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The global financial crisis, climate change, poverty and BP: the extent of the problem is clear. But what is the best way to solve it? This was the question asked at the first Steady State Economy Conference held in Leeds on June 19.
The conference was organised by Economic Justice for All (EJfA), a Leeds economics and sustainability debating group and the Center for the Advancement of the Steady State Economy (CASSE), with the aim of coming up with some concrete policy recommendations.
“If the leaders of the main political parties in the UK are not thinking seriously about an alternative to economic growth, then we the people must urgently start and develop the discussion,” Dr Lorna Arblaster, of EJfA, explained.
It was a discussion that was urgently needed. The conference attracted over 250 academics, economists, community organisations, activists, NGOs and business people who played as much a part in making the day a resounding success as the keynote speakers: Peter Victor, author of Managing Without Growth and Professor in environmental studies, York University, Canada; Andrew Simms, Policy Director at nef; Dan O’Neill, European Director of CASSE; and Tim Jackson, author of Prosperity Without Growth and professor of sustainable development, University of Surrey.
Peter Victor opened the conference by challenging our “fear of a no growth disaster” and reminding us that until 1950 there was no discussion of economic growth as something to strive for.
“Can we have full employment, no poverty, fiscal balance, and reduced greenhouse gas emissions without relying on economic growth?” he asked. “You bet!” was his resounding reply, which he backed up with a detailed computer model.
Participants were then asked to put forward alternative policy recommendations in expert-led workshops on how this could be done in the UK.
These included eight policy-focused workshops: limiting resource use; stabilising population; reforming the monetary system; maintaining low unemployment; distributing income more fairly; changing business practices; measuring quality of life and achieving a successful UK transition within a globalised economy, as well as two process workshops: changing consumer behaviour and engaging politicians and the media.
Well-being and work-life balance were key themes of the day as was reconnecting with ourselves, reconsidering what it means to be human and deciding what we really want from our lives. And as Andrew Simms reminded us, not forgetting to have fun.
The conference was just the start. The ideas and proposals which were discussed in the workshops will be collated into a manifesto, which will outline how to achieve a steady state economy in the UK and will form the basis for the movement’s next step.
So what of Leeds now that the steady state caravan has left? There’s a buzz in the city; people who missed the conference feel that they’ve lost out and others who had never heard of a steady state economy have seen the local media coverage. With all the crises and government cuts they may even be starting to question whether there is another, better way.
Three years ago, I felt like a bit of a loan voice. I’d been increasingly highlighting my concerns about a mounting reliance on a magic bullet (or a number of them) to mitigate against climate change. But, most of the time, I just got glazed looks, or doe-eyed responses from proponents of technological fixes (e.g. nuclear or carbon capture and storage) that: ‘all I care about is preventing runaway climate change’. As if I don’t.
But now, two mechanical engineers, Patrick Moriaty and Damon Honnery have published a paper that sums up part of my argument.
There are two rather encouraging things about Julian Huppert, the new Liberal Democrat MP for Cambridge. First of all, he’s got a Ph.D in biological chemistry, making him one of the few MPs with experience of science and hence a likely advocate of heeding scientific warnings on climate change and other environmental issues, no matter how inconvenient to politics. Second, Huppert’s maiden speech to the House of Commons yesterday contained these wise words:
…economic growth is not all that we should care about. We know that economic growth can lead to environmental damage, but the issue is broader than just that trade-off. We are too fixated on GDP, and make too much of whether it has gone up or down by 0.2%. It does not measure the things we ought to care about – education, health, or well-being. If there is an oilspill off the coast, which we then clear up, more or less well, GDP has increased, but I’m not sure any of us would be delighted with that outcome.
We need to focus more broadly on personal issues such as well-being and happiness. We need to develop rigorous metrics to measure this wellbeing throughout society, and then ensure that we bear them in mind when developing policy. For we already know a lot about well-being – it doesn’t change much with income, above a figure of around 7,000 pounds per annum. It changes with the quality of the environment, with the number of friends and other social bonds we have, with the activities we get involved in, with family and with community.
His words bring to mind those of Robert F. Kennedy, the celebrated US Senator and civil rights activist, when he addressed the University of Kansas in 1968. In fact, it was Kennedy’s words that inspired nef to develop National Accounts of Well-being, the first comprehensive international analysis of personal and social well-being. In other words, exactly the kind of rigorous metrics that Dr Huppert rightly calls for.
Professor Herman E. Daly is an ecological economist at the School of Public Policy, University of Maryland and Author of Steady-State Economics
“We are capable of shutting off the sun and the stars because they do not pay a dividend.” — John Maynard Keynes, 1933
“Let’s build a smarter planet.” This is IBM’s inspirational slogan, intoned as a benediction at the end of their 2010 advertisements. They do not say, “Let’s make a smarter adaptation to our planet Earth, out of which we were created and by which we are sustained.” It is the planet that is insufficiently smart, not its evolutionary prize-winning, big-brained, star tenant.
What makes IBM think that the planet is dumb? Well, obviously the mentally challenged Earth does not know how to keep on accommodating our continual economic growth, so we must redesign it with that remedial instruction in mind. For example, our growth requires fossil fuels, but when we burn a lot of them the resulting atmospheric CO2 slows down the radiation of heat back to outer space, heating up the stupid planet and causing dumb climate change. It would be easier to radiate heat energy out and make more thermal room for necessary fossil fuel burning if only we had less solar energy coming in. So a smarter planet would have a higher albedo to reflect more of that troublesome incoming solar radiation. Blasting light-reflecting particles of sulfur into the stratosphere or troposphere should raise the planet’s IQ a great deal.
This sophisticated planet-smartening pedagogy is known as geo-engineering. It will cheaply re-engineer the planet to allow BP to feed the sacred flame of economic growth by drilling deeper holes in more precarious places to pump more oil. That in turn will supply NASA with the resources to build more rockets, thereby to fulfill our cosmic destiny to escape this terminally dumb planet and build a really smart one from scratch in a better location. Scientists have long realized that geo-engineering and other retrofitting measures, while necessary to buy time for building up evacuation capacity, cannot be the final solution for a congenitally moronic planet. And if meanwhile an occasional oil spill reduces the photosynthetic capacity of life in the Gulf of Mexico — well, we have just seen that our silly planet already allows in too much solar energy, so if we reduce that inflow we will not have to trouble ourselves with converting it into food energy. Furthermore when NASA, BP, and IBM finish building our new smart planet, it will contain a new and smarter Gulf of Mexico.
To sum up, by serving only the interests of the growing economy, global corporations like IBM are providentially led, as if by an invisible hand, to also build a smarter planet! Of course, unlike Adam Smith, they do not really believe in any deistic providence with its invisible hand that converts private greed into public good. They know from modern science that random mutation plus natural selection explains everything, and that free will and purpose are illusions. But some of these illusions have survival value and must be persuasively advertised to secure support from the tax-paying masses (science is expensive) — at least until IBM, BP, and NASA have finished building a planet so smart that its inhabitants can safely be dumb robots.
Originally posted at The Daly News, blog of the Centre for the Advancement of the Steady-State Economy.
Saamah Abdallah is a researcher at nef‘s Centre for Well-being.
There are few who believe that all is well with the world and that we can just carry on as before. Where there is disagreement, it seems, is on how much needs to change. Amongst the leading political parties in the UK, it seems the answer is “as little as possible”. But at the 2nd Degrowth Conference (or Decreixement in Catalan), held in Barcelona this March, we got a flavour of a broader range of answers to this question and, indeed, potentially a new social movement. The concept of ‘green growth’ (investing in renewable and new technologies allowing economic growth without exceeding physical limits) has all but been abandoned by this community – demonstrated to be an insufficient answer to environmental crises by nef’s The Great Transition and Growth isn’t Possible and by the Sustainable Development Commission’s Prosperity without Growth.
Rather the debate centres around what more should, or needs to change, along with an end to economic growth. Is capitalism compatible with degrowth? How about markets? Indeed the entire modern world and industrialisation were questioned by some at the Conference.
Two years ago, attending the first degrowth conference, the concept was somewhat an academic curiosity. Now, with 500 attendees from 40 countries, there is a sense of a degrowth movement, albeit one that is trying to find its direction and a common narrative. The range of attendees – from academics to activists – was a strength; the conference reminded me of the European Social Forum, and the changes degrowth calls for cannot be achieved without such a range of actors. But it was also a challenge, with expectations from the conference so disparate. Whilst some attendees work closely with public bodies to explore aspects of degrowth, others were disgusted that even academic economists had been invited to the event.
So what common narrative may emerge? Well, degrowthers certainly recognise the fundamental role economic systems play in the environmental, social and economic crises we face. Furthermore, groups within the conference lay at least partial blame on the economic system for several other issues, including war, gender inequality, cultural imperialism and, of course, flat-lining well-being. This ‘joining the dots’ is key. There are many rally calls for social change. Where degrowth appears to be different is that it brings together so many apparently disparate issues. It is, as nef fellow Nic Marks would say, a platform with many doors. People are brought to it for all sorts of reasons. The shared understanding is of the primacy of the absurdities of the economic system – one which values a prison above an ecosystem, one whose own success leads to the redundancy of labour, and one which relies on the myth that infinite growth is possible on a finite planet – and the futility of attempting to tackle other problems until this economic system is contested. This understanding may help unite these different causes and concerns into a single and potentially powerful drive towards a Great Transition.
Coming back to the UK from Barcelona by train, we stopped at Cerbère, the first town in France as you come up the coast. Sharing its name with the dog that guarded the gates of hell, there was a sense of a place on a knife-edge. On the one hand it’s a dump, a town that grew out of the need to change train gauges on the border with Spain. A once famous hotel now looms in disrepair over the train tracks, the path from the centre to the train station appears to go through a sewage tunnel and, while we waited for our connecting train, someone set fire to some rags and through them onto the train tracks. But watching two strangers, a young black Frenchman and on old, probably American, man, with a guitar and all the air of a blues player from the 60s, meet, jam together and seemingly become friends, I got that cheesy warm sense of the good nature of humanity. There may be some differences and disagreements within the degrowth movement, but overall, it stands out as the most radical yet robust attempt to mobilise support for a better world – a more intelligent and coherent successor to the anti-globalisation movement of the nineties and the noughties. If that’s true, then we might just be able to turn back from the gates of hell.
The weekend papers reported that Vince Cable is in talks with HM Treasury about becoming Chancellor in the event of a hung parliament. Cable has been widely touted as the most trusted politician in the country, and would most likely to be a progressive choice for Britian’s economy, given his support for policies such as the Post Bank and the Robin Hood Tax.
But would Vince ever take the most radical step of all, and question whether economic growth is really the best compass to guide the progress of nations?
Sadly, it seems not. Speaking at a confrence last week, Cable took a swipe ‘environmentalists who advocate de-growth’. Explaining why environmental issues have slipped down the list of public priorities in recent months, the Shadow Chancellor for the Liberal Democrats said:
well, we’ve got zero growth in fact, we’ve got minus growth and it isn’t very nice. And I think people somehow wised up to this idea that all this puritanical non-consumption of resources we were being told was a good thing is actually really rather painful if you’re one of the people who was losing your job in the process. So recession has played very badly in terms of its environmental impact.
(Thanks to @adanylkiw for the transcript)
Herman Daly, professor of economics at the University of Maryland, is one of the very few voices within the economics profession who has the audacity to question the pursuit of economic growth at all costs. Of course, it wasn’t always that way: John Stuart Mill and John Maynard Keynes both thought that after a period of growth, economies would eventually reach a point of dynamic equilibrium. Professor Daly has just made his first excursion into the blogosphere with the brilliantly titled Daly News from CASSE, the Centre for the Advancement of a Steady-State Economy.
The term “economic growth” has two distinct meanings. Sometimes it refers to the growth of that thing we call the economy (the physical subsystem of our world made up of the stocks of population and wealth; and the flows of production and consumption). When the economy gets physically bigger we call that “economic growth”. This is normal English usage. But the term has a second, very different meaning – if the growth of some thing or some activity causes benefits to increase faster than costs, we also call that “economic growth” – that is to say, growth that is economic in the sense that it yields a net benefit or a profit. That too is accepted English usage.
Now, does “economic growth” in the first sense imply “economic growth” in the second sense? No, absolutely not! Economic growth in the first sense (an economy that gets physically bigger) is logically quite consistent with uneconomic growth in the second sense, namely growth that increases costs faster than benefits, thereby making us poorer. Nevertheless, we assume that a bigger economy must always make us richer. This is pure confusion.
That economists should contribute to this confusion is puzzling because all of microeconomics is devoted to finding the optimal scale of a given activity – the point beyond which marginal costs exceed marginal benefits and further growth would be uneconomic. Marginal Revenue = Marginal Cost is even called the “when to stop rule” for growth of a firm. Why does this simple logic of optimization disappear in macroeconomics? Why is the growth of the macroeconomy not subject to an analogous “when to stop rule”?
Professor Daly has contributed to nef‘s Other Worlds are Possible and wrote the foreword to National Accounts of Well-being. Read nef‘s own critique of economic growth in Growth Isn’t Possible and Growth isn’t Working.
Hat tip to Jeremy Williams for spotting this.
The notion that growth cannot continue indefinitely is still a young idea. Yes, it’s been around since the 70s, with the book The Limits to Growth. But it’s had little resources to really develop answers to the challenge of how to achieve a successful economy that does not depend on growth. Duncan Green, Head of Research at Oxfam GB, has written a blog criticising a recent event on Rethinking economic growth (also see my blog on it) which nef supported last month. He obviously agrees with the alarm call (that growth is not sustainable) – you can see that in his presentation of his to the Quakers Zero Growth Economy conference last year. But Duncan seems to expect solutions to these problems already and was disappointed at the scarcity of them at this event.
I shan’t attempt to stand up for all the speakers, but I would suggest that two of their publications at least (Tim Jackson’s Prosperity without Growth and nef’s Great Transition) do start to touch on some of the solutions to what is very admittedly a difficult problem. André Reichel’s suggestions for companies that do not require constant throughput of material production were also real practical solutions. Here are three parts of the solution. Just three:
- Steadily reducing working hours. Increases in labour productivity have typically meant that economic growth is required to keep steady employment. If productivity gains were taken as more free time, this would resolve this challenge. Take a look at our new report, 21 hours.
- Re-structured ownership. An economy dominated by shareholders who only take a stake in firms so as to make a quick profit is driven relentlessly to growth (see the work of Mathias Binswanger on this). It doesn’t have to be like this. Many forms of ownership, including small family businesses, co-operatives, communities, and the state, are not predicated on ever increasing returns on investment.
- Re-focussing measurement. Of course I mention that partly because at the centre for well-being we’ve been working on alternative measures of progress such as the Happy Planet Index and how they might help shift us away from the folly of the constant pursuit of growth. But also, Duncan himself has highlighted this as a key part of the shift away from a growth focussed economy.
Of course, these three solutions alone won’t solve all the world’s problems, and of course there are many interests who would oppose such changes, but they’re a start. More research is needed to better understand how a no-growth economy would work. And more advocacy is needed to promote the ideas around a stable economy. But until recently, this is not been something that big money was likely to get behind. However, things are beginning to change and there are signs of some forward thinking governments starting to invest in exploring alternatives to growth. Maybe then we’ll be able to have a few more answers for the man from Oxfam.
“Economic growth cannot continue as before”. “We need to consider the possibilities of de-growth”. These were some of the concluding remarks at the Growth in Transition conference held in Vienna last week. The kind of thing you hear radical economists and think tanks saying more and more nowadays. But here the context was a very different. A conference organised by the environment ministry of a European nation (Austria), and sponsored and supported by seven other ministries including the Federal Chancellery, and the Federal Ministry for Finance, the nation’s leading banks, main supermarket chain and the Chamber of Commerce.
The event was perhaps the first time that such a broad spectrum of mainstream bodies have agreed to confront the challenge of our times – how to transform our growth-hungry economy into something more sustainable, stable and socially just. Of course, not everyone jumped at the solution of doing without growth – and the rhetoric of ‘green growth’ continued to be bandied about. But in plenary on the morning of the second day, over 40 minutes, Professor Felix Ekardt of the University of Rostock drilled home the message that such green growth was not enough – that we needed to stop growing. You could almost hear the audience wincing.
It’s clear that this is a message which will take some time to sink home. A representative of the Austrian National Bank spoke excellently on the need to shrink the financial system, reduce inequalities and reduce debt. But she quickly, and without much discussion, expressed the faith that economic growth could be decoupled from resource use. I approached her later and highlighted that, allowing for ‘business-as-usual’ economic growth, this would require a 95% increase in resource efficiency by 2050 (as nef has recently calculated in the report Growth isn’t Possible). When I asked her whether we can really gamble humanity’s fate on the ability to achieve such efficiency gains, she did something quite unusual. She squirmed. It was only momentary, and was soon followed up by a repetition of the same mantra of efficiency. However, I have hope for her.
The world is not run according to climate science. Amid the almost hysterical jeering since the Copenhagen climate summit, it’s a fact worth remembering. If things were done with one eye carefully checking the planet’s ecological engines and the resource levels in its fuel tank, it would look very different The largest indoor snow park in the world would not, for example, be in the roasting Middle Eastern emirate of Dubai. Public transport would be quick and cheap, and Richard Branson would be an unknown gardener, quietly cycling back and forth to his organically-run allotment.
Yet fear of the likely adjustments needed to halt dangerous climate change seems to fuel the vitriol of the vociferous minority attacking climate science. It’s odd when you think what those changes might be. A cartoon currently going around sums it up. An academic-type gives a lecture, listing the outcomes of climate action: energy independence, clean water, clean air, green jobs, liveable cities, healthy children etc etc, while a man in the audience blusters, “But what if it’s a big hoax and we create a better world for nothing?”
And, it’s not, of course, a hoax. The basic chemistry of global warming has been understood and remained unchanged for around 200 years. Stories concerning the science in recent weeks have been of the type, “how long can you hold your breath?” Not “can we actually breathe underwater?” At the same time, observed trends on greenhouse gas emissions, measured since the last major report by the Intergovernmental Panel on Climate Change (IPCC), reveal the opposite of scaremongering.
If anything, the IPCC has been too conservative, having underestimated how quickly we would be pushed toward dangerous change. Actual carbon emissions have been beyond even their “most fossil-fuel-intensive scenario”. Crowing over the inclusion in its last report of an erroneous date for the melting of Himalayan glaciers drowned out a new report from the World Glacier Monitoring Service, that detailed an “unbroken acceleration in melting” of glaciers around the world.
Sadly, right now, the climate change deniers have little to fear. We have no policies or actions remotely equal to the threat. Why is that? It is partly because the world is not run in respect of basic, well-understood physical laws. It is run according to the dictates of an altogether more variable discipline, economics, whose insights and proposals are subject to a weaker scrutiny. The real world ticks reliably according to the laws on thermodynamics and the conservation of energy. Such consistency cannot be claimed for the notion that a deregulated, greed-driven approach is the most efficient way to organise banking. But what if economic policy was subject to the same standard of evidence and review as climate science?
What would natural science make of the assumptions underlying mainstream economic models? They include the classic assertions that we are all perfectly rational, make choices that are unaffected by the behaviour of others, and that we have “perfect information”, knowing everything important there is to know. Or there’s the one in which an infinite number of small firms compete in open markets with no barriers to entry (think Walmart, Microsoft, Amazon, Tesco, Google). And the idea that consumption can grow infinitely on a finite planet.
Orthodox economics is based on simplifications that so distort the real world as to make it unrecognisable, yet its basic tenets are credulously repeated on an almost daily basis in national newspapers and on television news. A genuinely evidence-based approach to economic policymaking would not produce a system remotely like the one we have, the business-as-usual version that many climate sceptics seem so eager to defend. Given its task, the vast range of subjects covered, the thousands of scientists involved, and the sheer size of its reports, what’s stunning about the IPCC’s work is that comparing it to any economic analysis used to actually run the world is like comparing the complete Oxford English Dictionary to a guide to slang published by the Sunday Sport.
Elsewhere, some voices have called for there to be a separate climate sceptics’ report. On one hand, this misses the point. If the sceptics’ science was good enough to be published in decent, peer-reviewed journals, it would be considered alongside everything else by the IPCC. But on the other hand, subjecting the deniers to the same degree of rigorous review as everyone else is a rather delicious prospect. If that was done, the final report would likely be short indeed.
And, on current trends, it is still the case that by the end of the year 2016, the amount of greenhouse gases in the atmosphere will make it unlikely that we’ll stay below the critical 2°C temperature rise. It’s 82 months and counting…