Third, new concepts of value are, then, essential. In particular, the human value to innovate in the face of necessity is the real capital of society as we face this transition, but how to account for that is an almost unresolved question when the resulting intellectual property has to be shared for maximum impact, and not be restricted in use.
Ritchie intends to increase the quantity of bright ideas by reducing the value of bright ideas.
Well done there.
But there is a problem with this. It makes a balance sheet, and those who manage it, indifferent as to when a transaction take place, so long as the discount rate still makes it attractive in terms of contemplating it at all. So precisely when, for example, the transition to a sustainable economy takes place is not a matter of priority to this form of financial capitalism: if it pays eventually then provided the associated risks (and so discount rate) do not diminish its value to the point of insignificance then it remains attractive whenever it occurs. But as a society; as a race; and as businesses whose survival will also depend upon this transition happening by a point in time that indifference as to timing that financial capitalism implies is not just inappropriate but wholly conflicts with the requirement that this task be undertaken in little more than a decade.
As a result the indifference to time inherent in modern financial capitalism may be wholly inappropriate when considering the Green New Deal. But what that implies is that accounting will require a new concept of capital where the time that a transaction occurs does matter, very precisely. There can be no indifference as to progression towards a green transition in this type of reporting: that goal makes precise timing a matter of priority in itself.
The implication is very clear. First, such accounting makes clear that some assets that are now valued (e.g. oil related assets where the oil in question will have to be left in the ground) do no longer have value. It is simply not possible to presume asset life when there can be none.
Given the discount rate what is the value currently of those oil assets that we’ll not let anyone use in Year What?
He’s not even getting accounting right, is he?