"Whether capitalism can be compatible with a beyond-growth wellbeing economy is as yet unclear. What is called for is a shift away from the commodification of everything and to a market system not based on profit maximisation but the ecological efficiency of the equitable satisfaction of wellbeing-needs. Whether the entities we call ‘companies’ will morph to be compatible with such a paradigm or new enterprises, more like co-operatives, family, employee and community owned enterprise will be the norm in this new paradigm is also not yet clear. But what is clear is that we can’t go on in the same blind fashion we are currently pursuing." (Source: Energy Bulletin)
Jules Peck of the New Economics Foundation asks some interesting questions in this article republished on the Energy Bulletin.
Simon Zadek explains on his blog why sustainability has reached its "valley of death" and what can be done to get it out of this predicament.
"De-materialised products, rentalised markets, renewable power and sustainability standards are amongst the social innovations that have provided inspiration and advances in offering consumers greener choices. Yet whilst our call to arms has been for transformation, we are, in practice, celebrating incremental changes in the spirit of increasingly desperate optimism."
“Exiting sustainability’s valley of death is not about public policy, business initiative, or citizen action – it is about all three and their dynamic alignment with each other. “
The thought that we can have human progress without constant economic growth is absolute nonsense for most political and business decision-makers. And their scepticism is understandable. Look at what negative growth has brought about over the last 18 months in terms of people losing their jobs or houses and governments blowing up their financial deficits.
That said, the debate about limits to economic growth and the “post-growth” economy for the developed world is re-igniting. There was a similar debate in the 1970s but it had very little impact on the traditional narrative of societal progress. Now, with the climate crisis, new resource scarcity and other unsustainable trends (biodiversity, water, soil, food), the issue is back on the table, although not yet seriously on the political agenda. Only a “narrower” debate about the measuring of economic growth has reached some policy-makers (the EU’s “GDP and beyond”, the Stiglitz-Sen report for French President Sarkozy and the OECD project “Measuring the progress of societies”).
There are some new developments though which indicate that the subject might become a political hot potato in the next years, especially if the current economic crisis might go into a second round and our developed economies find it hard to get back to 3% GDP growth figures and more.
- In France, there is a strong movement of “décroissance” (de-growth) which gets regular attention even in established media like Le Monde.
- In the UK, the Sustainable Development Commission last year published an excellent study “Prosperity without growth?”, questioning the traditional “green economy” narrative of “decoupling economic growth from its resource use and environmental impacts”.
- Last week, the British New Economic Foundation came out with another, even more radical report which asserts that “Growth isn’t possible” .
- And, last but not least, in an interview with The Ecologist, Deutsche Bank senior economist Pavan Sukhdev says: “I do believe society can get better, people can get happier and economies can get more robust whilst not actually increasing GDP, production or growing in the classical way”.
Unfortunately, at EU-level, these new stories about future prosperity and the REAL transformative agenda are seriously absent from the EU-2020 Post-Lisbon strategy debate.
It is that time of year again. The time that anyone who has any influence (and the illusion of power) will want to be on the snow hills of Swiss Davos to show off how important he or she is. And yes, I would not mind being there myself but, then again, I probably do not have the story “Davos-man” loves to hear. Nor do I have the influence
This year’s Davos has as its motto “Rethink, Redesign, Rebuild”.
- Rethink “business models, financial innovation and risk management”;
- Redesign “institutions, policies and regulations”, and
- Rebuild “trust”.
Wonderful how these PR companies always manage to find “3-somethings” for what needs to be done (yes, guilty myself too, this blog being called 3E…).
Problem is: there are a few RE’s missing if we want to have the correct diagnosis of our failing economic system and as every good doctor knows: without good diagnosis, no good medicine.
What about resilience (to the coming shocks of our “long descent”) and re-discovering biophysical limits to growth? After the “Great Reckoning” (Gillian Tett in the FT), maybe it is time to start re-questioning our economic growth paradigm and to review our concept of prosperity?
I wonder when Davos Man will have the courage to tackle those questions. Always ready to come to Davos 2011, Mr Schwab, to put these challenges to your favorite power elites!
In all the hyperbole about the COP15 meeting in Denmark, you might be forgiven to think that this event is the last chance of humanity to save Planet Earth.
Well here is the good news: I am convinced that the planet does not need saving. Gaia can take care of itself, thank you, even with all the plagues we are trying to throw at it. What is at stake is not the planet but the future of our societies. You see, I am not even saying “humanity”, because – fortunately or maybe unfortunately -, we are a resistant breed and I am sure before we reach Venus-like runaway temperatures, our current economic system will have collapsed and new (probably agricultural) societies will re-emerge. It will be a difficult process with some serious die-offs but on the whole the planet will survive and lots of species will survive – including species man.
Now for the bad news: the problem with Copenhagen is that the most important questions facing our human future are not even on the table. Or, at least, not all of them. Climate change is just one of the heads of the “unsustainability” hydra (remember the Greek mythology beast that grew two new heads when you chopped off one?).
So what is not being discussed at Copenhagen?
- the energy descent and the declining Energy Return on Energy Invested of new, so-called energy solutions. No there is no silver bullet, there is not even a bullet with which to kill the fossil-fuel devil. All “energy solutions” (even renewables) will be unable to replace the greatest gift of Mother Nature ever: oil. The energy density of oil is what made our Western lifestyle possible.
- the constant and dramatic decline of biodiversity and eco-system services, the physical basis of all our life on this planet;
- the regional shortages of fresh water;
- the soil, fisheries, food challenges;
- the growing population taboo
- and so on, and so on.
Get it? As long as we cannot as one humanity of this Spaceship Earth formulate what is really the problem, how we would be able to come up with effective solutions?
Is there a way out? Yes there is, it is called lifestyle revolution, just redistribution and new global governance. It is called “prosperity without growth”.
Are we ready for it? Unfortunately not. Copenhagen will confirm that
- The Economist (“Fuelling Fears”) as well as MIT’s Technology Review (“The Coming Nuclear Crisis”) have excellent coverage of the critical report of Michael Dittmar (Swiss Federal Institute of Technology in Zurich) on the “renaissance” of the nuclear industry. Conclusion: “countries that rely on uranium imports such as Japan and many western countries will face uranium .shortages, possibly as soon as 2013.”
- The UK’s New Economics Foundation has a new important publication: “Other worlds are possible. Human Progress in an Age of Climate Change”. The study is a remedy against our fixation on quantitative economic growth. To be read together with Tim Jackson’s “Prosperity without growth” .
- Colin Campbell and Walter Ryan-Purcell have a great historical overview of the social, economic, political and financial impacts of peak oil. A must-read for anyone concerned about more than climate change.
- The French Parliament has adopted the first package of laws resulting from the 2007 multi-stakeholder debate on the environment (the “Grenelle I”). The second package is to be adopted at the end of the year. Both packages make France one of the leaders on sustainable development, although the Greens have criticised these laws for not going far enough. Read AFP and Le Monde. A summary of main policies in Grenelle I can be found on the government’s portal.
- As oil prices are nearing the 70 dollar mark again, the Oil Drum has an excellent analysis: “Oil price, where next”?
Five years ago, when the Eastern European countries joined the EU, the media sang praises for the New Europe which would be more liberal, more open and more competitive than its Western neighbours (“Old Europe”). Now it looks like Old Europe will have to save the economies of the “modern” Europe from bankruptcy. What went wrong?
The economic crisis we are facing is the crisis of a market fundamentalism which was wholeheartedly embraced and promoted by most of the Eastern and Central European member states. Huge financial investments, low labour costs and even lower tax burdens made countries like the Baltics, Slovakia or the Czech Republic the favorites of the ”Lisbon Agenda lovers”.
Unfortunately, now that the old neo-liberal formulas have been discredited, the economic growth model of these countries has fallen flat on its face too. It could have been very different if the new member states would have looked to the future instead of to the examples of the Western past when building their new economies. Instead of trying to create tax havens and stimulating the delocalisation of car and other manufacturing industries via low labour costs, they could have become the leaders of the green industrial revolution which would have protected them better against the storms of the current and future economic downturns.
But then again, they probably lacked the visionary political leadership, the enlightened entrepreneurs who looked further than quick richness and the strong civil society to educate and prepare its citizens for a different European path to quality of life instead of more consumption.
What is even more worrying is that these countries, whose European aspirations and dreams have now been broken, could well become the breeding ground for a new authoritarian radical populism which could turn Jeremy Rifkin’s “European Dream” into a new European nightmare.
If this happens, the responsibility of the old member states will be overwhelming. Not because they did not bail out the troubled Eastern countries when they got into to trouble but because they send them unto the wrong road (the neo-liberal Lisbon-agenda-inspired growth path) in the first place.
Economy Nobel prize winner Joseph Stiglitz has the accurate analysis of this week’s meltdown of the financial markets in the Guardian:
“The new low in the financial crisis, which has prompted comparisons with the 1929 Wall Street crash, is the fruit of a pattern of dishonesty on the part of financial institutions, and incompetence on the part of policymakers.
We had become accustomed to the hypocrisy. The banks reject any suggestion they should face regulation, rebuff any move towards anti-trust measures – yet when trouble strikes, all of a sudden they demand state intervention: they must be bailed out; they are too big, too important to be allowed to fail.
It was all done in the name of innovation, and any regulatory initiative was fought away with claims that it would suppress that innovation. They were innovating, all right, but not in ways that made the economy stronger. Some of America’s best and brightest were devoting their talents to getting around standards and regulations designed to ensure the efficiency of the economy and the safety of the banking system. Unfortunately, they were far too successful, and we are all – homeowners, workers, investors, taxpayers – paying the price”.
There are a few lessons to be learned from this financial crisis.
To start with, it is time to leave the neo-liberal deregulation religion behind us. The belief that “the market” (whatever that is) will solve all problems (including climate change, the “biggest market failure ever”) has been enough discredited after 25 years. Yes, it has created enormous wealth for the wealthy (who now own their own private islands and jets and have magazines on “how to spend it”), but the average citizen has not become more happy and extreme poverty still rules this world. And the price of this deregulation capitalism has been the collapse of the fragile ecosystems that make our life on this earth überhaupt possible and the greedy over-consumption of essential finite energy sources and raw materials.
After this collapse of wild-west Wall Street capitalism, It might be time again for a period of strong governmental intervention but without resorting to the old social-democrat neo-Keynesian remedies or authoritarian solutions (. What we need is smarter regulation (not Verheugen’s “less red tape” disguised as “better regulation”). Unfortunately, we might need a new generation of smarter policymakers to make this happen. The politics of media spinners and one-liner champions is not going to bring us this smarter regulation. So we are in a bit of a mess here.
One of the first smart moves policymakers should make in this crisis is to establish a worldwide floor price for oil. Indeed, one of the biggest victims of the current market meltdown could be the new “green energy” wave. Whatever the economic crisis, the climate/energy crisis will not go away but might disappear of the short-term political agenda. Therefore, we need incentives to keep the flight out of fossil fuels and into renewable and energy savings solutions for our future economies alive. Let’s not make the same huge mistake as we made after the 70s oil crisis.
We have just entered the difficult transition tunnel to a new sustainable world. There will be many more shocks on the way and our democratic systems will be heavily tested over the next 15-20 years. Energy wars and further globalisation setbacks will not be avoided. The faster we start finding the new political generation which can give us the new smarter regulation, the quicker we will see the end of the tunnel.