Deflationary Minimalism

Beyond Capitalism

8 min readJun 11, 2022

We find ourselves at a critical point in time, because this is the last chance to fend off the deluge looming on the horizon which is the climate crisis. The catastrophic consequences of human influence on the climate of the earth are undeniable¹. Within the existing economic system we have not managed to do what has to be done. To secure the earth for future generations a new direction is required. Now, financial profit should not be the sole focus, but instead it should be the long-term ecological consequences and human capital. Humanity depends on the earth, and we must protect her from ourselves. The coming decade drastic change is required, and the economic system should accelerate this rather than oppose it.

The size of the economy and the insatiable growth thereof are now expressed in monetary value, while in the long term the ecological value is much more important. A very long-term vision and thus very proactive stance are required to combat the ecological crisis, because the consequences of choices made now will only lead to the end of human civilization long after we are all dead. The current economic system is built on an endless growth of consumption and this is not sustainable. Consumption is already at unsustainable levels, while large parts of the developing world will demand more from the earth in the future². At the same time vital life necessities are unreachable behind a tall paywall for many³. Demanding systemic change is not radical; willfully ignoring and downplaying the consequences of climate change: that is radical!

The ideal economy demands a new starting point with different values at its basis: Shrinkage replaces growth, ecology above profits, focus on humans rather than capital. Everyone should be aware of the shared responsibility and accept it. The way in which society and the individuals within it view prosperity, capital, and consumption needs to change. Education is the most important factor in this. Focus on developing a critical, empathic and proactive stance and in doing so give people the opportunity to reach these insights based on observations and facts. To impose a will
top-down will not work; real sustainable change has to come bottom-up.

An economy based on a society-wide accepted paradigm of individual minimalism combined with a deflationary monetary policy and levelling instruments will make the required transformation possible, tolerable, and just.

Minimalism

That which is not consumed does not have to be produced. This is the essence of the first and most impactful step towards a sustainable future⁴. Energy which is not used does not need to be generated. Products which are not consumed do not need to be fabricated. Food which is not eaten does not need to grow. The result — not the goal — of minimalism is that you consume less, in order to become happier.

Minimalism means that you own only what makes you happy and what is truly important to you. This means that the interpretation of it is very personal and different for everyone. On the one hand some of the extreme classical Japanese minimalists barely own anything⁵, while there are also minimalists which are just as fanatical who lead a seemingly normal life. What connects them is that both groups know very well what is important to them, so that they can ignore the unimportant. How often do we find ourselves buying something which we seldom use afterwards? How much energy is collectively lost on producing goods which are not a necessity? How much food is thrown away needlessly?

More is not always better. This core value of minimalism is something we as a capitalist society desperately need. Collecting, maintaining, and presenting things costs time, money, and energy. And what’s the goal? Often this is related to how others view us. Let’s get rid of this idea and instead do it for ourselves. This is extremely freeing. By making minimalism widely accepted so much waste could be prevented. Quality above quantity, and as a result a happier life with more time and energy to spend on each other rather than on things.

An ideal minimalistic economic system has no losses. It is a closed loop in which time, energy, and resources are only spent on products and services which are important. Afterwards the result is carefully managed, so that energy and resources are not lost prematurely. Within such a system we will become conscious of what is important, taking into account the ecological consequences. Saving and reducing consumption will become the new standard, and we will be happier for it too.

Deflation

Deflation is the inverse of inflation: money becomes more valuable as time passes. Everyone knows about the concept of inflation which causes prices to be periodically increased to cover rising costs. Central banks increase the monetary supply by purchasing debt, decreasing the relative value of money⁶. The result is that people are encouraged to consume. Because if they would save instead, then their money would become worth less as they postpone purchases. This way of encouraging consumption is deemed to be necessary for a healthy economy. On the other hand deflation is supposedly undesirable, but does this hold true when we change the goal from short-term profit to a sustainable future on the very long-term?

A deflationary economic system will result in less unnecessary consumption and stimulates a minimalistic lifestyle. The big fear is that there will be no consumption at all, or at the very least way too little. But this fear is unfounded, because people will of course still spend their money on those things which are truly important to them: energy, food, housing, and other vital products and services. On the other hand it will become unappealing to consume non-essential goods and services. This drives us from mass consumption towards conscious and value-driven consumption.

Monetary deflation is by definition only possible if the monetary supply decreases with the passing of time, and decentralized digital currency now make it possible to mathematically enforce this⁷. This utilizes a currency which by strict definition has no inflation, and this fact is transparant and irreversible for everyone. A decentralized system has no central authority which controls the creation of new money. Everyone within a decentralized currency system is bound to the same rules; if central banks cooperate within this system the deflationary policy will be verifiable for everyone.

Level

It is important that everyone on earth gets the chance to build up a happy life. This means that costs and benefits must be equally distributed regionally, nationally, and globally. For us in the Netherlands this means that we, as one of the most prosperous regions on earth⁸, will have to take a step backwards. Those who profited most from the rapid industrialization built on fossil fuels and exploiting the workforce in developing countries must accept that they will have to make due with less in the future⁹. Resources (or access to them) are depleting, while demand is rising¹⁰. The new system must reduce the pressure of humanity on the earth, and there is a need for a strong social safety net to absorb the shock of this transition in a fair way. The absolute largest improvement in equality can be found with those who have the least.

Basic security must be guaranteed: a universal income and guaranteed access to essential facilities and services are there for everyone¹¹. Instead of viewing this from a purely economical standpoint, it is more interesting to see the human value in it. With this guarantee people will no longer be forced to work, which makes the fear of losing jobs something from the past. Instead, technological innovation — job displacing, but essential — is stimulated. Many unimportant jobs will disappear in the end as a result of strongly reduced consumption. People will be motivated and working passionately for a better future, from their intrinsic beliefs rather than for their continued existence.

The huge investments which are required to combat the ecological crisis are financed by a green dividend¹². Governments will take the lead by making the crucial investments which are not happening by themselves, like investments in hydrogen and CO2 capture technologies. The benefits flow back to the citizen in the form of a green dividend. This has a strong levelling effect when the required capital is raised through taxes and other instruments which price the ecological impact and suppress income inequality. Examples are a carbon tax and forms of taxation on capital, inheritances, and gifts.

There is a gap between what is needed to combat the climate crisis and what is feasible now. Innovative technology is required to close this gap, and this needs the efforts of many creative and skillful people. Technological innovation has sharply increased the individual productivity since the industrialization¹³. Because of this fewer and fewer people are required to achieve the same results over time. Let’s use this fact to work on important tasks, rather than work on accumulating capital for the dominant class. The new economy will be a knowledge economy, in which humans develop themselves optimally and get the most out of life.

Conclusion

To withstand the ecological crisis major change is required and this demands a new economic system: a system which drastically reduces consumption. By broadly spreading minimalist ideas it is possible to consume less as a society without a perceived loss in happiness. A deflationary digital currency stimulates shrinkage by discouraging unnecessary consumption. Coupled with levelling instruments such as basic security, green dividend, and education, it is possible to make the transition in a just and sustainable way. Humanity is entering a new phase with a greater awareness of the ecological impact of their actions and with more time and options to develop themselves.

To win the battle against climate change sacrifice is required. But I believe a livable earth for future generations is worth some discomfort and loss of prosperity in the present. Let’s strife to be that generation in the history books which proactively sought to combat climate change, and not as the generation which just stood on the sidelines and watched while everyone knew deep down inside, but didn’t want to know. Because when we look back later we can say that we did a good job, and leave the earth behind with peace in our hearts.