"Is the end of growth the end of markets? The end of capitalism? Most definitely not. We will still need competition, we will still want ideas and innovation to flourish and we will want capital allocated as efficiently as possible. Markets are good at all those things."
New article by Paul Gilding ("The Great Disruption") which shows that post-oil and post-growth thinking is still struggling big time with the question of the balance between "state" and "market". Phrases like: we need to accept the earth’s limits "as absolute boundaries of the market system" are unhelpful. We need much more sophisticated blueprints of how a just society could produce and consume within ecological and energy limits.
“A World Bank leader who once again comes from Wall Street or from US politics would be a heavy blow for a planet in need of creative solutions to complex development challenges. The Bank needs an accomplished professional who is ready to tackle the great challenges of sustainable development from day one.” (Source: Project Syndicate)
The replacement of Robert Zoellick at the helm of the World Bank is an opportunity to give the US-led institution a new direction according to Jeffrey Sachs in Project Syndicate.
"It is time to acknowledge an uncomfortable truth about the public status of economics as an expert discipline: it has grown to be far more powerful as a tool of political rhetoric, blame avoidance and elite strategy than for the empirical representation of economic life. This is damaging to politics, for it enables value judgements and political agendas to be endlessly presented in ‘factual’ terms. But it is equally damaging to economics, which is losing the authority to describe reality in a credible, disinterested, Enlightenment fashion."
Brilliant analysis in Open Democracy on the perverse power of economic technocrats on our democratic institutions.
This text is the first of a series of articles under the heading “Uneconomics” which aims to “challenge the dominance of orthodox economics in public debate, highlighting alternative perspectives on the economy and the benefits that they might bring to informing policy and raising public understanding of the current crisis.”
“Twenty years ago, an historic environmental summit in Rio de Janeiro produced groundbreaking treaties and high hopes that pressing issues would be addressed. But as organizers prepare for the Rio+20 conference in June, there is little on the agenda to suggest any substantive action will be taken.” (Source: Yale Environment 360)
Brilliant and realistic analysis by New Scientist’s Fred Pearce on the chances of Rio+20 to solve any of the unsustainability challenges.
Two extracts are worth quoting:
“Tinkering with business as usual is not enough. What is needed is new environmental governance for a crowded planet running on empty. It is time to reboot the Rio+20 summit agenda.”
“The summit badly needs outside input. Right now, the official Rio+20 agenda and draft text show few signs that politicians are willing to go beyond the green-sounding rhetoric we heard from their predecessors in the same city two decades ago. It wasn’t enough then. It certainly isn’t enough now.”
“The idea to create a United Nations environmental agency following the model of the World Trade Organization (WTO) or the International Labor Organization (ILO) is growing.” (Source: UNCSD)
Sounds nice in principle but what will be its powers and its mandate? What will it do better UNEP now? One thing is sure:it should NOT be called “environmental” as that will push it again into the soft corner. it should deal with rethinking and re-modelling the global economy for the post-carbon, resource-constrained future.
“The public is up in arms about some of the big bonuses being paid to the CEOs of big bailed-out banks.”
Very good article on Harvard Business Review blog with striking conclusion: "The notion of the superstar CEO has been a fixture of business life for at least two decades and it is at the heart of the compensation problem that continues to vex the public. It’s time we consigned the myth to the dustbin."
“Just as the financial industry caused a near-meltdown of the global economy in 2008, the food industry has facilitated the explosion of obesity around the world.”
Another impressive opinion piece by Kenneth Rogoff at Project Syndicate. Using the example of the food industry he attacks the "pathological regulatory-political-economic dynamic" of today’s capitalism.
Two extracts worth quoting:
“Coronary capitalism is fantastic for the stock market, which includes companies in all of these industries. Highly processed food is also good for jobs, including high-end employment in research, advertising, and health care.”
“If our only problems were the food industry causing physical heart attacks and the financial industry facilitating their economic equivalent, that would be bad enough. But the pathological regulatory-political-economic dynamic that characterizes these industries is far broader. We need to develop new and much better institutions to protect society’s long-run interests.”
“The new UN report on global sustainability signposts some of the big policy moves needed to drive the economy on to a sustainable path…” (Source: The Guardian)
Simon Zadek evaluates the recent UN Sustainability Panel’s report in preparation for Rio+20.
“Ultimately, the panel’s efforts are to be applauded. While not a finished work, the panel has done its job, and what was needed, in signposting some of the big policy moves, all perfectly feasible, which are needed to shunt the global economy onto a sustainable pathway.”
In my own reading of the report, the glass is not so much half full as half empty. Indeed, the report signals some of the necessary policy moves but still counts on economic growth to get us out of the unsustainability mess. As the Brundtland report before, this is not the blueprint for a global economy which recognises that we have overshot the planet’s limits to growth.
In Open Democracy, Simon Zadek has written a brilliant critique of what is wrong with Davos in the form of a reaction to a piece by Martin Wolf of the Financial Times.
Some highlights of this must-read article:
On Martin Wolf’s (and the FT’s) views on how to fix the financial sector (and capitalism):
“Fixing finance, the elephant in the room, needs in his view higher capital ratios, stronger oversight, and smarter consumers. Whilst no one would disagree with such common sense advice, there are equally few who would agree that these actions will fix the problem. They leave in play perverse incentives, conflicts of interest and the entire, under-regulated shadow banking system that is busy repeating yesterday’s profitable errors.”
“Frankly, the main difference between corruption in developed economies compared to weakly governed societies is that corruption in the former has been legalised into super-profit taking, obscene remuneration, laying-off risks on the poor, and systematic under-contributions of the rich and profitable through the tax system.”
On the fact that Wolf (and other economists") keep seeing the environment as an “after-thought” to “serious economic analysis”:
“… you appear to see no links between the state of the economy and the state of the natural ecology that sustains our lives on this planet. The real problem with the financial markets is not that they are unstable and liable to periodic implosion – it is that they are not doing their task of investing our money in creating a resilient, sustainable economy that will benefit current generations and those to come. Endemic short-termism is another way of saying that investors are disinterested in what creates real value, financial or otherwise, but have decided that competing with each other to make money out of money is a simpler way to get rich. Even if you are unwilling to value what cannot be monetised, take a look at how catastrophic last year was for the insurance business because of natural disasters, or the speculation-driven food price peaking just before the Egyptian revolution.”
On the Great Transformation (the theme of Davos this year) and the impossibility of the Clubs of the powerful to embrace the Disruption needed for this transformation:
“It is tough to seek to disrupt the lives and livelihoods of one’s own members, sponsors and friends. That is certainly true in Davos, but is also painfully true in the inner world of international NGOs, or the bureaucracies of government and international organisations. Try supporting nuclear in a Greenpeace meeting and see how far it gets you. But it is disruption that is needed, of that there is no doubt. The Davos strapline, the Great Transformation, is not conceivable without the Great Disruption, and there are few if any incumbents that will welcome that.”
“At Davos this year, the world’s economic and political leaders stand warned: do globalization better, or it will be derailed by the growing legions of the discontented.” (Source: Project Syndicate)
Excellent analysis by UN Special Food Rapporteur Olivier De Schutter of the failures of capitalist globalisation.
The big question is whether globalisation can "be done better" under current rules of free and fast movement of big capital, easy delocalisation for industries and consumer demand for low prices of consumption products. How can governments do globalisation better whe they have no grip on the systems and values of production and consumption. This is where we really need a complete overhaul of existing capitalism but who will drive this?