With alternative coins flourishing and Central Banks designing their own digital currencies, there is a potential hard-backed currency which cannot be ignored: carbon. Using carbon to back a global currency would redistribute wealth, incentivize low carbon technology and avoid the environmental taxes which hit the world’s poor the hardest, writes Steve Keen.

Economists tell us that environmental problems are caused by the “tragedy of the commons”: because no-one owns the environment, no-one pays when they dump carbon dioxide into it. Their solution is carbon-pricing: put a price on things that generate carbon-dioxide—such as petrol consumption, or coal-fired power stations—and the market will do the rest. Demand for carbon-dioxide-generating products will fall, while the market will invent low-carbon products—such as electric cars, or solar power stations—to replace the high-carbon products that are causing Global Warming. Hey presto, problem solved.

However, while the economics sounds OK, the politics are not: attempts to price carbon, or tax products with high carbon content, have led to social revolts. The most colourful, literally, was the Gilet Jaunes movement in France, which started when French President Macron increased the tax rate on petrol. Working-class demonstrators donned the yellow safety vests that all vehicles in France are required to carry, and made the point that this tax was hard on the poor, but easy on the rich. They demonstrated as only the French can do, and Macron scrapped the tax.