so that it honors the principles of a living system. It is about creating the conditions for a regenerative economy to emerge.
The best plane does not emerge from chaos. It emerges from intelligent design that honors the laws of physics. The best economy does not emerge from the current financial chaos. It emerges from intelligent design that honors the laws of life.
You've laid out the principles. Sovereign money is the enabling condition for those principles to become reality.
Let's talk more at the AMI conference. I'd love to have you present, and to hear your thoughts on how we might design sovereign money as a commons.
Oh my gosh, John, thank you so much for this beautiful unpacking of an understanding that needs much much much broader discovery, appreciation and adoption. I have felt very conflicted of late about the degree to which I’ve failed to keep one eye (at least) focused on how we can change the rules of the game. I’m approaching that time in my life and career that this is the problem space I’d like to better understand and help with to whatever extent I can be of help. Might we catch up sometime? I would so enjoy and appreciate that…thank you for this piece. It’s beautiful. I cannot wait for your full paper. 🙏🏻🫶🏼
Be careful what you ask for (full paper). I’m co-creating it with my pal Claude. Would be impossible for me to write it without her! But with the liner paper, this shorter one floats nicely to the surface. I’m glad to know it was clarifying. I’ve been trying to “say” this for years!! 😩
Love to catch up. Next week is very free my afternoons. When’s good? For your consideration: the “organization” I refer to applies equally to the parts (companies, cities, etc) as it does the the whole system!
And I’ve been intuiting it but haven’t paused long enough to form the words — an obviously necessary service to the whole, so thank you for taking the time and energy for it 🙏🏻 Email on its way…
Thank you John. Your message is becoming more articulate, deeper, and may we hope more influential, with every writing. You are truly at the vanguard, and I have a sincere appreciation for how you recognize each shoulder you stand upon so reverently, and continue to recognize and bring attention to the many that are along side of you - a growing tide of intellect, comprehension, and compassion.
As I read this piece, I got an amazing forgotten insight to my long devotion to systems theory, ecological awareness, new paradigm generally, and specifically to the all the kin of ecological economics - I taught from Odum's text and papers in 1976, as a TA in Field Ecology at Providence College, under the tutelage of Gene "Doc" Donahue.
To me, the increasing diversity-biomass-information density of your new map illustrates Fritjof Capra's "system conception of life -- life organizes itself in networks, and these living networks are inherently regenerative, creative and intelligent."
Thank you John for your insightful article. I understand and agree with your analysis of the materialist paradigm, and that a different map is needed to direct our action through a shift from the materialist paradigm to a generative paradigm
In my recent article, "Systems thinking for solving the climate crisis," I applied Dana Meadows's systems thinking to design such an action map, usable by people everywhere, for shifting from the materialist paradigm (which I call "economic decision-making") to a generative paradigm (which I call "regenerative decision-making"). I invite you to take a look:
https://erikkvam.substack.com/p/systems-thinking-for-solving-the?r=2n8im9
I dedicated my book to Dana. :)
That's excellent
I look forward to the full paper. This supports my contention that we need an upgrade in consciousness to transition to a regenerative civilisation.
Thank you John for this thoughtful piece. I was especially struck by your statement, "The purpose of capital is to serve life, not the other way around." That simple shift in perspective changes the questions we ask about economics.
I believe if we are entering a true phase shift, then the transformation will require more than new policies, it will require a new consciousness that recognizes our interdependence with one another and with the living systems that sustain us.
I saw a saxophonist first then the face.
Oh dear. You know what that says right? 🙄
Left brain hemisphere preference. Which is funny because I was born left handed but then my grandmother taught me righthandness (she got put through hell in 1930s German schooling for herself being born left handed among other things) and nowadays I write right hand first and am considered empathic to a fault by everyone else around me. Analytic too.
This is a remarkably clear and concise post John, and right on "the money." I'm excited to see one of the Odum brothers mentioned as well. The other brother, Howard also wrote a very remarkably clear and spot on article back in the 1970s, and you might want to reference it in the paper you're writing now. "Energy, Ecology, and Economics, by H.T. Odum.
https://www.emergysociety.com/wp-content/uploads/OdumHT.1973.Energy-Ecology-and-Economics.Royal-Swedish-Academy-of-Science.Ambio_.pdf
The need to question the doughnut seems important to me - I always felt it was a reductionist approach even if Kate made an important contribution against GDP (later she started speaking about regeneration but too late, as the paradigm shift requires changing the graphic, as you say). Your graph is not an easy one for mainstream economists to buy. Above all, the theoretical discussion needs to happen and you are making a tremendous move in that direction, @John!
Life is messier than the machine!
Have an idea for your network my friend, think this is an important step! Plans for regional chambers, locally led of course
https://www.withlife.net/regen-chamber?kuid=9780ec9c-d3e7-493d-8950-01d0afaaac09-1786969465&kref=HTo3pwkA0aZa
Although I don’t understand everything you are writing, I understand enough to want to support you in spreading your thinking and help in the paradigm shift.
Thank you Donna! Communicating across paradigms is not something we humans know much about. My apologies I’m still a learner. But please know it has little to do with intelligence and far more to do with perception.
Bravo! Right on path. Looking forward to the longer paper!
John,
thank you for this piece. It's one of the clearest articulations I've read of why the "grow more" vs. "shrink and share" framing is a false choice.
Your core insight; that a mature living system does not simply do more with less, but does more with less through superior organization is genuinely profound. The Odum data on ecosystem succession provides a much-needed empirical anchor for what has too often remained a philosophical intuition. If we can design economies that follow that same pattern, we have a plausible path out of the polycrisis.
But I want to press you on one question that your article gestures toward but does not fully resolve: What is the mechanism that enables this phase shift?
You acknowledge that ecosystems achieve this through "the slow, blind accounting of natural selection," but that "modern economies don't yet have the mechanism. It will have to be designed in, on purpose." This is the crux. And I believe the missing piece, the enabling condition that makes the rest of your framework viable is sovereign money.
Here is why I think this matters for your argument:
1. The Doughnut Needs a Monetary Architecture
You correctly note that Kate Raworth's doughnut is "based on a splice, not one comprehensive analysis of a real complex system." The outer ring comes from planetary boundaries, the inner from political negotiation. But what holds the two together? What ensures that the economy actually operates within the doughnut, rather than crashing through the ceiling or collapsing below the floor?
The answer is not simply better policy or smarter regulation. It is control over the money supply. As long as money is created primarily by private banks as interest-bearing debt, the system has an inherent growth imperative. Banks must lend more to service existing debt; economies must grow to repay interest; and the financial algorithm you rightly critique becomes a structural constraint, not a policy choice.
Sovereign money, where the state, not private banks, creates and issues the currency—removes that imperative. It allows a nation to align its money supply with genuine social and ecological goals, rather than with the profit-maximization logic of private credit creation.
2. Organization Requires Investment, and Investment Requires Money
Your phase shift hinges on "organization substituting for extraction and throughput." But building organization, better infrastructure, more resilient supply chains, regenerative agriculture, circular industrial systems, requires upfront investment. That investment must be financed.
Under our current system, that financing comes with interest, which demands future growth to service. Under a sovereign money system, the state can invest directly in the organizational infrastructure you describe, without incurring the compounding debt that locks us into the growth treadmill. This is not "printing money" in the reckless sense; it is issuing currency backed by the productive capacity of the nation, in service of a deliberate industrial and ecological strategy.
3. The Wealth Concentration Problem Is a Monetary Problem
You highlight the "unforgiving finance algorithm" that is "increasingly concentrating wealth and power among the tiny slice of humanity." This is not an accident of capitalism; it is a feature of a system where private banks capture the seigniorage and distribute it to their shareholders and executives.
Sovereign money returns that seigniorage to the public. It does not eliminate wealth inequality overnight, but it removes the primary structural driver of it: the private monopoly on money creation. Combined with the redistributive policies you mention, it makes the "social floor" of the doughnut genuinely achievable.
4. My Question to You
You write that your view "sits outside the modern age paradigm of materialism." Sovereign money also sits outside that paradigm, not because it is anti-materialist, but because it recognizes that money is not a thing (a commodity to be mined or traded) but a social technology: an accounting system that can be designed to serve life rather than extraction.
So my question is this: Are you ready to support sovereign money as the enabling condition for the phase shift you describe?
Your regenerative economics framework is powerful, but without a monetary architecture that frees us from the debt-growth imperative, I fear it remains a beautiful map with no engine. Sovereign money is the engine. It is the mechanism that allows us to design the organization you call for, on purpose, at scale.
I would be happy to share my own framework with you, a detailed proposal for how sovereign money can be implemented as the fiscal policy backbone of a regenerative economy. I believe it aligns directly with your vision, and I would value your critical engagement with it.
If it is not obvious, I am not an academic, I am an old hippy who has read a lot about money. But I am a member of The American Monetary Institute and (a former President of) The Alliance For Just Money as well as IMMR, the International Movement for Monetary Reform. These organizations have a lot of academic members.
Let me know if you are open to that conversation. The phase shift is coming, one way or another. The question is whether we will steer it consciously or be swept along by forces we refuse to name.
Warm regards,
Howard Switzer
https://www.monetaryalliance.org/
https://monetary.org/
https://internationalmoneyreform.org/
Thanks howard. The old hippies had a lot of good things to say! Snd still do.
I have not thought abut money as much as you have. But I think I get the argument about sovereign money. Here are my challenges:
1. Does sovereign money not assume a wise and functioning democracy?
2. Investment requires capital not debt per se. Debt demands equity “below it” in the form of investment equity or some other form of risk cushion (government commitments for example).
- so private investment is really determined by the much higher return requirements of equity, not the interest on the debt.
- agree, sovereign money could do lots/most/all of the investment required in an economy. But hard to imagine that turning out well either. (See point 1)
- where would private capital go in this scenario?
I don’t have a satisfactory answer to your question. But I believe it begins with getting clear in the design principles, if we accept the economy must behave like a living system. Maybe we don’t actually need to control the mechanism at all. Just honor the principles as an airplane designer must honor the law of gravity. May the best plane emerge!
Of course it’s not that simple.
Curious to hear thru thoughts
Actually I wasn’t fair to my view on this. I have an entire chapter in my book on the need for an institution of the commons - natural and technological - governed separately from the public sector. This is essential. Then if we treat sovereign money as a commons, I could imagine it’s intelligent use. Meanwhile the economy could do what it does within the bounds of the commons. Guard rails and money pumps serving as the self orgs isn’t snd self fueling qualities of a healthy system
John,
Thank you for this. Your response is exactly the kind of engagement I was hoping for, curious, honest, and willing to sit with the tension. You've named the real challenges, and I take them seriously.
Let me work through your three challenges, and then I want to show you why I think your own framework already contains the answer.
Challenge 1: "Does sovereign money not assume a wise and functioning democracy?"
This is the hardest question, and you're right to ask it.
The short answer is: yes, it does assume that, but so does every alternative.
The current system assumes a wise and functioning democracy too. It just assumes it less explicitly. The Federal Reserve is nominally independent, but it answers to no one. Congress has delegated its constitutional power to create money to a private banking cartel, and we call that "stability."
The choice is not between sovereign money with a flawed democracy and the current system with a flawless one. The choice is between:
1. A system where money creation is explicitly democratic and accountable, even if imperfect
2. A system where money creation is implicitly privatized and unaccountable, and we pretend otherwise
The Grangers, the Populists, the Greenbackers, they all faced this same objection. "You can't trust the government with money." And yet, the government they didn't trust gave us the greenbacks that financed the Union victory, the Homestead Act, the land-grant colleges, and the transcontinental railroad. The private bankers they did trust gave us the Panic of 1873, the Panic of 1893, and the Great Depression.
The question is not whether democracy is wise enough for sovereign money. The question is whether we can afford to leave money creation in the hands of an unaccountable private cartel.
The answer, I think, is that sovereign money is not a solution to the problem of democracy. It is a tool for making democracy more functional. When the people control the money supply, they have a lever over policy that they currently lack. The Gilens & Page study proved that policy responds only to money. Sovereign money would give the other public a say in the most fundamental economic question: who creates the money, and for what purpose?
You wrote in Regenerative Economics that the economy should work like a living system, able to adapt, evolve, and sustain life. A living system does not have a "wise and functioning" central planner. It has feedback loops. Sovereign money, properly designed with democratic checks and citizen oversight, is a feedback loop. It is not a solution to the problem of democracy; it is a condition for democracy to work.
Challenge 2: "Investment requires capital not debt per se."
You're right about the capital structure. Debt demands equity beneath it as a risk cushion. Private investment is driven by equity return requirements, not just interest rates. And yes, sovereign money could do much of the investment required in an economy but you're skeptical that would turn out well.
Let me offer a different framing.
Sovereign money does not replace private capital. It repositions it.
Right now, private capital sits above public money. The government borrows from private banks, which creates debt that must be serviced with interest. That interest flows to the creditor class. The government is perpetually in debt to the very institutions it is supposed to regulate.
Under sovereign money, the government creates money directly, interest-free, and spends it into circulation. This does not eliminate private capital. It changes the relationship between public and private.
In this new configuration, private capital is still essential. It provides the risk capital for innovation, the equity cushion you mentioned, the dynamic experimentation that markets are good at. But it does so within a framework set by public money. The public sector provides the infrastructure, the monetary foundation, the commons, the guardrails. The private sector operates within those guardrails.
You wrote that "the purpose of capital is to serve life, and not the other way around". Sovereign money is the mechanism that enforces that priority. It ensures that the monetary system serves the public good, rather than private profit.
As for whether it would "turn out well" you're right to be skeptical. Any system can be abused. But the current system has already turned out badly. It has produced a polycrisis of ecological collapse, extreme inequality, and political dysfunction. Sovereign money is not a guarantee of good outcomes but it is the necessary condition for good outcomes. Without it, we are negotiating with the bond market, not governing.
Challenge 3: "Where would private capital go in this scenario?"
This is the question that keeps finance people up at night. And it's a fair one.
Private capital would go where it should go: to productive enterprise that generates returns, not speculation. The difference is that those returns would be generated within an economy that is not structurally dependent on debt and growth.
Under sovereign money:
• Infrastructure investment would be publicly financed, not private debt financed. This frees private capital for innovation, entrepreneurship, and high-risk ventures.
• The commons would be publicly owned and managed, generating revenue that flows back to citizens. This provides a stable foundation for private enterprise.
• The debt-growth imperative would be removed. Private capital would no longer be competing with a public sector that is perpetually borrowing at interest.
You yourself have written about the need for an "institution of the commons", natural and technological, that is governed separately from the public sector. In your framework, this institution would mediate between the private and public sectors and would be "collectively larger and more valuable than the entire private sector".
This is where sovereign money and your commons framework intersect perfectly.
If we treat sovereign money as a commons, as a public good, governed democratically, with clear rules and guardrails, then private capital operates within that commons. It does not control it. It is enabled by it.
This is not a zero-sum game. It is a phase shift, exactly the kind of metamorphosis you've written about. The caterpillar's immune system dissolves before something new can form. The current financial system is the immune system. Sovereign money is the dissolution. What emerges is something new: an economy where private capital serves life, rather than the other way around.
Where Your Framework Already Points the Way
You wrote: "I have an entire chapter in my book on the need for an institution of the commons - natural and technological - governed separately from the public sector. This is essential. Then if we treat sovereign money as a commons, I could imagine it's intelligent use."
This is the bridge. You've already built it. You just haven't fully crossed it yet.
The institution of the commons is the governance structure for sovereign money. It is the democratic check that addresses your first challenge. It is the risk cushion that addresses your second. It is the framework that gives private capital a clear role while ensuring it serves the public good.
The question is not whether sovereign money is a good idea. The question is whether we can design it as a commons with the same care and intention that you bring to the design of regenerative economies.
I believe we can. And I believe the AMI conference is the place to have that conversation.
A Final Thought
You wrote: "Maybe we don't actually need to control the mechanism at all. Just honor the principles as an airplane designer must honor the law of gravity. May the best plane emerge!"
I love this. And I think it's exactly right, if the mechanism is designed properly.
An airplane designer does not control gravity. But they do design the plane to honor the laws of gravity. They build the wings, the control surfaces, the structural integrity. They create the conditions for flight.
Sovereign money is not about controlling the mechanism. It is about designing the mechanism so that it honors the principles of a living system. It is about creating the conditions for a regenerative economy to emerge.
The best plane does not emerge from chaos. It emerges from intelligent design that honors the laws of physics. The best economy does not emerge from the current financial chaos. It emerges from intelligent design that honors the laws of life.
You've laid out the principles. Sovereign money is the enabling condition for those principles to become reality.
Let's talk more at the AMI conference. I'd love to have you present, and to hear your thoughts on how we might design sovereign money as a commons.
Warmly,
Howard
Oh my gosh, John, thank you so much for this beautiful unpacking of an understanding that needs much much much broader discovery, appreciation and adoption. I have felt very conflicted of late about the degree to which I’ve failed to keep one eye (at least) focused on how we can change the rules of the game. I’m approaching that time in my life and career that this is the problem space I’d like to better understand and help with to whatever extent I can be of help. Might we catch up sometime? I would so enjoy and appreciate that…thank you for this piece. It’s beautiful. I cannot wait for your full paper. 🙏🏻🫶🏼
Be careful what you ask for (full paper). I’m co-creating it with my pal Claude. Would be impossible for me to write it without her! But with the liner paper, this shorter one floats nicely to the surface. I’m glad to know it was clarifying. I’ve been trying to “say” this for years!! 😩
Love to catch up. Next week is very free my afternoons. When’s good? For your consideration: the “organization” I refer to applies equally to the parts (companies, cities, etc) as it does the the whole system!
And I’ve been intuiting it but haven’t paused long enough to form the words — an obviously necessary service to the whole, so thank you for taking the time and energy for it 🙏🏻 Email on its way…