Handbook on Growth and Sustainability 178347355X, 9781783473557

Citation preview

HANDBOOK ON GROWTH AND SUSTAINABILITY

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 1

01/06/2017 16:50

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 2

01/06/2017 16:50

Handbook on Growth and Sustainability

Edited by

Peter A. Victor Professor, York University, Canada

Brett Dolter Post-doctoral Research Fellow, University of Ottawa, Canada

Cheltenham, UK • Northampton, MA, USA

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 3

01/06/2017 16:50

© Peter A. Victor and Brett Dolter 2017 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2016962563 This book is available electronically in the Economics subject collection DOI 10.4337/9781783473564

ISBN 978 1 78347 355 7 (cased) ISBN 978 1 78347 356 4 (eBook) Typeset by Servis Filmsetting Ltd, Stockport, Cheshire

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 4

01/06/2017 16:50

Contents List of contributorsix Acknowledgementsxii   1 From growth to sustainability Brett Dolter and Peter A. Victor

1

PART I  WHAT IS GROWTH? WHAT IS SUSTAINABILITY?   2 Growth, development and learning to live in a finite world Peter Timmerman

17

  3 Sustainable development, limits and growth: reflections on the conundrum38 James Meadowcroft   4 Sustainability metrics and their use Peter Bartelmus

59

PART II  CAN GROWTH BE SUSTAINABLE?   5 A new economics for our full world Herman Daly

85

  6 Ecological modernization and green growth: prospects and potential107 Paul Ekins   7 Climate change, growth, and sustainability Anders Hayden

138

  8 Climate change, happiness and income from a degrowth perspective160 Filka Sekulova, Giorgos Kallis and François Schneider   9 Green agrowth: removing the GDP-growth constraint on human progress  181 Jeroen C.J.M. van den Bergh

v Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 5

01/06/2017 16:50

vi  Handbook on growth and sustainability PART III IS THE END OF GROWTH NIGH? SUSTAINABILITY CONSTRAINTS ON GROWTH 10 Innovation, technology, and economic growth Matthias Ruth 11 Energy, economic growth and sustainability: an energy primer for the twenty-first century Charles A.S. Hall

213

232

12 Shortcomings of a growth-driven food system Michalis Hadjikakou and Thomas Wiedmann

256

13 Land as a planetary boundary: a socioecological perspective Helmut Haberl and Karl-Heinz Erb

277

PART IV  ARE THERE IMPERATIVES FOR GROWTH? 14 Prometheus unwound: shorter hours for sustainable degrowth Andrea Levy

303

15 Is there a monetary growth imperative? Sebastian Strunz, Bartosz Bartkowski and Harry Schindler

326

16 Thomas Piketty, growth, distribution and the environment Steven Pressman and Robert H. Scott, III

356

17 Growth and sustainability in a material world: the self-reinforcing cycle of population, GDP and resource use Marina Fischer-Kowalski and Julia K. Steinberger

372

PART V IS IT POSSIBLE TO MOVE BEYOND GROWTH CULTURE? 18 Economic growth, biophysical limits and sustainability in economics textbooks since 1948 Tom L. Green

397

19 From growth to sustainability: cultural transition beyond consumerist lifestyles Halina Szejnwald Brown and Philip J. Vergragt

420

20 Navigating the Anthropocene: environmental politics and complexity in an era of limits  439 Stephen Quilley

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 6

01/06/2017 16:50

Contents  ­vii 21 Questioning sustainability in Latin America María Páez Victor

471

22 Going down? Human nature, growth and (un)sustainability William E. Rees

498

23 Beyond consumer capitalism: foundations for a sustainable prosperity522 Tim Jackson Index 545

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 7

01/06/2017 16:50

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 8

01/06/2017 16:50

Contributors Peter Bartelmus, Honorary Professor of the Bergische Universität Wuppertal, Germany. Bartosz Bartkowski, Research Fellow at the Helmholtz Centre for Environmental Research – UFZ, Germany. Halina Szejnwald Brown, Professor of Environmental Science and Policy, Clark University, Canada. Herman Daly, Professor Emeritus, School of Public Policy, University of Maryland, USA. Brett Dolter, Post-doctoral Research Fellow at the Institute of Environment, University of Ottawa, Canada. Paul Ekins, Professor of Resources and Environmental Policy, UCL Institute for Sustainable Resources, University College London, United Kingdom. Karl-Heinz Erb, Associate Professor at the Institute of Social Ecology, Alpen-Adria Universität Klagenfurt, Austria. Marina Fischer-Kowalski, Professor of Social Ecology at Alpen Adria University, Senior Lecturer at the University of Vienna, Austria. Tom L. Green, Associate Professor, Biology Department, Faculty of Natural Sciences and Mathematics, Universidad del Rosario, Bogotá, Colombia. Helmut Haberl, Associate Professor at the Institute of Social Ecology, Alpen-Adria Universität Klagenfurt, Austria. Michalis Hadjikakou, Senior Research Associate in the Sustainability Assessment Program, School of Civil and Environmental Engineering, University of New South Wales (UNSW) Sydney, Australia. Charles A.S. Hall, Professor Emeritus, Department of Environmental and Forest Biology, State University of New York College of Environmental Science and Forestry, USA. Anders Hayden, Associate Professor in the Department of Political Science, Dalhousie University, Canada. ix Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 9

01/06/2017 16:50

x  Handbook on growth and sustainability Tim Jackson, Professor of Sustainable Development and Director of the Centre for the Understanding of Sustainable Prosperity at the University of Surrey, United Kingdom. Giorgos Kallis, ICREA Research Professor at Institut de Ciència i Tecnologia Ambientals (ICTA), Spain. Andrea Levy, PhD (History), independent scholar, columnist and coordinating editor at Canadian Dimension magazine. James Meadowcroft, Professor in the School of Public Policy and Administration and in the Department of Political Science at Carleton University, Canada. Steven Pressman, Professor of Economics at Colorado State University, USA. Stephen Quilley, Associate Professor at the School of Environment, Resources and Sustainability, University of Waterloo, Canada. William E. Rees, Professor Emeritus, School of Community and Regional Planning, University of British Columbia, Canada. Matthias Ruth, Professor in the School of Public Policy and Urban Affairs and the Department of Civil and Environmental Engineering, Northeastern University, USA. Harry Schindler, PhD candidate at the Helmholtz Centre for Environmental Research – UFZ, Germany. François Schneider, Associate Researcher at the Universitat Autònoma de Barcelona, Spain. Robert H. Scott, III, Associate Professor of Economics and Finance, Monmouth University, USA. Filka Sekulova, Postdoctoral Researcher at the Universitat Autònoma de Barcelona, Spain. Julia K. Steinberger, Associate Professor in the School of Earth and Environment at the University of Leeds, United Kingdom. Sebastian Strunz, Research Fellow at the Helmholtz Centre for Environmental Research – UFZ, Germany. Peter Timmerman, Associate Professor in the Faculty of Environmental Studies, York University, Canada. Jeroen C.J.M. van den Bergh, ICREA Research Professor at the Institute of Environmental Science & Technology of Universitat Autònoma de

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 10

01/06/2017 16:50

Contributors  ­xi Barcelona, Spain; Professor of Environmental and Resource Economics in the Faculty of Economics & Business Administration and the Institute for Environmental Studies, VU University Amsterdam, the Netherlands. Philip J. Vergragt, Fellow at the Tellus Institute; Research Professor at Marsh Institute, Clark University, USA and Professor Emeritus of Technology Assessment at Delft University of Technology, the Netherlands. María Páez Victor, Sociologist, Victor Research, Toronto, Canada. Peter A. Victor, Professor in the Faculty of Environmental Studies, York University, Canada. Thomas Wiedmann, Associate Professor in the Sustainability Assessment Program, School of Civil and Environmental Engineering, University of New South Wales (UNSW) Sydney, Australia.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 11

01/06/2017 16:50

Acknowledgements A collection of original chapters such as this is based on the contributions of many people. First and foremost are the authors who accepted our invitation to write highly readable, well-researched, up-to-date chapters on so many aspects of growth and sustainability. Our debt to them is enormous. We also appreciated the encouragement and support that we received from the very professional staff at Edward Elgar. We want to thank Alan Sturmer, Executive Editor, whose idea it was to produce the handbook and who gave us advice on a number of issues throughout the project. We also gratefully acknowledge Senior Desk Editor Caroline Cornish, Assistant Editor Karissa Venne and Editorial Assistant Erin McVicar for their invaluable editorial help. The marvellous Sophie Sanniti, a graduate student in the Faculty of Environmental Studies at York University, supported us with great efficiency as we reviewed the draft chapters, by checking tables, figures, notes and references and generally keeping us on track. Finally we thank three fellow ecological economists who discussed with us at the outset the balance of issues and ideas that they thought should be reflected in the handbook: Ed Crummey, Andreas Link and Eric Miller. We hope that they like the outcome.

xii Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 12

01/06/2017 16:50

1  From growth to sustainability Brett Dolter and Peter A. Victor

OVERVIEW In Paris, on 14 December 1960, the member governments of the Organisation for Economic Co-operation and Development signed a convention which opened with the commitment “to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries” (OECD 1960, Article 1a). In the midtwentieth century this prioritization of economic growth was still novel for governments but has since become the norm, not just for members of the OECD, but for virtually all governments around the world. The dominant belief is that ever-expanding economic output can provide the means to tackle most if not all of the problems confronting society, such as unemployment, poverty, and environmental degradation, and provide funding for transit, education, health, the arts and more. Indeed, without growth, the concern is that these problems and funding requirements will only get worse. So the pursuit of economic growth provides a compelling narrative for all those interested in economic policy and the future direction of society. About a quarter of a century after the OECD Convention, the World Commission on Environment and Development (1987) questioned whether and under what conditions economic growth could be sustained. The Commission envisaged a future characterized by sustainable development rather than unrestrained economic growth. While sustainability has not replaced growth as the order of the day, at least as far as governments are concerned, it has entered the vocabulary of public discourse where a key division exists between those who think that growth and sustainability are perfectly compatible and those who think that a choice must be made between them. Nourishing this ongoing debate is rich intellectual discussion around the relationship between economic growth and sustainability dating back at least as far as Mill (1848 [1970]). In 1972 the discussion entered public and political discourse with the publication of The Limits to Growth (Meadows et al. 1972) which posited a conflict between growth and sustainability. Their simulations of the world system suggested that if trends continued, economic growth would seriously deplete the world’s 1 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 1

01/06/2017 16:50

2  Handbook on growth and sustainability resources, ­undermine industrial production and food supply, and overwhelm ecosystems with pollution, leading to the collapse of human civilization. Economists such as Robert Solow (1974) responded with optimism that, at least for many natural resources, market signals would encourage substitution of scarce resources for plentiful resources, and technological innovation and human ingenuity would avert a crisis. Following from the limits to growth perspective, ecological economists such as Herman Daly (1991) outlined policies that would cap resource use and allow for continued qualitative economic development, without a quantitative increase in the material and energy throughput required for economic production. Meanwhile, following Solow, most economists and politicians have continued to promote economic growth as a primary policy objective. By convention, economic growth is measured as the rate of increase in real (that is, inflation adjusted) gross domestic product (GDP). Gross domestic product measures the value of the output of an economy. Meadows, Daly and others concerned about limits to growth focus on the material, energy, land and water resources used to produce this output. The question arises of whether growth in the value of output can increase indefinitely while the use of resources stays constant or declines, as long-term ecological and economic sustainability would seem to require. Variants of the growth and sustainability discussion have continued to emerge in the past four decades. Ecological modernists have argued that economic growth can continue as long as environmentally benign technologies are adopted (Mol and Spaargaren 2000). Proponents of the environmental Kuznets curve hypothesis posit that economic growth would entail more efficient technologies and would enrich citizens, increase their environmental concern, and facilitate regulation of environmental pollutants (Grossman and Krueger 1995). Stern (2004) challenged the environmental Kuznets curve hypothesis for carbon dioxide (CO2) by showing that CO2 emissions do not appear to be abating as economies grow and citizens become wealthier. The environmental Kuznets hypothesis has generally been found to work best for environmental flows that have obvious local impacts. New terms such as green growth and the circular economy have been introduced to describe conditions under which economic growth can be “decoupled” from resource inputs and waste and sustained indefinitely. In recent years, Victor (2008) has argued that economic growth is not necessary for the stability and well-being of a developed economy. Jackson (2009) showed that a growing economy makes the reduction of greenhouse gas emissions increasingly difficult. Degrowth activists have argued that the scale of economic activity must shrink in order to achieve sustainability (Martinez-Alier 2010), while van den Bergh (2011; and Chapter 9 in

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 2

01/06/2017 16:50

From growth to sustainability  ­3 this volume) argues that degrowth may cause more harm than good and advocates an “agrowth” perspective, wherein economists are agnostic as to the desirability of economic growth. Continuing the limits discussion, Rockstrom et al. (2009) have argued that the world economy has already passed safe “operating boundaries” in key areas such as the nitrogen cycle, biodiversity loss and greenhouse gas emission concentrations in the atmosphere. The planetary boundary hypothesis has been critiqued by Nordhaus et al. (2012) who believe that most earth systems (with the important exception of the climate) are illcharacterized by boundary conditions and limits. Their arguments echo Davidson’s (2000) point that a spectrum of environmental degradation is possible, and trade-offs between economic production and environmental degradation create continual tensions between those affected by the costs of growth and those who benefit from economic growth. In this handbook we continue the growth and sustainability discussion. To do so we invited scholars from a variety of fields including economics, sociology, and ecology to provide their insights. Contributions come from scholars who have been participants in this discussion in the past including Herman Daly, Paul Ekins, Jeroen van den Bergh, and William E. Rees. Contributions also come from scholars with new methods of approaching the issue, including Filka Sekulova, Peter Timmerman, and Tom Green. We also invited contributions from authors outside of the academy. Andrea Levy is a freelance writer and editor and writes on the role that a shorter workweek might play in transitioning to a more sustainable society. The range of views in this handbook reflects a diverse and eclectic group of contributors. As co-editors of the handbook, we invited the authors, suggested the topics, provided comments on drafts, and gave guidance on chapter length, but the chapters are very much their views, their analysis and their prescriptions for growth and sustainability. Before describing the contents of the book in detail it is useful to offer clarifying definitions of the concepts of growth and sustainability. As noted, economic growth is typically defined and measured by changes in real GDP and sometimes real GDP per capita. But whether such growth is economic, in the sense that its benefits outweigh its costs, was raised by McKean (1973) and independently by Daly (1999). As well as growth in GDP, growth may also refer to growth of the capital stock, growth of consumption, and growth of the material and energy throughput required to provide market goods and services. Readers should be alert to the different ways the term growth is used by the various authors. Sustainability is an even more contested concept (Robinson 2004), but the general thrust is that humans have an ethical obligation to m ­ aintain quality of life for future generations of humans and other species. This

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 3

01/06/2017 16:50

4  Handbook on growth and sustainability requires maintaining an adequate level of environmental quality and ecosystem functioning. Sustainability can also imply the use of the precautionary principle in decision-making: risk aversion in the face of incomplete information when considering the potential harms caused by resource use, pollution, and the proliferation of new technologies. Many of the chapters in this handbook focus on climate change and the challenge of reducing greenhouse gas emissions. Sustainability in this context means working to stay within a safe level of atmospheric greenhouse gas concentration. However, sustainability is not limited to greenhouse gases; it also includes issues such as inequality, social justice, food production, land quality, material use, and energy scarcity. “Growth and sustainability of what and for whom?” are important questions to ask when reading the handbook. We have organized the book into five parts and grouped chapters accordingly. The handbook begins in Part I with a discussion of the roots of the concepts of growth and sustainability. Part II provides a range of views on the question of whether growth is, or can be made, compatible with sustainability. Part III explores some of the resource, pollution, and technology constraints that may limit the prospects for future growth. In Part IV our contributors offer thoughts on whether a non-growing or low-growing steady-state economy can address the social imperatives of providing employment, equity, a stable monetary system, and opportunities for bringing countries out of poverty. Part V concludes with contributions that ask whether it is possible to shift growth dependent cultures away from growth and towards sustainability. We now outline each section in detail.

PART I: WHAT IS GROWTH? WHAT IS SUSTAINABILITY? What do growth and sustainability mean and how have these meanings evolved over time? In Chapter 2, Timmerman explains that growth was not always associated with progress. In pre-modern times, “growth outside of ‘natural’ bounds was considered to be dangerous and to be avoided”. Through a process of slow cultural evolution, influenced by scientific discoveries in biology and especially embryology, western society began to see growth and development as a sign of positive evolution. If we are to move away from growth, it will be necessary to shift deeply held cultural beliefs that equate growth and progress, and reimagine what a flourishing human looks like in a finite, resource-limited world. As Timmerman writes, “The assumption of the infinitely desiring consumer is co-dependent today on

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 4

01/06/2017 16:50

From growth to sustainability  ­5 the assumption of an infinitely available planet”. The challenge today is to define a flourishing life compatible with a finite world. Meadowcroft discusses, in Chapter 3, the concept of sustainable development, what it means and the challenges it presents. The often stated goal of sustainable development is to meet the needs of present and future generations, while living within ecological limits. The concept has been popular because it promises to put an end to the economy and environment zero-sum game, where benefit to the economy means an environmental cost and vice-versa. It has, however, also caused confusion. Ecological limits are slippery, difficult to define, and normative; “there can be no purely scientific procedure to determine ‘safe climate change’ or an ‘acceptable rate of species loss’”. Development is not equal to growth of GDP, but is sometimes interpreted as such. Meadowcroft asks whether humanity is up to the task of decoupling economic activity from environmental impact to reduce (rather than just contain) human insults to the environment when “there is no green ‘invisible hand’ that ensures increased affluence automatically leads to reduced ecological impacts”. Can we shift our political, social and cultural institutions to achieve sustainable development? As we begin an examination of growth and sustainability, it is useful to ask, how do we know if we are becoming more or less sustainable? One answer: we must measure. In Chapter 4, Bartelmus explains that this is complicated by the multi-faceted nature of sustainability. It is difficult to aggregate disparate measures; for example, how do we aggregate atmospheric concentrations of carbon dioxide with measures of biodiversity? Also, should either be monetized to create a monetary index? Despite the difficulties with aggregation, there is reason to want a compound sustainability measure. As Bartelmus argues, “Piecemeal information can only bring about piecemeal policy”. In his chapter Bartelmus explores how we might achieve a compound sustainability metric, and the work that lies ahead to improve our accounting of sustainability.

PART II:  CAN GROWTH BE SUSTAINABLE? Central to a discussion of growth and sustainability is the question, “Can growth be sustainable?” Herman Daly has done more than any other economist to argue that the answer to this question is no, stating on Chapter 5 that “More human economy (more people and commodities) means less natural ecosystem . . . There is an obvious physical conflict between the growth of the economy and the preservation of the e­ nvironment”. Daly also points out that growth must be carefully defined:

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 5

01/06/2017 16:50

6  Handbook on growth and sustainability Ecological economists advocate development without growth – qualitative improvement without quantitative increase in resource throughput beyond an ecologically sustainable scale. Given this distinction, we could indeed say that there is no necessary conflict between qualitative development and the environment, and that would be true. But there is certainly a conflict between quantitative growth and the environment. Calling different things (quantitative increase and qualitative improvement) by the same name (GDP growth) is a recipe for confusion. It is better to call different things by different names. Gross domestic product accounting mixes together both growth and development, as well as costs and benefits. It is a number that confuses more than it clarifies.

Paul Ekins, in Chapter 6, makes the case that we can increase GDP (grow the economy in traditional GDP terms) while lowering economic impact and he begins his chapter by accepting Daly’s terms: As economic activity has expanded, so has the throughput of energy and materials, which may be described as the physical growth of the economy. Clearly such physical expansion cannot continue indefinitely in a biosphere and lithosphere of finite size subject to the laws of thermodynamics. If this was all there was to the growth/environment conundrum, then it would be easily solved. Indefinite physical growth is impossible in a finite physical system.

After accepting this starting point Ekins then argues that we can have green growth if we can decouple economic activity (measured by GDP) from resource use and environmental impact. Relative decoupling occurs when GDP grows faster than an environmental pressure like pollution or depletion. Absolute decoupling occurs when GDP grows, but environmental pressures decline. Ekins offers empirical evidence that decoupling has been occurring and modelling results that show more is possible. He recognizes that the physical economy cannot grow forever, but argues that it may be possible for economic value to continue to increase without limit. Hayden is skeptical of the promise of green growth. Focusing on climate change, in Chapter 7 Hayden argues that decoupling has been insufficient to achieve significant reductions in greenhouse gas emissions. Demandbased greenhouse gas emissions accounting reveals apparent decoupling in some nations (for example, the UK) to be a reallocation of emissions, rather than a reduction. Emission-intensive products and inputs consumed in the UK are now imported rather than produced domestically. If we are to keep climate warming within the 2-degree threshold (or better yet the 1.5 degree threshold) Hayden suggests we need to move past growth as a social priority. In Chapter 8, Sekulova et al. make the case that a focus on degrowth can help shift our social priorities. Degrowth, or decroissance as it was originally called in France, does not mean shrinking GDP. That may

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 6

01/06/2017 16:50

From growth to sustainability  ­7 be a consequence of degrowth, but could in itself be disastrous: “there is nothing worse than a growth society that does not grow”. Instead, degrowth is a call to shift away from growth culture and “create the necessary political, social and economic conditions for managing and living well without growth”. In this shift, the drive for ever-greater consumption is replaced by a culture of “caring for the commons, voluntary simplicity, and conviviality”. Van den Bergh points out in Chapter 9 that degrowth (measured as lower GDP) is itself no guarantee of sustainability. We may shrink the size of low-impact sectors even while increasing the size of high-impact sectors. If this were to occur, degrowth may cause more environmental harm than well-planned green growth. Instead of focusing on green growth or degrowth, van den Bergh suggests an agrowth approach. In this approach we become agnostic about economic growth, not fearing contraction, not cheering expansion, and not focusing on an end to growth to solve environmental problems. By shifting the focus away from growth we may lessen its social power. These contributors offer contrasting perspectives on how we should treat economic growth in order to achieve sustainability. They include arguments in favor of green growth (Ekins), degrowth (Sekulova et al.), and agrowth (van den Bergh). Each position is well described and convincingly argued. It is left to the reader to decide, “Can growth be sustainable?”

PART III: IS THE END OF GROWTH NIGH? SUSTAINABILITY CONSTRAINTS ON GROWTH No matter how the question posed in the Part II is answered, there are headwinds that constrain the possibility of future growth and will have to be overcome if growth is to be sustained. These headwinds include: the uncertain future of technology and its ability to respond to environmental change; energy scarcity and the climate imperative to transition to lowcarbon energy sources; and land scarcity and the environmental consequences of a growth-based food system. In this part, contributions explore factors that may constrain economic growth in the future. For the past two centuries or so technological innovation has been a key driver of economic growth. The process began with the invention of the steam engine, which according to Ruth in Chapter 10 created “A selfreinforcing process of resource extraction, technology development and deployment, structural changes in society, growth in scope and scale of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 7

01/06/2017 16:50

8  Handbook on growth and sustainability the economy, and accelerated resource use and emissions”. This process also led to the sustainability crisis we face today, “Because of fundamental physical principles, most notably the second law of thermodynamics, extraction, conversion and use of resources – be those materials or energy  – unavoidably result in irreversible changes in the environment”. With this history in mind Ruth explores whether we can rely on technology to help us achieve sustainability. He suggests there may be limits to this potential. The future is defined by uncertain risks. We are approaching multiple potential tipping points where non-linear shifts may occur that negatively affect human well-being. Even if we can direct technology’s evolution to greener pathways, the rate of technological change may not be fast enough to adapt to the change that is underway. In this situation it is necessary to “revise the rules by which society engages in changes of its environment”. Social innovation may become as important as technological innovation in allowing us to reach our sustainability goals. In Chapter 11, Hall explains that energy is fundamental to economic activity. Concern that the fossil fuels on which economic growth relies are being depleted and that there are inadequate substitutes to replace them has a long history and is the subject of considerable debate. There is more agreement on the need to move away from fossil fuels to prevent catastrophic climate change. The prospects for alternative energy sources and technologies on a sufficient scale are highly debated. Moving forward there is more to learn before we understand whether renewable energy technologies such as hydroelectricity, wind and solar can support an economic system in which energy demand grows exponentially, or whether energy scarcity will require a transition to a low-growth economic system. If we manage to address the challenge of a renewable energy transition, we are faced with still other challenges. The global food system is based on growth. In wealthy countries, growth in income has been accompanied by growth in waistlines. In Chapter 12, Hadjikakou and Wiedmann outline the negative health and environmental impacts created by the food system, and offer some ideas on how to transition to a food system that increases well-being. Without major adjustments to the food system we can expect continued pressures on the land base. Human food production uses “one-third of terrestrial net primary production (NPP)” (Haberl et al. 2007, cited by Haberl and Erb in Chapter 13 of this volume). Haberl and Erb explore how land may qualify as a limiting factor for human economic activity. Land can be used more intensively, but doing so “usually involves tradeoffs and costs such as higher environmental impacts that may increase the risk of transgressing other boundaries such as those of nitrogen, phosphorous, water or biodiversity”.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 8

01/06/2017 16:50

From growth to sustainability  ­9 These biophysical realities define the future prospects for economic growth and possible transition to sustainability. The Earth has a finite supply of land, a finite supply of non-renewable energy, and a finite capacity to absorb pollutants from burning fossil fuels that has been exceeded and is now leading to climate change. In a world characterized by uncertainty and non-linear change can technology be expected to come to the rescue? Or, facing these constraints, is the end of growth nigh?

PART IV: ARE THERE IMPERATIVES FOR GROWTH? Though there are biophysical reasons why economic growth may not continue indefinitely, there are also social pressures that create an imperative for economic growth. Four important growth imperatives are unemployment, the money system, inequality, and development for poorer nations. In this part contributors explore the significance of these growth imperatives and whether they can be overcome. One concern about a low-growth economy is that unemployment will increase; when economic activity slows, unemployment often results. Jackson and Victor (2011) refer to this as the “productivity trap” – as labor productivity improves fewer workers are needed to produce the same level of output. In Chapter 14, Andrea Levy shows that reduced working hours can alleviate this problem. Work sharing and shorter workweeks help to spread wage-work in the economy; jobs are shared instead of lost. Reduced working hours also improve worker quality of life by increasing leisure time. By reducing pressures to grow the economy in order to create jobs (a goal repeated by politicians almost daily), reduced work hours offer a way to weaken the employment growth imperative, while improving well-being (Victor 2008). There are also concerns that a system in which money is created as interest-bearing debt by commercial banks imposes a requirement for economic growth. A typical argument is that the economy must grow in real terms so that debtors can expand production and pay interest to creditors. Strunz et al. argue in Chapter 15 that this “monetary growth imperative” is overstated. They note that interest payments have existed in “stationary societies” throughout history and are simply “a zero-sum-game where one’s gain is another one’s loss”. Strunz et al. also argue that the economy does not have to grow in order to satisfy the need to pay interest on debt – payment of interest is merely a redistribution or transfer of wealth. While we may have a “cultural habit of linking monetary interest to growth”

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 9

01/06/2017 16:50

10  Handbook on growth and sustainability this habit “persists only as long as the features of our economy enable this habit”. There may be another reason to worry about a debt-based money system. In Chapter 16, Pressman and Scott explore the work of economist Thomas Piketty. Piketty has argued that the current economic system systematically generates inequality. This is so because the economy generally grows at a slower rate than the average returns to savings. Those who hold savings accumulate wealth, and those who are indebted fall further and further behind. In stark terms, this inequality “implies that the past tends to devour the future: wealth originating in the past automatically grows more rapidly, even without labor, than wealth stemming from work” (Piketty 2014, p. 378, cited in Chapter 16 in this volume). Caution must be taken to ensure that slower growth does not exacerbate inequality by making paupers out of debtors and kings out of creditors. Wealth taxes, inheritance taxes, a progressive income tax system, and increased ownership of capital by workers could all help to level the playing field and prevent “a return of the rentiers”, according to Pressman and Scott. Fischer-Kowalski and Steinberger (Chapter 17) take a broad systems approach to the relationships among human, economic and material growth and the positive feedback links between these macro elements. They argue that the feedback loops that have encouraged growth in the past may be weakening. Most notably, fertility rates are declining in wealthy countries. The well-being of citizens in poorer, developing countries will depend on whether they can become rich faster than their growing populations age and require care. These contributions provide us with a sense of the challenges of a transition from growth to sustainability and how they might be addressed. They also suggest that “growth imperatives” can be overcome. The challenge, however, is to shift the growth culture.

PART V: IS IT POSSIBLE TO MOVE BEYOND GROWTH CULTURE? As Timmerman argues in this handbook’s opening chapter, growth has become equated with progress. Is it possible to shift the narrative? Is it possible for modern, western, industrialized, consumer cultures to move away from a dependency on economic growth? This last set of chapters provides some answers. Green, in Chapter 18, investigates the treatment of sustainability concerns in economic textbooks. He finds that the limits discourse – ­sustainability through low growth – is typically dismissed. A textbook

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 10

01/06/2017 16:50

From growth to sustainability  ­11 by Samuelson and Nordhaus (2005) calls the authors of Limits to Growth “an ominous-sounding group” and optimistically predicts that ­technology will solve environmental problems, “if the growth pessimists of today prove wrong, it will be largely because new environmentally friendly and resource-saving capital replaces today’s resource-intensive, polluting technologies” (Samuelson and Nordhaus 2005, p. 563). Through messages like these in economics textbooks, students are inoculated against environmental concern. A revised approach to teaching economics is ­ needed to shift the discipline away from “growthmanship”. In Chapter 19, Brown and Vergragt argue that cultural change is possible; consumer culture was created after World War II. Millennials are now happy to live in lower-footprint, smaller living spaces, in dense cities. Does this lifestyle offer a path that others can follow? Quilley argues, in Chapter 20, that economic growth is driven by ­innovation and creativity. He does not believe that a steady-state economy can be achieved because innovation will continue to burst forth and disrupt the steady-state; the dynamism of human creativity is not compatible with a static economy. He argues that we can harness this creativity and shift from being consumers to becoming producers of culture. The techno-focused “maker culture” may offer a glimpse of what this life offers. Will others choose to be makers instead of consumers? Victor asks us, in Chapter 21, to look to Latin America for a model of sustainability. In Latin America there is a recognition that social justice and sustainability go hand in hand. In recent decades, redistribution and sustainability have allowed evermore citizens to experience “Buen Vivre”: the good life. Can other countries follow Latin America’s lead? Rees takes a more pessimistic view, in Chapter 22, of the potential to shift away from growth culture. He argues that we are hardwired for unsustainability owing to the workings of our “triune brain”. Unconscious urges often overwhelm the best efforts of rational thought – and that may overwhelm our efforts to create a culture of cooperation and low consumption. Rees leaves us with an uncomfortable question, are we ­predisposed to unsustainability? “Were the ill-fated Greenland Norse merely treading a well-worn path that global society is doomed to follow?” Jackson does not believe that humanity is destined for failure. Instead he sees the potential to chart a path towards sustainable prosperity. Starting from the premise that “the economy is not an end in itself but a means towards prosperity”, in Chapter 23 Jackson outlines four domains in which the economy must shift, “the nature of enterprise, the value of work, the structure of investment and the role of money”. For Jackson, there is hope that humanity can rise to the challenge of sustainability, reform the consumer capitalist economy, and learn to live well on a finite

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 11

01/06/2017 16:50

12  Handbook on growth and sustainability planet. We close with Jackson’s call for sustainable prosperity with the hope that it will inspire the work and commitment of you, our readers.

FROM GROWTH TO SUSTAINABILITY The chapters in this handbook display many dimensions of the ongoing discussion and debate about growth and sustainability. All of the authors, including ourselves, are deeply concerned about the increasing burden that human economic activity is placing on the biosphere. Whether this burden can be contained and reduced without curtailing economic growth still remains an open question, though our inclination and that of most of the authors in the handbook, is to doubt that it can. The transition to an era of sustainability in which social and environmental justice prevail, where economies function without undermining the resources and life support systems on which they depend, and where all of Earth’s inhabitants can expect to live long and fulfilling lives, will not be easy. We hope and intend is that this handbook provides inspiration for the work of achieving the transition from growth to sustainability.

REFERENCES Daly, H. (1991), Steady-State Economics, 2nd edn, Washington, DC: Island Press. Daly, H. (1999), ‘Uneconomic growth in theory and in fact. The First Annual Feasta Lecture’, Feasta Review, 26 April, the First Annual Feasta Lecture, Trinity College, Dublin. Davidson, C. (2000), ‘Economic growth and the environment: alternatives to the limits paradigm’, BioScience, 50 (5), 433–40. Grossman, G.M. and A.B. Krueger (1995), ‘Economic growth and the environment’, Quarterly Journal of Economics, 110 (2), 353–77. Jackson, T. (2009), Prosperity without Growth: Economics for a Finite Planet, London and New York: Earthscan. Jackson, T. and P.A. Victor (2011), ‘Productivity and work in the “green economy”: some theoretical reflections and empirical tests’, Environmental Innovations and Societal Transitions, 1 (1), 101–8. Martinez-Alier, J., U. Pascual, F.-D. Vivien and E. Zaccai (2010), ‘Sustainable de-growth: napping the context, criticisms and future prospects of an emergent paradigm’, Ecological Economics, 69 (9), 1741–7. McKean, R. (1973), ‘Growth vs. no growth: an evaluation’, Deadalus, the No-Growth Society, 102 (4), 207–27. Meadows, D., D. Meadows, J. Randers and W. Behrens (1972), The Limits to Growth, New York: Potomac Associates. Mill, J.S. (1848), Principles of Political Economy: With Some of their Applications to Social Philosophy, bk iv, ch. VII, reprinted 1970, London: John W. Parker. Mol, A.P.J. and G. Spaargaren (2000), ‘Ecological modernization theory in debate: a review’, Environmental Politics, 9 (1), 17–49. Nordhaus, T., M. Shellenberger and L. Blomqvist (2012), The Planetary Boundaries Hypothesis: A Review of the Evidence, Oakland, CA: Breakthrough Institute.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 12

01/06/2017 16:50

From growth to sustainability  ­13 Organisation for Economic Co-operation and Development (OECD) (1960), Convention on the Organisation for Economic Co-operation and Development, Article 1(a), accessed December 2015 at https://www.oecd.org/general/conventionontheorganisationforeconom​ icco-operationanddevelopment.htm. Robinson, J. (2004), ‘Squaring the circle? Some thoughts on the idea of sustainable development’, Ecological Economics, 48 (4), 369–84. Rockstrom, J., W. Steffen, K. Noone, Å. Persson, F.S. Chapin III, E. Lambin et al. (2009), ‘Planetary boundaries: exploring the safe operating space for humanity’, Ecology and Society, 14 (2), 32–64. Samuelson, P.A. and W.D. Nordhaus (2005), Economics, 18th edn, New York: McGraw Hill. Solow, R.M. (1974), ‘The economics of resources or the resources of economics’, American Economic Review, 64 (2), 1–14. Stern, D. (2004), ‘The rise and fall of the environmental Kuznets curve’, World Development, 32 (8), 1419–39. Van den Bergh, J. (2011), ‘Environment versus growth – a criticism of “degrowth” and a plea for “a-growth”’, Ecological Economics, 70 (5), 881–90. Victor, P.A. (2008), Managing without Growth: Slower by Design not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. World Commission on Environment and Development (WCED) (1987), Our Common Future, Oxford and New York: Oxford University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 13

01/06/2017 16:50

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 14

01/06/2017 16:50

PART I WHAT IS GROWTH? WHAT IS SUSTAINABILITY?

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 15

01/06/2017 16:50

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 16

01/06/2017 16:50

2 Growth, development and learning to live in a finite world Peter Timmerman

Psyches esti logos heauton auxon. (The soul has a logos, a self-law of growth.)

(Heraclitus, Fragment 115)

INTRODUCTION Ecological economics (EE) has been robust in its critique and recasting of much of standard economic theory and practice, but has neglected to generate an equivalently powerful or even more powerful model of the human than that of standard economics. This is ironically partly due to the ecological focus of EE, and partly due to a perhaps necessary bias towards shying away from the anthropocentric in general. As a result, the model of the human – and the ethical stances that might flow from it – in ecological economics is mostly unexamined (Brown and Timmerman 2015), but still derives essentially from the modern world view in which we are all already saturated, albeit with general warnings about inequality, over-­consumption, problems with free-market capitalism, and so on. In contrast, what is needed urgently now is something much stronger and compelling – a new (but also very old) model of what it means to be an ethical human. In this chapter, elements of this model are predicated on a reassessment of the pivotal terms “growth” and “development” (with a glance at “sustainability”) and their changing relationship to notions of human well-being. The current econo/ethical model, based on, or at least crystallized into a persuasive dogma by standard economics, presents a world in which we operate as if each individual were an infinitely desiring self – what Emerson called “the infinitude of the private man” – coupled with a devotion to expressing itself and its need for “freedom” in a society characterized by a dynamic of constant growth and progress, and thereby requiring an infinite bounty of resources on an infinite planet to meet his or her desires. Standard texts almost universally begin with: “The ends of human beings are without limit” (Harvey and Jowsey 2007, p. 8); “Economics makes the assumption that human beings will act to fulfill their ­self-interests. It 17 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 17

01/06/2017 16:50

18  Handbook on growth and sustainability also assumes that individuals are rational in their attempts to fulfill their unlimited wants and needs” (Heakal 2015). Examples could be multiplied indefinitely. It is not just problematic that this dogma is an outcome of a need to make various abstract theories “come right”: it is also the fact that there is a constant pressure to ensure that if human beings don’t altogether fit this model of unlimited want and need, they must be reshaped accordingly, by forms of mental and practical colonization – for example, through the ubiquity of capitalist norms, cultural stereotypes, education, propaganda, and endless advertising. It is not the burgeoning global human population that is the main threat to planetary sustainability, but rather the runaway expectations of a global human population rapidly committing itself to the current Western model (or “mindset”) of what it means to be and to have a good life. To arrive at a more appropriate model for our time, there needs to be a recognition of a deep and intimate relationship between the model of the self and what we could call its frame of meaning, its lived horizon; or to return to von Uexküll’s original formulation of a being’s environment, its Umwelt (von Uexküll and Kriszat 1970). In traditional language, the microcosm reflects the macrocosm. The assumption of the infinitely desiring consumer is co-dependent today on the assumption of an infinitely available planet. This assumption is central to the prevailing technological and economic romanticism of modernity, which owes much of its powerful and seemingly overwhelming dynamic to its commitment (rhetorically, practically) to the breaking of all chains, constraints and boundaries in the name of human self-expression, political liberation, and existential freedom. Yet, in the face of this omnipresent dynamic, we need something quite different: a model of how to live and flourish in a finite world – a world of interdependence, boundedness, and clearly finite, a world that respects the “limits to growth”. We need a different model of the person that will resonate more appropriately with slow or no-growth models of our future social, economic, and planetary context, and which will be attractive and compelling enough to commit individuals and societies politically to their potential implementation. There are movements in this direction that can be found in the exhortations of environmentalists, philosophers, religious leaders, and some politicians, as well as some evidence of changes in elite cultural circles towards new status norms associated with “doing more with less”, voluntary simplicity, green living, and the like. However, these movements and slogans are not seemingly strong enough to carry the day. In fact, it could be argued that one of the reasons why ecological economics has been unable to make much headway in the general culture is that

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 18

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­19 its articulation of the role of the person in ecological economics is mostly, as noted already, vague. Most people in history, throughout the world and certainly in the West, have in fact lived with models of human flourishing that had aspects of what we are looking for – their lives were very strongly bounded, mostly out of sheer necessity, but in that necessity people strove to make viable life-decisions, and at their best, to make their local world into a site for human flourishing. It is the modern model that is anomalous. To supersede it we must engage in part in an act of retrieval, recast for our time, drawing on the wisdom of some ancient traditions, but also responding to our new scientific framework of understanding of the Earth and its ­processes. It is, as intimated already, a new (old) approach. To be clear, I see this approach as already in the wind, as part of what I call “a contemporary implosion of sensibility” – the emerging replacement of the cultural, social, psychological norms of the infinite self of the modern individual with norms and identities based on the images, metaphors, and ideals of an immanent finitude. This “implosion” comes about through the confrontation of a culture saturated in technological and romantic infinitudes with the seminal arrival of the first powerful symbol of the finite in 200 years– the Earth as a bounded sphere. This drawing of boundaries around the Earth (visually and scientifically) underscores, expresses, and exemplifies the growing threats posed by transgressing the physical limits of the planet of which we have increasing warning on an almost daily basis. Like the mechanism and casing around an atomic bomb – a timed series of conventional explosions driven inward towards a critical mass – the ecological crisis is driving us inward, towards a re-valuation of our immanent dwelling place; an implosion simultaneous with, and responsive to, the earlier and ongoing explosions of its centrifugal opposite. Learning to live within a bounded, finite sphere shifts many things, and as an example of what is happening, we can point to the extraordinary sensitivity we now feel towards many things that a hundred years ago we would have ignored. Once we draw a boundary around something, the internal parts of that thing become interconnectedly sensitive – an implosion of sensibility. The economist Kenneth Boulding put it this way in his early, famous, explorations of the implications of a future lived within a “closed”, spaceship earth: “The most worrying thing about (today’s) earth is that there seems to be no way of preventing it from becoming one world. If there is only one world, then if anything goes wrong, then everything goes wrong” (Boulding 1993, p. 312). We do not know, for instance, if an absurd mistake on the other side of the globe may destroy us all in 10 minutes’ time thanks to nuclear

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 19

01/06/2017 16:50

20  Handbook on growth and sustainability weapons. Since Rachel Carson, we also know that the dumping of chemicals far away will find their way into the most intimate parts of our bodies. This deep interconnected dependence has made us like spiders feeling tremors out on the circumference of their webs. Global media enable us to see and hear, as well as think, globally, thus making us more aware of what is going on than ever before. However, they also simultaneously flood us with a constant bombardment of griefs and tragedies and joys that we cannot respond to completely, or we would go berserk. This is one aspect of a circle around the Earth – the “worlding” of the planet, as Boulding might say. More than 30 years ago, Marshall McLuhan prophetically remarked that in a world ringed by satellites, there was no such thing as true wilderness any more, no place that was not subject to the human gaze. The surrounding of Earth and the mapping of its surface has proceeded apace since then, and has spawned cruise missiles, Global Positioning System (GPS), and the emerging militarization of orbital space – a vast panopticon. The species as a whole has begun to occupy what was once God’s eye view, and finds itself on or beyond the verge of “managing the planet” (Scientific American, 1989) for our own purposes, so far poorly, because we have not found the appropriate integration of those purposes with the circumscribed planet now seemingly within our grasp. A central question, constantly iterated in ecological economics and elsewhere is, how to manage growth in this bounded state? If growth is endless, consumption insatiable, and any scarcities mere temporary obstacles, how can we create a sustainable and just world? As already suggested, there is (I argue) an intimate connection between the assumption of infinite growth on the global scale and certain assumptions in the modern individual of which freedom from constraint is practically basic as a desire. However, if planetary growth is in fact finite and bounded, this is going to be (and already is) deeply resisted by ­governments and corporations; and not only that, it will also be resisted by individuals who, in the name of freedom, will resist any constraints on their activities, seeing boundaries as obstacles to their present and future pleasures. A model of human flourishing based on the finite, on constraint and boundedness is, on the face of it, unattractive.

THE ROOTS OF INFINITE GROWTH To generate such a model is a vast task, not remotely carried out below. Instead, what follows is a look at one of the central assumptions of the current model, that infinite growth as currently defined is indeed an

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 20

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­21 obvious and necessary good. What I hope to show in some detail is that “growth” and “development” as currently defined are recent historical artifacts, and that they emerged right at the moment of the emergence of modern capitalism, and are in only a very curious sense, “natural”. “Growth” and “development” (and its modern partner, “progress”) constitute a complex nexus of powerful metaphors and symbols that impel our commitment almost without thought. These “commanding metaphors”, or “symbolic forms” (Cassirer 1953) have been drawn from elementary physical and biological experience and subsequently seeded into culture. There have been a number of explorations of sources of the modern self (Taylor 1989) but little about its interaction with the longterm shifts in these pivotal concepts (but see Passmore 1970). Each of these three terms has had its times of focus, with the others present in the background weave being drawn along, discovered or connected to the others in turn. They have historically overlapped, underlapped, and interacted. Very roughly, though aspects of these terms can be found far back in antiquity, “growth” as an obvious description of a physical process predominated for much of history, while what we think of as “development” and, later, “progress”, are more recent arrivals. The essential element that separates “growth” and “development” as metaphors from “progress” is the biological or organic analogy drawn upon to describe and justify these two descriptors and prescriptors of personal and social dynamics. In the late seventeenth and early eighteenth centuries they become associated with the emerging notion of progress and various related justifications for the nascent capitalist culture (Mokyr 2017): the biological analogies then hybridized with the social concept and were let loose to become limitless, unbounded, ungrounded, and infinite. I am concerned here with these themes in Western society and their spreading impact on the rest of the world. There are examples too many even to sample from other cultures of differing concepts of growth, development, and human well-being (for example, the Boran of Ethiopia’s concept of dagaaga, or a form of stable evolving growth likened to a ram’s spiraling horn (Dahl and Megerssa 1997); or the karmic progress of spiritual development through multi-generational incarnations in differing species in Hinduism and Buddhism). Deep interconnections with theories of time and the trajectories (if any) of past, present, and future are ubiquitous. Growth, to repeat, is associated with natural processes, physical or biological. An example, drawn from the Bible, is St Paul discussing the nurturing of faith by himself and a colleague: “I planted the seed, Apollos watered it, but God has been making it grow. So neither the one who plants nor the one who waters is anything, but only God, who makes

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 21

01/06/2017 16:50

22  Handbook on growth and sustainability things grow” (TNIV, I Corinthians 3:6–7). (The Greek verb for “grow” is “auxin”, to grow or increase, and is currently used to describe plant growth hormone.) One very important distinction is between extensive and intensive growth (Jones 1988). Extensive growth is growth most obviously associated with physical growth, like a balloon being blown up, a city expanding, a crystal proliferating, and so on. Intensive growth is the growth of a potential, a seed or the unfolding of an inner complexity, and as such is more “organic”, though there is overlap: a child grows up physically (extensively) and mentally (intensively); a plant grows, but also changes as it grows. We can call the emphasis on the physical expansion or multiplication a bias towards the extensive. Until the sixteenth and seventeenth centuries, the bias towards the extensive is everywhere: almost the only references to intensive growth are in personal or spiritual growth, characteristic of the Stoic, Epicurean, and neo-Platonic philosophers, and their heirs in Christianity. Of course, the mystery of how a seed grows or a person was obviously pertinent, one of God’s mysteries if you like; but the solutions provided in the ancient context were constrained by a number of factors, of which one central one was the practically universal belief that whatever was the origin of something had to be more complex or more comprehensive than what it produced. The Darwinian solution – an evolving complexity based on simple forces – was not available. Attempts to understand growth in the context of complexity teetered uneasily over the issue of cause and consequence. The most influential alternative, Aristotle’s, depended on the web of original four causes (material, formal, efficient, and final), and led to an invoking of the powerful notion of teleology – X was purpose already encapsulated in the moment of creation, towards which the creature was directed, and in which it would achieve fulfillment. As will be discussed in more detail further on, Aristotle in fact had a practical understanding of embryology, but none of his writings on the topic achieved any salience in his era. Growth was contextualized and interpreted according to two wider “cosmic” or “natural” forces: nature and time. First, in terms of “nature”, the Greek phusis (from which we get physics) originally meant the underlying pattern of the life of all things at a cosmic level (for example, Heraclitus, Fragment B112: “Wisdom is to speak and act according to, and following, phusis”). The closest equivalent is the Chinese Tao – the mysterious pattern that underlies all life, and of which growth is one aspect, the overt carrier of phusis’ foundational dynamics. (As an aside, in classical Chinese culture, change is the norm, but growth is usually worrisome, uncontrollable, and threatening – growth is (if you like) too close to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 22

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­23 the engine room of universal energy – and it is often symbolized, especially in Taoism, by weird growths on trees and bodies, hunchbacks, and strange monsters.) In the West, phusis was later translated by the Romans into a not exactly equivalent term, natura, which has a narrower and more practical sense of something associated with birth or origin. Growth in Greece or Rome reflects or epitomizes or embodies these senses of nature, cosmic or practical. Second, concerning time in this context, it is generally considered that one of the characteristics of the modern tradition is its distinctive understanding of cosmic or “natural” time as linear, or to be more exact, directed meaningfully and singularly towards a redemptive future. Originally religious, a secularized version of it is practically definitional of progress. The main contribution to this came from the monotheistic narratives set in motion by Judaism and Christianity. Roughly speaking, Judaism claims that its history is special, and specially guided by its singular God; and, following the crisis of its Babylonian exile (circa 500 BCE) it developed the belief in a future Messiah who would redeem Israel, and that all nations would acknowledge his reign and follow his lead accordingly. Not only were the Jews specially favored by God, they would be the carriers of the unfolding of the redemptive end of time. This apocalyptic theme was adopted or fulfilled by Christianity, which further claimed that not only had this redemptive event already happened, but that in some fashion it was still ongoing – Christ was still available in Heaven for believers – and that He would be the vehicle for the redemption of all previous history. This paradigmatic cultural shift implied that: (1) events in history are meaningful and directed; (2) there can be surprising events that make the seemingly random passage of time suddenly make both retroactive and prospective sense; (3) history is driven and c­umulative; (4) there is some connection between individual spiritual activities and larger social processes on a historical scale. Many cultures, by contrast, operate within horizons of degeneration over time, cyclical time, and simply more of the same endlessly. If we look at traditions that are superficially similar, for example, the Buddhist tradition of Maitreya the future Buddha, we find them by contrast firmly embedded in frameworks of endless repetitive cycles of degeneration and regeneration – Buddhisms will arise, degenerate, and be reborn with new Buddhas for each cycle. St. Augustine in the fourth century AD made it quite clear that one of the characteristics of Christianity was that everything happened once, there was only one redemption, and the Kingdom comes once, and once only. While Buddhists may spiritually grow through many lifetimes; Christians live and die but once. The main contrast to the Christian tradition, the Greco-Roman,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 23

01/06/2017 16:50

24  Handbook on growth and sustainability ­ perates within a scheme of degeneration from a previous Golden Age to o the current Bronze or Iron world (for example, Hesiod, Ovid). The narrative arc is the one where the original pattern was simpler, better, and supportive of the morally appropriate. In Hesiod’s world (roughly 600 BCE), the age we are currently in is completely warped and doomed: Would that I were not among this fifth generation, but died before or after. For now truly is the Iron Age, and men never rest from labour and sorrow by day, and from perishing by night; and the gods shall lay sore trouble upon them. Still, even these shall have some good mingled with their evils. But then Zeus will destroy this race of mortal men when they have degenerated to the point where they have grey hair on their temples at birth. (Works and Days, ll. 170–74, adapted from Evelyn-White trans.)

To move forward in any positive sense is necessarily to move backward to recapture better days. The paradigmatic models of the human are long dead: Achilles and Hector are gone from the fields of Troy. There are, however, two important and influential variants in the Greco-Roman tradition. The first, made a great deal of in the later Christian tradition, is of new beginning. Beginning fresh as a metaphor obviously draws upon origin and birth stories – something new is coming into the world – and will eventually cross-fertilize the arrival of progress as a proto-capitalist theme (for example, repudiation of the old, and the invention of the fresh and new). The locus classicus of the “new beginning” variant is Virgil’s IVth Eclogue, wherein a quasi-prophetic declaration (by the Cumaean prophetess, Sybil) is linked to the rise of a new era that will culminate in the initiation of the imperial reign of Augustus Caesar: Now is come the last age of Cumaean song: the great line of the centuries begins anew. Now the Virgin returns, the reign of Saturn returns; Now a new generation descends from heaven on high. Only do you, pure Lucina, smile on the birth of the child, under whom the iron brood shall at last cease, and a golden race spring up through the world. Your own Apollo is king! And in your consulship, Pollio*, yes yours, shall this glorious age begin, And the mighty months commence their march; under your sway any lingering traces of our guilt shall become void and release the earth from its continual dread. (IV, 5–17, Fairclough trans.)

(*Pollio was consul in 40 BCE, and brokered a peace between Octavian/ Augustus and Mark Antony, probably celebrated in this poem.)

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 24

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­25 While this Roman version of a Messianic prophecy was very influential when Christianity became the state religion, it was an anomaly in the Roman world itself. The second variant of the Greco-Roman tradition was owed to Stoicism, where a notion of a kind of progress was promulgated, but again, almost exclusively in terms of the potential moral development of the individual (Wright 2008). “Progress” in the ancient Greek world is “prokope”; (Latin “profectus”) which originates as a description of an army chopping down trees that are obstacles to their forward movement – it means ­“advancing”, “moving forward”, not developing. However, at one point, the Stoic philosopher Seneca (4 BCE–65 AD) says: How many animals we have discovered for the first time in this generation, how many not even in this one! The people of a future age will know much that is unknown to us; much is being kept for the generations to come after memory of us has faded away. The world is a paltry thing unless it contains something for every age to discover. (Seneca, 1972, VII, 30.5)

This sudden Senecan eruption, practically unique, of a belief in future improvement and discovery is immediately dampened down later in the same essay: “No one cares about philosophy. Far from any discoveries being made on topics left inadequately researched by the ancients, many earlier discoveries are falling into oblivion” (1972, VII, 32.4). This is complemented elsewhere by Seneca’s notorious belief in endless cycles of history within which presumably (Williams 2012) moments of discovery can be found and then lost again. Nevertheless, this little passage became seized upon and frequently cited by Francis Bacon and others when the scientific revolution began to quicken in the late Renaissance. In his review of the Greco-Roman period in his survey volume, The Idea of Progress, J.B. Bury summarizes: We can see now how it was that speculative Greek minds never hit on the idea of Progress. In the first place, their limited historical experience did not easily suggest such a synthesis; and in the second place, their axioms of thought, their suspiciousness of change, their theories of Moira [Fate], of degeneration and cycles, suggested a view of the world which was the very antithesis of progressive development. (Bury 1932 [1960], p. 19)

The blending of the Christian and Greco-Roman traditions in the medieval period was similarly unprogressive, but the prospect of salvation generated what could be called “vertical growth”. Change in the ­physical realm was minor, given a fixed hierarchical cosmos, and confined to such areas as movement through the four elements (earth, water, air, fire). Spiritual growth on the other hand was possible – movement upward

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 25

01/06/2017 16:50

26  Handbook on growth and sustainability through differentiated realms – but structured and mediated through the Church: one approached the divine infinite from a definitely finite perspective. If this was transgressed, the official interpretation was that one was deemed to be heretical (see Corrigan and Harrington 2014 on the influence of the early medieval writings of Dionysius the Areopagite, a near heretic in this area; other traditions, Islamic and Judaic also wrestled with the dangers of the spiritual approach to the infinite from the finite, for example, Maimonides: Halbertal 2013). There is little to note in the medieval period concerning growth and development in the physical realm except in the then marginal area of the spiritual ethics of economics, specifically with regard to the quasi-material issue of money, that is, usury. Elsewhere (Timmerman 2015) I have discussed this topic in detail, as have others (Langholm 1979, 1984). The only importance in this context is the fact that growth in the context of usury was considered to be a form of “unnatural growth”, uncontrolled and parasitical, and so suspicious on the face of it. The “natural rate” of growth (agricultural language predominates) versus “unnatural growth” was a widespread topic that only grew in pertinence as early modern capitalism emerged. Again, growth outside of “natural” bounds was considered to be dangerous and to be avoided.

THE QUARREL OF THE ANCIENTS AND THE MODERNS The impacts of the voyages to the New World, the discoveries in anatomy by Vesalius and Harvey, and the gathering repudiation of Aristotelian and Platonic explanations of natural forces by the new methods of testing hypotheses through experimentation and applied mathematization undermined the traditional hearkening back to the previous touchstones of ancient knowledge (though the Renaissance drew much of its strength from just such a dynamic). However, undermining did not necessarily lead immediately to notions of growth, development, or progress. John Donne, in 1611, shows clearly the ambivalence of the “new”: So did the world from the first hour decay, That evening was beginning of the day, And now the springs and summers which we see, Like sons of women after fifty be. And new philosophy calls all in doubt, The element of fire is quite put out, The sun is lost, and th’earth, and no man’s wit Can well direct him where to look for it. (“Anatomy of the world”, ll. 201–8).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 26

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­27 Reading through the period one is struck by the struggle to work through to a new narrative that might be forward moving. Revolts and revolutions, however revolutionary, are cast as returns (“re-volts”) to earlier precedents. Through the seventeenth century, and particularly towards the end, the debate quickened, not only as to whether the future could be different from the past, but better. In this debate, the seeds of a new progressive narrative are sown. The agenda of the debate, conducted among the cultural elites of various European countries was sometimes framed as “the Quarrel between the Ancients and the Moderns”. The essentials of the debate (Baron 1959; DeJean 1997) were manifold, involving the authoritativeness of ancient writings (Aristotle over Descartes), the primacy of ancient authors over moderns (Sophocles over Racine), the supremacy of modern inventions (printing press, gunpowder, compasses), the genius of Newton, and so on. Francis Bacon characteristically inverts the traditional argument: Men are misled, he says, because they speak of Greece and Rome as “antiquity” or as “the world in which the ancients lived”, and ascribe to that world, therefore, the wisdom proper to maturity. But in fact, paradoxical though this may sound, it is the moderns who are the ancients, it is they who have achieved, as a result of the long history of mankind, a “greater knowledge of human things and a riper judgement” than the relatively young “ancient world” could have at its disposal. (Novum Organum, Aphorism 84, summarized in Passmore 1970).

As the eighteenth century began, and the Moderns began to pull ahead, so to speak, physical progress and spiritual progress began to be elided. The philosopher Leibniz (1646–1716) remarked: The love of God also fulfills our hopes, and leads us down the road of supreme happiness . . . It is true that supreme felicity (with whatever ‘beatific vision’ of knowledge of God may be accompanied) can never be complete, because, since God is infinite, he can never be entirely known. Thus our happiness will never consist, and must not consist, in complete joy, in which nothing is left to desire, and which would dull our mind, but must consist in a perpetual progress to new pleasures and new perfections.

and Leibniz argues further, “progress never comes to an end” (cited in Rutherford 2014, pp. 77–8) in part because of God’s activity in the world through the promotion and orchestration of universal desire: “Each individual substance in the universe is an entity striving to maximize its own perfection in relation to all the others” (Arthur 2014, p. 141). Elements of this debate could still be found in the eighteenth-century Enlightenment: Mandeville’s seminal Fable of the Bees (Mandeville 1714) scorns the moral legacy of virtue, and proclaims as a new discovery that

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 27

01/06/2017 16:50

28  Handbook on growth and sustainability private vice is the engine of public prosperity; Rousseau argues that the modern world is indeed more advanced and complex than the ancient world, but as such is more culturally degenerate, reviving a theme we have touched on earlier in the Greco-Roman context; David Hume in an early essay (1742 [1987]), “On the populousness of ancient nations” tackles the question of population growth, asserting that, contrary to the views of Montesquieu and others, there are more people now than previously; and Hume further argues – an early influence on Smith and Malthus – the more prosperous the economic system, the more people there will be by endogenous population growth (Brezis and Young 2011), all because of progress: “Our superior skill in mechanics; the discovery of new worlds, by which commerce has been so much enlarged; the establishment of posts; and the use of bills of exchange: These seem all extremely useful to the encouragement of art, industry, and populousness” (Hume 1742 [1987], p. 236). By the end of the eighteenth century, advocates of progress, such as Joseph Priestley, are in full cry, science being in a state of “perpetual progress and improvement” and “whatever was the beginning of this world, the end will be glorious and paradisaical, beyond what our imaginations can now conceive” (Passmore 1965, citing The Theological and Miscellaneous Works, esp. An Essay on the First Principles of Government, 1777). This kind of statement could be multiplied indefinitely: progress was launched. However, if we move back a step to the role of “growth” in this cultural shift, we find that it enters into the cultural matrix in a different form – requiring two new developments. The first is in fact, “development”.

ARRIVAL OF EMBRYOLOGY “Development” enters English late (from the French “desveloper” meaning to “unwrap, unfurl”, around 1650). It designates not just growth, but changing, transforming, improving growth – a focus on the process, the actual mechanism of the seed in its forward path towards becoming a plant. Its use in economic applications comes only at the beginning of the twentieth century: but its general social and political use enters into the progress and growth milieu earlier. The moment when growth and development come together is at the end of the seventeenth century, and the catalytic element is the arrival of modern embryology (Meyer 1939; Gilbert and Browder 1991; Mazzolini 2003; for a still relevant general history, Needham 1959). Ironically enough, the first descriptions of true embryological ­development can be found in Aristotle, who studied chicks in embryo;

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 28

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­29 but Aristotle’s original understanding was very complex (Needham 1959, referring to Aristotle’s “On The Generation of Animals” and other texts) and was adopted by the Catholic Church (through St Thomas Aquinas) only so as to determine the moment when the “intellectual soul” was infused by God into the human being. The main school of thought, deeply embedded culturally, was called “preformationism” – essentially meaning that all the elements of the adult were already available in (usually) the male sperm, though there were those who believed that the maternal egg contained the preformed being (otherwise it was the role of the female womb to fructify the unborn homunculus. Some of this was cast in the medieval distinctions between the “imperfect” female, and the “perfect” male, impressing structural form (male) on inchoate matter (female) (also cited by St Thomas Aquinas in his Summa Theologia, cited by Needham 1959, p. 236). Modern epigenesis – the view that the embryo changed, was transformed significantly as it developed by purely internal forces – involved a limited return to Aristotle (through William Harvey) and René Descartes. Both of these epigenetic retrievals were limited by, in Harvey’s case, a resort to Aristotelian language rapidly going out of date; and in Descartes, by a strictly atomistic and mechanical explanation which was almost immediately seen to miss the basic question: how does one move from simple mechanism to complex, living, organism? The arrival of the microscope and the painstaking work of early scientists such as Jan Swammerdam (1637–80) on frog’s eggs and Marcello Malpighi’s (1628–94) detailed hour-by-hour study of chick embryos towards the end of the seventeenth century shifted the ground of the question, and put preformation or epigenesis firmly on the scientific and cultural agenda. The study of embryology became a critical focus of the larger debate on mechanical versus unknown, possibly organic, forces throughout the eighteenth century (culminating in a famous debate between the Newtonian Albrecth von Haller (1708–77) and Caspar Friedrich Wolff (1735–94) considered one of the founders of modern embryology). Towards the end of the eighteenth century mechanical explanations began to lose place to the arrival of inexplicable forces such as electricity, magnetism, and new theories based in what was called ­“vitalism”. Embryology linked these together with the phenomenon of growth, and now development. As a result, to cite the historians Roe and then Gasking: Rejecting the search for a causal account of generation, these embryologists viewed the formation of the individual as part of a process of development encompassing the whole of the organic realm. As Gasking has pointed out:

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 29

01/06/2017 16:50

30  Handbook on growth and sustainability “Growth accompanied by change was now regarded as a fundamental feature of the Universe, and the growth of living things was the analogy in terms of which all other processes were to be understood.” (Roe 1981, p. 152)

For our purposes, the most important analogy – more than an analogy, a hybridization – was the application of growth and development to social, economic and political processes. Growth and development, as stated a number of times already, were rooted metaphorically in biological processes, and as such were bounded by the constraints of biology. Biological processes begin, grow, age, and die. Human individual development is the same: we are born, grow, age, and die; we develop certain powers as we go through life, and then hit a natural boundary. In the eighteenth century, writers began to consider whether there were laws of social history (Montesquieu, Mandeville, Smith and others) that were as powerful for social systems as Newton’s laws had been for natural systems. Gradually, the idea of social growth, improvement, progress entered into political discourse. Here is Hume again (on the virtues of foreign trade) as only one example: “Thus men become acquainted with the pleasures of luxury and the profits of commerce; and their delicacy and industry, being once awakened, carry them on to further improvements, in every branch of domestic as well as foreign trade” (“Of commerce”, 1752, quoted in Whittaker 1940). One touchstone of this social growth was population growth, which now became recognized as a significant engine of progress, and of course quasibiological in fact, though the biological import shifts from the individual to the larger social “organism”. Adam Smith in The Wealth of Nations: “The most decisive mark of the prosperity of any country is the increase in the number of its inhabitants” (1776 [1976], pp. 87–8). New concerns over the relationship between the ebbs and flows of population growth (as in Malthus) and the sustainability of profits, wages, and economic growth are themselves emblematic of the movement of the metaphor from the individual to the social. The crucial difference, the one that makes all the difference, is that the growth of the individual or biological organism is constrained, but growth projected onto the social realm is not. The individual can die, but the society can carry on growing and improving. There is no biological reason for the decline and death of the society, though the prospect of decline and fall has occasionally haunted nineteenth, twentieth, and twenty-first century societies (for example, Gibbon 1776–89 [1993]; Spengler 1918, 1923 [1976]; Jones 1988). In the meantime, growth and development broke free to become infinite social projects in what amounts to perpetuity.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 30

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­31 As an extended aside, this is the implied foundation for the project of “sustainable development”. It is well known that “sustainable development” is a “plastic word” – useable for multiple purposes in manifold contexts (Poerksen 1995), but the same is true for “sustainable” by itself. The original Latin word, “sustineo” carries with it a variety of meanings, which are intercomparable with reasonably equivalent Greek and Hebrew terms. A classic nexus of these is in the Bible, where the original Hebrew terms (such as “samak” and “ca’ad”) cover meanings such as ­“producing”, “strengthening” and so on – and are translated in the King James version as “sustaining” or “upholding” – Genesis 27:37: “With corn and wine have I sustained him”; Psalms 54:4 and Song of Songs 2:5; “God is mine helper: the Lord is with them that uphold my soul”, and also encompassing the idea of a strong foundation (the Greek equivalent is “sterizate”). The strong intimation of fostering a natural continuity over time is captured in Virgil’s rendition in the Georgics (20 BC) of the farmer’s life: “The farmer divides the soil with the curved plough; from whence he sustains (sustinet) his year’s work, his country, his future generations, his cattle and his bullocks” (Virgil 1916, 2:13–15). It is this combination of elemental nurturance with the inflection of continuity that is the source of the term’s current association with perpetual, supposedly benign, ­development (Oxford English Dictionary earliest citation 1972). This development of development dovetailed with the rise, not only of the Industrial Revolution, but its counterpart, the rise of the Romantic individual. There is no room here to explore this topic, except to say that Romantic individualism is both an internalization of the new powers of emerging modernity (cf. Napoleon), and a reaction against the mobilization of mass numbers of people in industrial, military, and sociopolitical contexts. Having already referred to the commitment of Romantic writers and poets to the destruction of the repressive hierarchies of the past, and the delirious future to come, I simply cite a famous description of modern man as seen through the eyes of Percy Shelley (1820): The loathsome mask has fallen, the man remains Sceptreless, free, uncircumscribed, but man Equal, unclassed, tribeless, and nationless, Exempt from awe, worship, degree, the king Over himself; just, gentle, wise; but man Passionless–no, yet free from guilt or pain, Which were, for his will made or suffered them; Nor yet exempt, though ruling them like slaves, From chance, and death, and mutability, The clogs of that which else might oversoar The loftiest star of unascended heaven, Pinnacled dim in the intense inane. (Prometheus Unbound, end of Act III)

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 31

01/06/2017 16:50

32  Handbook on growth and sustainability Human beings are not yet free of all constraints, but perhaps in time they will be as God, should they find a way around chance, and death, and change. When we look at the world since the Industrial Revolution, we find that the dynamic of scientific and technological innovation is echoed in the dynamic of the modern individual. It is ironic that while Romanticism came about in part as a resistance to aspects of the modern, it has strongly contributed to the glorification of the “strivings” of humankind on a societal scale. There is no more Romantic artefact than the Hoover Dam, and nothing more characteristic of the dove-tailings of the individual and the social as mutually supportive projects than a phrase like “Space: the final frontier”.

THE RISE AND FALL OF ECONOMIC GROWTH Arndt (1978), in his book entitled The Rise and Fall of Economic Growth sketches out the subsequent vagaries of growth in modern economic thought during and after the Romantic era, and supplements the above by pointing out that “growth” has not always been the be-all and end-all of economics: there have been periods in the last hundred or so years when economic growth was not a main concern, and development, as in international development, only became a fundamental priority after World War II. The elements of what constitutes economic growth in the current era have been subject to a plethora of theories and proposals, most famously in the “take-off” models of W.W. Rostow (1953) and deep critiques (Sachs et al. in The Development Dictionary; Sachs 1992). It is notable to someone coming fresh from the historical overview presented above that proponents such as Rostow continuously refer unconsciously to biological analogy, especially with reference to “self-sustaining growth” – the equivalent of the integrated organism with a life of its own, whose parts all mesh together, and with a purpose. Once the pieces are together, like some Frankenstein monster missing only the final spark, development will proceed naturally. Even critics of development, or at least over-rapid development, are prone to these kinds of metaphoric association. Arndt cites On Economic Growth by D.M. Bensusan-Butt (1960, pp. 212–14): Even when the worst of poverty lies behind, it is to be presumed, in a gradual evolution, that the collective wisdom of a varied community will refine the experiments of the well-to-do minorities of one generation into the sober preferences of the majority in the next . . . There is no reason why these thing should not be done better next time. It is much more that the ultimate fruits of civiliza-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 32

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­33 tion are slow growths that need a stable environment, and that the economic motive running loose in circumstances that permit or compel violent economic change must wreck this environment . . . [The economist] should not sneer about the economic motive . . . but equally he should not be laud it as the great engine of human progress, and from a safe position on the roadside, lead the cheers which attend the juggernaut progress of Aggregate Industrial Output.

It is all here. The quasi-natural process of “gradual evolution” as managed by the collective wisdom of society, associated with the “fruits” of “slow growth”, in deliberate contrast with mechanisms associated with danger, “violent economic change”, “running loose” and the “great engine” of the “juggernaut”. So unavoidable is the growth metaphor that it becomes the lens within which everything is to be seen, and the ultimate goal. In their recent Arrow lectures, deeply critical of free-market ideologies, entitled Creating a Learning Society, subtitled “A new approach to growth, development and social progress”, Stiglitz and Greenwald (2014, p. 209) nevertheless state: As we have argued here and elsewhere, government needs to play an important role in any economy, correcting pervasive market failures, but especially in the “creative economy”. Thus our critique of noninclusive growth goes beyond that it is a waste of a country’s most valuable resource – its human talent – to fail to ensure that everyone lives up to his or her abilities. Noninclusive growth can lead to democracies that do not support high-growth strategies.

Is high growth then ultimately inescapable?

CONCLUSION: LEARNING TO LIVE IN A FINITE WORLD There was a call early on in this chapter for a model of how to live and flourish in a finite world – what it means to be and to have a good life in a world of interdependence, boundedness, and finite, a world that respects the “limits to growth”, and it was suggested that part of the creation of this model should be an act of retrieval. I believe that we can see the emergence or re-emergence of such a finite and bounded ethos, given the attractiveness and seeming “rightness” for our time of aboriginal traditions, other non-Western traditions, and earlier Western traditions (for example, classical Stoicism). There are also crossovers into aspects of contemporary biology, such as the immanent teleology of Hans Jonas and others (Jonas 1966), and the new theories of auto-poeisis (Weber and Varela 2002). These traditions are traditions of immanence rather than transcendence,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 33

01/06/2017 16:50

34  Handbook on growth and sustainability place rather than space, and are committed to intensive rather than extensive growth. Since this chapter is so focused on Western thought, Stoicism provides a brief example of what this kind of living might entail (and the current revival of Stoicism is intriguing in this context (Hadot 1998; Brennan 2005)). As an epigraph to this chapter, Heraclitus states: “The soul has a logos, a self-law of growth.” This extraordinary saying, unique in the ancient world, encapsulates a principle of self-organization that takes its cue from the logos, itself in turn the dynamic expression of the cosmos, the pattern of things. In ancient philosophies such as Stoicism, we grow into an understanding of our place in the cosmos through both experience and through making ourselves available to the intimations of order in the universe. Marcus Aurelius, in his Meditations states: No longer let thy breathing only act in concert with the air which surrounds thee, but let thy intelligence also now be in harmony with the intelligence which embraces all things. For the intelligent power is no less diffused in all parts and pervades all things for him who is willing to draw it to him than the aerial power for him who is able to respire it. (From Book 8, trans. Long)

This integration of intelligent understanding and the actual workings of the cosmos, whatever else it might be, is a form of what the Stoics call oikeosis, which refers to the acts appropriate to someone who is at home in the world. This is one example of an ancient, updateable ethic. Reference has been made to individual, social, and technological romanticism, fostered by the breakthroughs of the modern era, devoted to a certain model of freedom from constraint. This has been fostered by, and reinforced by, the growth and development concepts let loose from their original biological limitations. I once read of a madman who asphyxiated himself because he was trying to find a substitute for breathing. As part of his madness, he was convinced that having to breathe every few seconds was a conspiracy to trap him in some complex web of deceit. This is a pretty fair analogy to those who argue for destroying the planet in the name of economic freedom. A new model would among other things propose that true freedom involves a recognition (and an embracing) of our dependence on planetary processes – that we are not victims of natural constraints, but beneficiaries of natural conditions. The bounds of the Earth are not a cage, but the source of whatever it is that we are. We can grow through a deep connection with the right patterns of nature, and in fact, ironically enough, we need to return to the roots of our biological inheritance. Coming face to face with the Earth prompts us to do so, and reveals that considera-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 34

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­35 tions of what we mean by growth challenge us personally and socially in profound ways that we have hardly begun to fathom. Learning to face up to, and live once again, if differently, embedded in the Earth, can potentially become the great outcome of this pivotal moment in human history. We can learn what it means to be who we are. So, ironically, among the other benefits of this process of learning to live in a finite world, we may become clearer about what it is to be truly creatures of the Earth before we recklessly decide to set out to infect the rest of the universe with our presence.

REFERENCES Arndt, H.W. (1978), The Rise and Fall of Economic Growth, Melbourne: Longman Cheshire. Arthur, R.T.W. (2014), Leibniz, Cambridge: Polity Press. Baron, H. (1959), ‘The Querelle of the Ancients and the Moderns as a problem for Renaissance scholarship’, Journal of the History of Ideas, 20 (1), 3–22. Bensusan-Butt, D.M. (1960), On Economic Growth, Oxford: Clarendon Press. Boulding, K. (1993), Valuing the Earth: Economics, Ecology, Ethics, H. Daly and K.N. Townsend (eds), Cambridge, MA: MIT Press. Brennan, T. (2005), The Stoic Life: Emotions, Duties, and Fate, Oxford: Oxford University Press. Brezis, E.S. and W. Young (2011), ‘Population and economic growth: from Hume to the new growth theory’, paper presented at the David Hume and the Scottish Enlightenment: Economic and Philosophical Studies conference, 12–13 December, Ben-Gurion University, Beer-Shiva, accessed 15 January 2016 at http://www.ec.bgu.ac.il/eng/EventsPapers/BrezisYoung_Population%20and%20Economic%20Growth.pdf. Brown, P.G. and P. Timmerman (eds) (2015), The Unfinished Journey of Ecological Economics, New York: Columbia University Press. Bury, J.B. (1932), The Idea of Progress: An Inquiry into its Origin and Growth, 1960 edn, London: Macmillan. Cassirer, E. (1953), The Philosophy of Symbolic Forms, vol. 1, trans. R. Manheim, New Haven, CT: Yale University Press. Corrigan, K. and L.M. Harrington (2014), ‘Pseudo-Dionysius the Areopagite’, Stanford Encyclopaedia of Philosophy, accessed 1 March 2017 at https://plato.stanford.edu/entries/ pseudo-dionysius-areopagite/. Dahl, G. and G. Megerssa (1997), ‘The spiral of the ram’s horn: Boran concepts of development’, in R. Majid and V. Bawtree (eds), The Post-Development Reader, London: Zed Books, pp. 51–64. DeJean, J. (1997), Ancients Against Moderns: Culture Wars and the Making of a Fin-deSiecle, Chicago, IL: University of Chicago Press. Donne, J. (1611), ‘An anatomy of the world’, accessed 15 January 2016 at http://www.poetry​ foundation.org/poem/173348. Gibbon, E. (1776–89), The Decline and Fall of the Roman Empire, 6 vols, J.B. Bury (ed.), reprinted 1993, New York: Random House/Everyman’s Library. Gilbert, S.F. and L.W. Browder (1991), A Conceptual History of Modern Embryology, Baltimore, MD: Johns Hopkins Press. Hadot, P. (1998), The Inner Citadel: The Meditations of Marcus Aurelius, trans. M. Chase, Cambridge, MA: Harvard University Press. Halbertal, M. (2013), Maimonides: Life and Thought, Princeton, NJ: Princeton University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 35

01/06/2017 16:50

36  Handbook on growth and sustainability Harvey, J. and E. Jousey (2007), Modern Economics: An Introduction, 8th edn, New York: Palgrave Macmillan. Heakal, R. (2015), ‘Economics basics: introduction’, accessed 1 March 2017 at http://www. investopedia.com/university/economics/#ixzz3rVRAL9oT. Hume, D. (1742), ‘Of the populousness of ancient nations’, Essays, Moral, Political and Literary, part 2, reprinted 1987, Indianapolis, IN: Liberty Classics. Jonas, H. (1966), The Phenomenon of Life, New York: Harper and Row. Jones, E.L. (1988), Growth Recurring, Oxford: Clarendon Press. Langholm, O.I. (1979), Price and Value in the Aristotelian Tradition: A Study in Scholastic Economic Sources, Bergen: Universitetsforl. Langholm, O.I. (1984), The Aristotelian Analysis of Usury, Bergen: Universitetsforlaget. Mandeville, B. (1714), The Fable of the Bees: or, Private Vices, Publick Benefits, London: printed for J. Roberts. Mazzolini, R.G. (2003), ‘Embryology’, in J.H. Heilbron (ed.), The Oxford Companion to the History of Modern Science, Oxford: Oxford University Press, pp. 249–51. Meyer, A.W. (1939), The Rise of Embryology, Stanford, CA: Stanford University Press. Mokyr, J. (2017), A Culture of Growth: The Origins of the Modern Economy, Princeton, NJ: Princeton University Press. Needham, J. (1959), A History of Embryology, New York: Abelard-Schuman. Passmore, J. (ed.) (1965), Priestley’s Writings on Philosophy, Science, and Politics, New York: Collier Books. Passmore, J. (1970), The Perfectibility of Man, New York: Charles Scribner’s Sons. Poerkson, U. (1995), Plastic Words, trans. J. Mason and D. Cayley, University Park, PA: Pennsylvania State University Press. Roe, S.A. (1981), Matter, Life, and Generation: Eighteenth Century Embryology and the Haller-Wolff Debate, Cambridge: Cambridge University Press. Rostow, W.W. (1953), The Process of Economic Growth, Oxford: Clarendon Press. Rutherford, D. (2014), ‘Justice and circumstances: theodicy as universal religion’, in L.M. Jorgenson and S. Newlands (eds), New Essays on Leibniz’ Theology, Oxford: Oxford University Press, pp. 71–91. Sachs, W. (1992), The Development Dictionary: A Guide to Knowledge as Power, London: Zed Books. Scientific American (1989), Managing the Planet: A Special Issue, 261 (3). Seneca, L.A. (1972), Naturales Questiones (Natural Questions), vol. 2, trans. T.H. Corcoran, Loeb edn, Cambridge, MA: Harvard University Press. Shelley, P.B. (1820), ‘Prometheus unbound’, accessed January 2015 at http://www.poetry​ foundation.org/poem/174403. Smith, A. (1776), The Wealth of Nations, reprinted 1976, Oxford: Clarendon Press. Spengler, O. (1918, 1923), The Decline of the West, 2 vols, trans. C.F. Atkinson, reprinted 1976, New York: Alfred A. Knopf. Stiglitz, J.E. and B.C. Greenwald (2014), Creating a Learning Society, New York: Columbia University Press. Taylor, C. (1989), Sources of the Self: The Making of the Modern Identity, Cambridge, MA: Harvard University Press. Timmerman, P. (2015), ‘The ethics of re-embedding economics in the real: case studies’, in P.G. Brown and P. Timmerman (eds), Ecological Economics for the Anthropocene, New York: Columbia University Press, pp. 21–65. Virgil (1916), Eclogues, Georgics, Aeneid, trans. by H.R. Fairclough, Loeb Classical Library, Cambridge, MA: Harvard University Press. Von Uexküll, J. and G. Kriszat (1970), Streifzüge durch die Umwelten von Tieren und Menschen, Bedeutungslehre (A Stroll Through the Worlds of Animals and Men, Meanings), Frankfurt am Main: Fischer, English translation 1992, in Semiotica, 90 (special issue with an introduction by T. von Uexküll), 319–91. Weber, A. and F.J. Varela (2002), ‘Life after Kant: natural purposes and the autopoetic foundations of biological individuality’, Phenomenology and the Cognitive Sciences, 1 (2), 97–125.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 36

01/06/2017 16:50

Growth, development and learning to live in a finite world  ­37 Whittaker, E. (1940), A History of Economic Ideas, New York: Longmans Green. Williams, G.D. (2012), The Cosmic Viewpoint: A Study of Seneca’s Natural Questions, Oxford: Oxford University Press. Wright, R.A. (2008), ‘Plutarch on moral progress’, in J.T. Fitzgerald (ed.), Passions and Moral Progress in Greco-Roman Thought, London: Routledge, pp. 136–50.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 37

01/06/2017 16:50

3  Sustainable development, limits and growth: reflections on the conundrum James Meadowcroft

This chapter is concerned with growth, environmental limits and sustainable development. It is organized into four sections. The first examines the notion of sustainable development. The second explores understandings of limits articulated in environmental argument. The third offers thoughts on the notion of ‘decoupling’ as a critical pathway to promote sustainability. The final section presents some concluding reflections.

1  SUSTAINABLE DEVELOPMENT The World Commission on Environment and Development (WCED) was not the first to invoke the notion of ‘sustainable development’ (Lafferty and Langhelle 1999), however Our Common Future provided the most widely cited definition, which has anchored three decades of international debate around sustainability. According to the WCED, sustainable development is ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (WCED 1987, p. 43). Critically, the passage continues: it contains within it two key concepts: the concept of ‘needs’, in particular the essential needs of the world’s poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organisation on the environment’s ability to meet present and future needs. (WCED 1987, p. 43)

It is worth pausing to consider some implications of this definition. First, as the structure of the expression itself makes clear, what is to be sustained in sustainable development is ‘development’. It is not in the first instance about sustaining any particular social practice, political institution, firm, ecosystem or environmental amenity, but rather about sustaining the process of development itself (Meadowcroft 2000). In this context ‘development’ means improvement in the human social condition, including health, education, economic prosperity or scientific, artistic and moral advance. To employ a word that is now unfashionable, what is to 38 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 38

01/06/2017 16:50

Sustainable development, limits and growth  ­39 be sustained is progress. However, if this development process is to be sustained, so must valued practices and institutions and the natural systems on which human civilization depends. Second, the two awkward concepts of ‘limits’ and ‘needs’ (so awkward that many subsequent discussions of sustainability have chosen to ignore them) point to the core quandary which sustainable development was intended to address. On the one hand, environmental limits are real, and ecosystem destruction threatens continued improvements in human well-being. While, on the other hand, a large part of the human population remains mired in poverty; their aspirations for a better life cannot legitimately be denied; yet further economic advance will inevitably result in increased environmental burdens. The idea of environmental limits was invoked to highlight real constraints on the path of future human advance: to ignore threats to ecological integrity generated by human activity risked undermining the foundations of future progress. The idea of needs was invoked to emphasize the legitimate claims of the poor, and to establish who had first call on resources should environmental considerations limit the growth of material consumption. That is, meeting the basic needs of the poor should come before satisfying additional material demands of the rich. So sustainable development captured the image of a new development trajectory that would pay attention to international equity and respect environmental limits, opening up the potential for all societies to continue to better themselves. While the post-war development discourse focused on poor countries catching-up with industrialized states, the WCED emphasized that ‘development’ was something every society does, and sustainable development represented an emergent challenge for all. Third, sustainable development was formulated as a high level political concept. More particularly it was intended as a ‘bridging concept’ that could draw together North and South (and East and West, as this was before the collapse of the Eastern bloc). As it has become embedded in international discourse, sustainable development links together a series of critical normative concerns related to improving human welfare, protecting the environment (especially global life support systems), equity within and between generations, and public participation in environment and development decision making (Langhelle 1999). In this sense, sustainable development functions like other broad normative ideas which play an important role in political discourse, such as ‘freedom’, ‘democracy’, ‘justice’, and so on. These terms have definite meaning and we cannot ­conceive of modern political discourse without them. Yet we still argue about the relative importance of their central components and what they should entail in practice. Just as we cannot deduce which particular voting system is most appropriate in a specific context by invoking the general

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 39

01/06/2017 16:50

40  Handbook on growth and sustainability idea of ‘democracy’, so we cannot determine whether this dam should be constructed, or that forest preserved uncut, just from the notion of sustainable development. Additional evidence and arguments must be invoked in either case. Nevertheless, these broad normative concepts help frame and structure discourse, ruling out many options that are clearly incompatible with democracy (for instance, that only the rich should have the right to vote), or with sustainable development (for example, that economic considerations should always trump environmental concerns). Keeping these points in mind allows one to avoid a number of common misperceptions. For example, governments sometimes reduce sustainable development to a ‘quality of life’ issue: but this is to neglect the critical questions of environmental limits and international equity. Emphasis on ‘balancing economic, social and environmental considerations’ (‘the three pillars of sustainable development’) has often led to a ‘two out of three isn’t bad mentality’, where environmental issues are systematically overridden to secure economic and social objectives (Meadowcroft 2013). Again, impressive lists of economic, social and environmental indicators can be aggregated, but if strategic priorities are not clearly identified then the concept is shorn of its critical edge. Sometimes the concept is dismissed as being too vague, lacking operational purchase, or open to cooptation by vested interests. Yet nothing is gained by abandoning the idea (because it is subject to misuse or distortion) in favor of more pristine concepts, because if these are complex, widely adopted, and articulate positive normative values, they too will be subject to ongoing interpretive struggles. Finally, it serves as a caution about the ‘normalization’ of sustainable development into established disciplinary practices. Economics provides a case in point where sustainability has been operationalized in particular ways (for example, as ‘non-declining income over time’), and much ink has been spilled on issues such as the substitutability of natural and manmade capital, or the contrast between ‘weak’ and ‘strong’ sustainability (Victor 1991; Neumeyer 2014). Such debates provide useful insights, but it should be remembered that sustainable development was in the first instance a political vision that explicitly included ideas about environmental limits and equity, which cannot adequately be represented in terms of the evolution of a single financial variable. So how does sustainable development relate to economic growth? On the one hand, the idea was explicitly formulated to draw political argument away from the unproductive ‘environment versus growth’ framing of the 1970s. Rather than focusing on economic growth, the WCED emphasized development – a process that embraced multiple dimensions, and that could in principle be continued indefinitely precisely because it did not have to entail an increase in environmentally damaging material

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 40

01/06/2017 16:50

Sustainable development, limits and growth  ­41 consumption (see Chapter 6 in this volume). On the other hand, writing at a time when many developing countries were mired in debt and locked in economic stagnation, the Commission unapologetically called for a ‘new era of growth’ that would meet the aspirations of the poor for better material living conditions. An expansion of economic activity and an increase in resource inputs (for example, energy consumption) was deemed essential to meet the needs of peoples in poorer countries. Elsewhere, sustainable development ‘could be consistent with economic growth provided the content of growth reflects the broad principles of sustainability’ (WCED 1987, p. 44). In sum: economic growth was an important contributor to development; but development should not be reduced to economic growth; everywhere efforts should be made to ‘change the quality’ of growth (to meet basic needs, enhance public welfare and dramatically reduce environmental burdens); while growth that violated these conditions was ‘unsustainable’, and so did not represent true ‘development’. To explore these relationships further it is helpful to consider the issue of environmental ‘limits’ a little more closely.

2  LIMITS AND SUSTAINABILITY Ideas about limits have been central to the development of modern environmental thought and practice (Meadowcroft 2012). Indeed, environmental politics and policy involve a more or less continuous (sometimes explicit but more often implicit) argument over the definition of limits – a process that involves a clash of economic and social interests, disputes over the costs and benefits of particular modes of social/environmental interaction, contention around scientific assessment of the causal mechanisms driving particular impacts, and political conflict over public intervention to manage human activities within environmental frontiers. A whole string of environmental concepts reflect attempts to come to terms with such limits, including: ‘critical loads’, ‘maximum sustainable yield’, ‘permissible exposure limit’, ‘precautionary catch limit’, ‘environmental quality standards’, ‘emissions limits’, ‘cap and trade’, ‘endangered species’, ‘planetary boundaries’, ‘biosphere reserve’, ‘ecological footprint’, ‘voluntary simplicity’, and ‘sustainable consumption’. As we saw in the previous section, environmental limits are critical to sustainable development. Yet the discussion of limits in the report of the WCED remained opaque. The formulation cited above – that refers to ‘limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs’ – makes it sound as though limits depend on technology and social organization

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 41

01/06/2017 16:50

42  Handbook on growth and sustainability rather than on the physical characteristics of ecosystems. Yet elsewhere the report recognized that there are ‘ultimate limits’, arguing ‘many of us’ already ‘live beyond the world’s ecological means, for instance in our patterns of energy use’, and that ‘sustainable development requires the promotion of values that encourage consumption standards that are within the bounds of the ecological possible and to which all can reasonably aspire’ (WCED 1987, p. 44). This being said, the way governments have actually taken up sustainable development since it was endorsed by world leaders at the Rio Earth Summit in 1992 has tended to avoid an explicit and frank discussion of the implications of environmental limits. In particular, political leaders have shied away from the critical issues of the growth of population and of material consumption that threaten global ecosystems and which any consequent discussion of sustainable development must sooner or later confront. Climate change represents perhaps the most obvious global limit (and was the problem that most concerned the WCED as it developed the concept of sustainable development) but, two and a half decades after the initial signing of the United Nations Framework Convention on Climate Change (UNFCC), states remain resistant to the idea of carbon budgets that would operationalize limits implicit in a 2.0 (or 1.5?) degree Celsius target for warming in this century. Why do limits pose such difficulties? Part of the story relates to complexities and ambiguities associated with the concept itself. Indeed, the idea of limits is routinely invoked in environmental discourse in at least four distinct ways (Meadowcroft 2012). First, and most obviously, limits are understood as biophysical constraints that become manifest as natural and social systems interact. Expand fishing activities too far and stocks will collapse; allow excess fertilizer run-off to contaminate a lake and its ecological state may flip; release too much carbon dioxide into the atmosphere and the climate will change. Typically such limits are experienced as shocks that frustrate expectations and compel some form of societal adjustment. A second understanding of limits focuses on cognitive and institutional barriers to our capacity to understand and manipulate nature (and society). Here the limits lie ‘within’ us – as individuals or groups – and are revealed by our inability to manage natural systems as engineered systems or to control our own technological artifacts. A third influential (if metaphorical) understanding points to the limits of the current global development trajectory to meet human aspirations. The established model could not be extended to all humankind without a catastrophic breach of limits of the first kind. More fundamentally, it is argued that the current materialist and consumption oriented paradigm fails truly to satisfy human needs. Beyond a certain point increased affluence does not sub-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 42

01/06/2017 16:50

Sustainable development, limits and growth  ­43 stantially improve well-being, and a different sort of society focused on family, community, locality, personal growth and interactions with nature would be more rewarding (as well as more environmentally sustainable). Finally, we have limits as self-limitation: the deliberate restriction of human activity to deal with limits of the three kinds raised above. Such limitation can be motivated by self- or other-regarding concerns, and can be articulated at the individual or collective level. These four different understandings of limits (biophysical constraints, cognitive/organizational inadequacies, a dead-end development trajectory, and self-control) are interwoven in varied ways in arguments about environmental futures. This was the case, for example, with the pioneering Limits to Growth report which used an early computer simulation to model global trends (Meadows et al. 1972). Its core argument related to biophysical limits: the interaction of five key variables (population, industrialization, food production, pollution and the consumption of non-renewable natural resources) illustrated that a continuation of existing trends would ultimately result in a civilizational ‘crash’. However, the report also emphasized that material growth was not the highest end of human endeavor and that deliberate action could be taken to limit runaway growth and steer society towards a state of long-term equilibrium. Even if we stick to the first understanding, where limits are associated with the idea that pressure cannot be increased on ecological systems indefinitely without consequences, it remains difficult to establish exactly where such limits lie and what is to be done about them. In the first place, there are many different limits, relating to varied natural systems and processes, and different forms of human intervention, that are manifest at multiple and overlapping spatial and temporal scales. Second, the causal linkages involved in eco-social couplings are complex and often poorly understood. So it is hard to know where to draw the line. Third, judgements about such limits have an irreducibly normative character (consider, for example, Davidson 2000; Rockstrom et al. 2009; Biermann 2012). Thus environmental limits appear rather plastic. They are open to interpretation and can prompt different forms of policy response. These difficulties are evident for large-scale problems such as climate change and biodiversity loss. The physical processes involved are rife with uncertainty, and there can be no purely scientific procedure to determine ‘safe climate change’ or an ‘acceptable rate of species loss’. But they are also present on the local level (for example, acceptable polluting loadings or land use ­decisions) and in relation to local/regional/global linkages. This does not mean that environmental limits do not exist, lack scientific foundation, or are arbitrary. It does mean that while science is essential to establish the p ­ hysical processes underpinning environmental limits, any definition of these limits requires

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 43

01/06/2017 16:50

44  Handbook on growth and sustainability normative choice and political argument. It implies decisions about risk, the distribution of costs and benefits, and preferred ways of life. This points to the practical difficulty of defining and acting on environmental limits. To alter offending social practices implies a change to existing expectations and entitlements, disruptions of established routines and identities, and interference with previously defined property rights (for example, through the establishment of catch limits, emissions regulations, protected areas, and so on). So there is resistance. Moreover, it is not just that societies occasionally stray over ecological boundaries. On the contrary, the trajectory of the past few centuries, which has involved rapid growth in human numbers, deployment of ever more powerful technologies, increasing exploitation of fossil fuels to power economic development, and a vast increase in material throughput, is systematically pushing against ecological frontiers all across the board. Our civilization has been built on a continuously expanding human environmental footprint. The grand social bargain of the twentieth-century developed states – involving market mediated economies with private ownership of the principal productive assets, representative democracy with extensive personal liberties, and a mildly redistributive welfare state – has been underpinned by a mode of economic expansion that has generated increased material affluence at the cost of growing environmental harm. Many scientific assessments have demonstrated the magnitude of the human impact on the global ecosphere (MEA 2005; IPCC 2014). To provide just a few indications of the enormous increase in the scale of the human presence: ●

over the period 1900 to 2005 world population quadrupled (while the value of total economic output increased more than 22 times) (UNEP 2011b); ● total material extraction increased by a factor of 8 over the same period, with the use of construction minerals growing by a factor of 34, ores and industrial minerals by a factor of 27, and fossil energy carriers by a factor of 12 (UNEP 2011b); and ● while in 1900 the human population already massed more than all other mammal species combined (with domestic animals weighing in at three times the wild total), a century later humans represented ten times the remaining wild total, with the mass of domestic animals constituting 24 times wild mammalian mass (Smil 2013). So in a real sense the human presence has been squeezing the space required for other species and exercising continuously growing pressure on the global ecosphere.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 44

01/06/2017 16:50

Sustainable development, limits and growth  ­45 Environmental limits take many forms at multiple scales, are defined by complex and often poorly understood causal processes, and are irreducibly normative. Managing these limits requires difficult adjustments to existing entitlements and practices, while the continuously expanding human presence is threatening to make the consequences of breaching such limits ever more real.

3 DECOUPLING, GROWTH AND SUSTAINABLE DEVELOPMENT Sustainable development implies the adjustment of societal development trajectories so that they remain within an envelope that the environment can support. Yet it recognizes that the precise definition of these ecological limits is bound up with normative choice about the value of different ways of life and socio-ecological interconnections. Sustainable development frames the negotiation of these limits – the adjustment of human ambitions to the ecological conditions of our existence – as a positive process that opens up fresh avenues for human improvement. Building sustainable societies is about building fairer and better societies. So where does that leave ‘growth’? Clearly this depends on the kind of growth that is implied and the circumstances in which a particular society (and, indeed, human civilization more generally) finds itself. One of the difficulties with arguments about growth is that it is not always clear which kind of growth is at issue: conventionally measured gross domestic product (GDP), social well-being, material throughput, the human ­population, disruption of natural systems or critical environmental impacts. From an environmental perspective, it is physical impacts that ultimately matter (tons of CO2 emitted, hectares of forest clear cut). Impacts that relate to critical environmental problems cannot keep growing without undermining the conditions that have made development possible. Also, since on many fronts such impacts have already moved beyond the assimilative capacity of ecosystems (MEA 2005; EEA 2010; Geo5 2012), substantial absolute reductions in environmental ­pressures are required. Of course growth in physical impacts is related to the size of the human population, the throughput of energy and materials, the kinds of ­technologies that are being deployed and the scale of market exchange. But the nature of these relationships is complex, mutable and ­contested. Under existing conditions GDP growth typically leads to greater material and energy throughput, and increased environmental loading. Although people in different regions of the globe have very different material

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 45

01/06/2017 16:50

46  Handbook on growth and sustainability footprints, population growth implies increased ecological pressure. Technology can both multiply and mitigate environmental disruptions. One way to explore these issues is to consider the notion of ‘decoupling’ which in the environmental sphere has been described as ‘breaking the link between “environmental bads” and “economic goods”’ (OECD 2002, p. 11). The term was used in the Netherlands Third National Environmental Policy Plan (NEPP3 1989) which called for ‘an absolute decoupling of economic growth from environmental pressure and the sustainable use of natural resources’. In the early 2000s it was promoted by the Organisation for Economic Co-operation and Development (OECD 2001, 2002), which defined ‘Decoupling environmental pressures from economic growth’ as a core objective of its Environmental Strategy for the First Decade of the 21st Century (OECD 2001). More recently decoupling has reappeared in the context of the United Nations Environment Programme’s (UNEP’s) ‘Green Economy’ initiative (UNEP 2011a, 2011b). Even when the term is not explicitly used, it can be understood as implicit in the idea of changing the ‘quality of growth’ articulated in Our Common Future (WCED 1987), and in the notion of ‘green growth’ promoted by international institutions particularly surrounding the Rio+20 conference in 2012. While decoupling is often invoked in this broad sense, it is typically assessed by reference to specific indicators which track ‘the relative growth rates of a pressure on the environment and of an economically relevant variable to which it is causally linked’ (OECD 2002, p. 11). Decoupling is said to occur when ‘the growth rate of the environmentally relevant variable is less than that of its economic driving forces’. In the literature a critical distinction is made between relative and absolute decoupling: in a growing economy absolute decoupling implies that ‘pressure on the environment is stable or falling’; while relative decoupling occurs when ‘the growth rate of the environmentally relevant variable is positive, but less than the growth rate of GDP’ (OECD 2002). Both forms of decoupling can be considered to reflect an increase in the efficiency with which the environment is being used to generate economic goods, but with absolute decoupling the efficiency gain is large enough that the environmental pressure does not increase (or actually falls) even as economic benefits rise. Like any environmental indicator decoupling measures capture one fragment of a complex reality. Typically they do not provide information about the capacity of environmental media to absorb a given pressure: so even with absolute decoupling, impacts might continue to cause grave or even irreversible harm. Nor do they reflect environmental externalities associated with trade flows: so the absolute decoupling of economic activity from a pollutant release in one country might reflect the transfer of environmentally damaging production elsewhere (UNEP 2011b). There

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 46

01/06/2017 16:50

Sustainable development, limits and growth  ­47 is now a growing literature that considers the impact of trade flows on decoupling calculations (see, for example, Dolter and Victor 2016). Although decoupling measures focus on the efficiency with which the environment is being used to provide economic goods, and say nothing directly about how close existing activities lie to the frontier of environmental sustainability, a preoccupation with absolute decoupling really only makes sense in the context of anxieties about limits (whether at the local or broader scale) to the environment’s capacity to support human activity. That is, the concern with absolutely de-linking ‘economic goods’ and ‘environmental bads’ is grounded in an assumption that (1) the capacity of the environment to absorb insult (or of humans to accept harm transmitted through the environment) is not infinite and (2) that, as a result of continuing expansion, humankind is tending to place ever greater absolute demands on the ecosystems that sustain societies. As the authors of the 2002 OECD decoupling indicator report pointed out: ‘most discussions concerning decoupling will sooner or later raise questions about the projected trajectories for environmental pressures if economic growth continues’ and about ‘the capacity of the environment to sustain human activity in the long term’ (OECD 2002, p. 19). When decoupling indicators are linked to an externally defined material target – established on the basis of scientific assessment mediated through policy processes (for example, a limit for sulfur dioxide emissions based on an estimate of ‘critical loads’ that ecosystems can tolerate) they can become a mechanism for evaluating the extent to which economic activity is being maintained (or being brought back) within socio-ecologically tolerable limits. It is worth making two further points about the common macro-level formulation of the decoupling challenge to break the link ‘between environmental damage and economic growth’. First, taken literally, the environmental objective is impossibly broad: humans are constantly transforming their surroundings, and the extent to which such changes constitute ‘damage’ is continuously socially contested. Indeed, the authors of a recent UNEP report on decoupling concluded that ‘on higher levels of aggregation’ (such as a national economy) ‘overall impact assessments become increasingly indeterminate’ (UNEP 2011b, p. 9), and ‘it may be difficult to design a system-wide set of interventions capable of decoupling resource use from all negative environmental impacts simultaneously’ (UNEP 2011b, p. 6) – because there are so many diverse (and perhaps unknown) impacts, and measures taken to deal with one problem can have unintended effects on others. Clearly, then, there is an implicit assumption that decoupling concerns major issues that ­significantly impact human or ecosystem health and well-being. Of course, this may be applied at multiple

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 47

01/06/2017 16:50

48  Handbook on growth and sustainability scales (from local communities to the global ecosphere): thus decoupling greenhouse gas (GHG) emissions from economic activity relates to the critical global issue of climate change, while decoupling fertilizer run-off from agricultural production might be necessary to avoid eutrophication of a local lake. However, if this macro-level call for decoupling is not rendered concrete through the establishment of clear priorities and actions it risks degenerating into incoherence. Second, the standard formulation of the ‘economic good’ side of the decoupling relationship can also be seen as problematic, perhaps appearing to suggest that economic growth is a good in and of itself, or even the key economic good. Yet there is increasing recognition that the standard measure of economic growth – GDP – is a very crude approximation of social welfare. Gross domestic product may grow even while real welfare declines, or while conditions for long-term prosperity are undermined (Stiglitz et al. 2009). Moreover, there is a tradition of environmental thought which suggests that the modern obsession with economic growth is itself the problem, increasingly eroding ecological systems while failing to meet real societal needs (Victor 2008; Jackson 2009). Such ideas link to the broader cultural critique recently articulated by the ‘degrowth’ movement (Martinez-Alier et al. 2010; Chapter 8 in this volume). From this vantage ‘decoupling’ can look like a distraction, when the real challenge is to move away from economic growth itself. Given this context, it could be argued that we would be better off with a formulation of the macro decoupling challenge that was broadly agnostic about economic growth (van den Bergh 2010; Chapter 9 in this volume): which called, for example, for the ‘absolute decoupling of economic activity from serious environmental damage’, signaling that whether GDP rises, stabilizes or falls, absolute pressures on the environment must be reduced back within the boundaries of what ecological systems can sustain. Notwithstanding these doubts – indeed in a certain sense because of them – the idea of decoupling captures key features of the challenges that actually confront contemporary policy makers. On the one hand, economic growth appears essential to continued prosperity and stability, yet on the other hand, global economic expansion is leading to a rising material footprint that increasingly breaches environmental limits at diverse scales. Decoupling can track the extent to which societies adjust (or fail to adjust) their political-economic systems to reduce environmental burdens even as they secure increased economic well-being, and it points to questions about the underlying relationships among social welfare, economic growth, and environmental harm. Is it possible to have continued economic growth (an increase in ­economic activity as measured by GDP) without a corresponding increase

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 48

01/06/2017 16:50

Sustainable development, limits and growth  ­49 in critical environmental pressures? If GDP can be substantially ‘dematerialized’, requiring less material or energy requirements for each unit of value, the size of the economy as a set of market transactions could rise even though material/energy throughput did not. Moreover, increased material throughput (the volume of material production and consumption) might not always lead to an extension of critical environmental loadings. Different kinds of throughput have different environmental impacts (uranium versus construction aggregates; energy from wind compared to energy from coal), and while any throughput increase has by definition some environmental impact, not all of these impacts are necessarily critical at appropriate spatial and temporal scales. How far these process can actually be pushed in practice depends on complex interrelationships among the economy as a value system and as a system of physical interactions, on the underlying properties of ecosystems and eco-social interactions, and on the capacity of political systems to reform the rules governing economic behavior (for example, through regulatory regimes, fiscal policy, expenditure, and so on) that would drive economic actors to adjust practices in the desired direction. Assessing international experience with decoupling GDP growth from environmental burdens is challenging. To broadly summarize the existing literature one could say that at the national level relative decoupling on specific environmental burdens is commonplace across OECD states (Azar et al. 2002; OECD 2002; UNEP 2011b). Absolute decoupling has been observed in some countries with respect to important environmental issues (for example, mercury releases, sewage discharges, ozone depleting substances, phosphorus inputs, coal consumption), but has not been achieved by all countries and with respect to all environmental issues. Sulfur dioxide provides one of the clearest cases of absolute decoupling in the OECD, with emissions falling even as economies have expanded. In the 30-year period 1980–2010 the figures for GDP growth and emission decline for three countries were: Canada, +60 percent and –57 percent; Netherlands, +56 percent and –82 percent; UK, +59 percent and –89 percent (EEA 2014). Indeed, by 2010 sulfur dioxide emissions in Western Europe had fallen back to pre-1900 levels (Smith et al. 2011). A fuller assessment of the environmental significance of this result requires some external scientifically and politically derived standard, which can in this case be provided by ‘critical loads’ for acidification. In Europe between 1990 and 2010 the areas where critical loads were exceeded declined by 80 percent, with further progress (related to additional policy measures) expected to reduce these to a few remaining ‘hotspots’ on the German/ Netherlands border by 2020 (EEA 2014). However, it will take much longer for ecosystems to recover from decades of high deposition. Of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 49

01/06/2017 16:50

50  Handbook on growth and sustainability course, lifestyles in OECD countries might not have been so convincingly decoupled from sulfur dioxide emissions, because of imports (say from China) with embodied SO2 emissions. While there is no detailed data on this phenomenon, we can take encouragement from the fact that global sulfur emissions also seem to have peaked in the 1980s. In other words the dramatic declines in Europe and North America were not overwhelmed by increases in developing countries. Chinese emissions, which grew strongly in the 1990s and early 2000s, are now also beginning on a downward path, following recent anti-pollution initiatives (Klimont et al. 2013). India’s emissions continue to grow. Sulfur dioxide emissions are in the first instance a local and regional problem with impacts on human and ecosystem health (although they also influence aerosol formation and hence the climate). So local and regional decoupling are critical, and remain an acute challenge in some regions, especially Asia. Demonstrating decoupling for a few specific issues, in certain countries, for particular periods of time, is a far cry from the achievement of decoupling for all critical problems at global, regional and local scales over extended time frames. In fact, some other issues have proven much more difficult to control: NOx emissions, for example, and above all greenhouse gas (GHG) releases and pressures on global biodiversity (EEA 2014). Moreover, as patterns of production and consumption evolve, new issues continue to appear, associated with the expansion of existing activities or the deployment of novel technologies (e-waste, or impacts from advanced battery production, for example). Positive trends can be reversed by shifting economic or political circumstances (for example, the erosion of protected areas, or loosening of environmental regulations). So there is no green ‘invisible hand’ that ensures increased affluence automatically leads to reduced ecological impacts as implied by an environmental Kuznets curve (UNEP 2011b; World Bank 2012). Climate change represents a critical global decoupling challenge (and also the one for which data is most readily available). The Kaya identity which lies at the foundation of many climate models presents GHG emissions as a product of population, GDP per head, energy per unit of GDP, and emissions per unit of energy. So: GHG emissions 5 population × (GDP/population) × (energy/GDP) × (emissions/energy) This highlights that if global emissions are to decrease then at least one of these four terms must decline, and if some (such as GDP per capita and/or population) are to continue to rise, others must fall still more rapidly. The last two terms of this equivalency point to planes on which macro decou-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 50

01/06/2017 16:50

Sustainable development, limits and growth  ­51 pling can be achieved. Pressure on the climate system per unit of economic output can be reduced by: (1) decreasing CO2 emissions per unit of energy (for example, by raising the proportion of renewables in the energy mix), or (2) decreasing the energy intensity of GDP (using less energy to produce each unit of output). Provided the product of these two terms falls faster than any increase in total GDP (that is, population × GDP/population) absolute decoupling would be achieved and total emissions would fall. All sorts of social innovations and policy initiatives could help drive down these two terms. In this respect it is a mistake to associate decoupling with a ‘technologically focused’ as opposed to ‘culturally’ or ‘behaviorally oriented’ solution to environmental problems. Changing dietary patterns (say, reducing beef consumption/production) could lower aggregate GHG emissions just as surely as mandating more efficient engines in passenger vehicles. Decoupling is then a macro result of micro scale adjustments which can be encouraged by policy intervention, but also by other ­autonomously driven eco-societal changes: fashion, technology, scarcity, and so on. Other things being equal, with slower population growth and/or per capita economic growth a given decoupling rate would be associated with a greater reduction in absolute emissions. So demographic policies are a potential medium-term policy lever as countries wrestle with bringing down GHG emissions. Lower rates of economic growth would also make the decoupling mountain less hard to climb (provided they did not delay the deployment of mitigating technologies). Is it possible to push decoupling far enough and fast enough to address critical global problems? To take the climate example again: if the world is to meet a 2050 emissions reductions target compatible with the 2 degree climate goal, and assuming global population increases in line with median UN estimates and economic growth along existing trends, decoupling rates of CO2 emissions from GDP ten or more times higher than those experienced in recent years would be required (Jackson 2009). Whether such reductions in the carbon intensity of world output can be attained remains an open question. However, historic decoupling rates tell us little about what is or is not possible – because nobody has yet pursued an aggressive decarbonization agenda. If the world stops burning fossil fuels (or at least prevents the emissions from reaching the atmosphere through carbon capture and storage) then pressure on the climate system will abate. As polluting activities taper off, even large subsequent increases in aggregate economic activity would generate only small increases in total emissions (ten times zero is still zero). In this sort of world, higher incomes (from economic growth or from rebound effects associated with energy efficiency improvements) would not lead to significant GHG emission

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 51

01/06/2017 16:50

52  Handbook on growth and sustainability increases because carbon intensive goods and services would simply not be available for purchase. Radically transforming energy production and consumption in this way is no trivial task (see Chapter 11 in this volume): but expert assessments repeatedly suggest it faces no fundamental technical or economic barriers (Stern 2006; IISA 2012; DDP 2014). Instead, the obstacles are primarily political and institutional, and dramatic changes would be required to the way political authorities currently structure the economic landscape if societies are actually to proceed down such lowcarbon pathways. In many ways the interconnections among issues are likely to pose the greatest difficulty for decoupling efforts. Even as states begin to deploy more ambitious climate mitigation policies they will also need to adapt to ongoing impacts of climate change. Energy use is closely related to water use and land use. Biodiversity protection may collide with pressure to expand areas devoted to bio-energy crops, and so on. On the other hand, it is also true that changing one practice can impact multiple problems; for example, phasing out fossil fuels will reduce conventional air pollutants and water contamination as well as mitigate climate change. So positive synergies exist as well as negative ones. To say that such absolute decoupling is possible in principle (for selected critical environmental burdens), does not tell us how likely it is in practice. And to argue that modern economies do not rest on an economic foundation that by definition requires a continuous extension of critical environmental burdens does not mean that current political-economic arrangements do not encourage just such an extension. In fact, prevailing practices allow the large-scale externalization of environmental costs, enabling the private accumulation of wealth through the socialization of environmental risk, and encouraging the displacement of environmental problems across space and time. Businesses routinely increase value by exploiting unsustainable process of production and encouraging unsustainable patterns of consumption. The co-evolution of technologies, financial practices, regulatory regimes and consumer expectations all ‘lock in’ existing social-technical configurations (Unruh 2000; Geels 2005) that are vigorously defended by interests that benefit directly from their reproduction (Meadowcroft 2011). Breaking with these patterns will be exceptionally difficult, requiring structural reforms to established political-economic relationships to choke off environmentally deleterious forms of economic activity. Many analysts remain skeptical of the potential to achieve decoupling at anything like the pace required to meet internationally agreed goals (Jackson 2009). Climate change has been on the policy agenda for more than two decades but GHG emissions continue to rise, and the perfor-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 52

01/06/2017 16:50

Sustainable development, limits and growth  ­53 mance of even the leading jurisdictions is uneven. Yet this hardly seems surprising. Creating successful international institutions takes time: consider the three-quarters of a century required to establish the (existing and deeply flawed) world trade regime. Moreover, the political science literature on domestic policy change suggests a 30-plus year time frame for shifts in fields that pose considerably less structural challenges than climate (Sabatier and Jenkins-Smith 1993; Pierson 2000). Human societies have been building the fossil energy system for two centuries, and this trajectory will not be changed overnight. On the other hand, there are many positive signs, from the conclusion of the 2015 Paris Agreement to the increasingly rapid uptake (and falling prices) of renewable energy. Focusing on eliminating the environmental harm (climate change driven by GHG emissions) by promoting full decarbonization of the global economy (driving out unmitigated fossil energy usage), while highlighting the co-benefits (health, more livable cities, economic opportunities, and so on) of new technologies and new ways of living seems best suited to mobilize political resources for change. There is no guarantee it will unfold rapidly enough to avoid a given level of harm, but it is probably more likely than any other strategy to succeed. It is important to emphasize that the argument sketched out above does not imply that economies can float on air, that endless growth in material flows is possible without consequences, or that environmental impacts that are not critical are insignificant. Pushing forward decoupling to bring selected absolute environmental burdens under control will demand significant reform to existing economic institutions. Just how far such decoupling can be achieved, and the scale of reform to existing economic structures that will be required to do so, can only be answered in practice.

4 SUSTAINABLE DEVELOPMENT FACES THE FUTURE Among those who take environmental limits seriously there have been two basic traditions of thought; one emphasizes the transformation of economic growth to reduce its environmental footprint, and the other takes more deliberate aim at economic growth itself as the driver of ­environmental destruction. Our Common Future with its notion of sustainable development has been associated with the first current, while the Limits to Growth report with its explicit endorsement of a steady state economy, is more closely linked to the second perspective. Yet there are stronger affinities between the two documents than is usually ­acknowledged. Both argued that economic growth was not an end in

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 53

01/06/2017 16:50

54  Handbook on growth and sustainability itself and that emphasis should be placed not just on material advance, but also on the higher products of human civilization. Both recognized a need for increased resource consumption to raise living standards in poor countries, but posited some form of ‘absolute’ ecological limits that must be respected to avoid undermining the conditions for human flourishing. Both argued for understanding of human interactions with the environment in a systematic way, and considered that demographic policies would be an essential element of managing human pressures on the biosphere. The continuing debate between ‘green growth’ (Ekins 2000; OECD 2011a; World Bank 2012; Chapter 6 in this volume) and ‘end of growth’ (Daly 1977; Chapter 5 in this volume) turns in large part on beliefs about three interrelated questions: (1) the extent to which decoupling of economic growth from environmental burdens is actually possible; (2) the depth of the changes to the existing economic system required to resolve environmental issues; and (3) the understanding of the approach that will be most effective in shifting current practices. For green growth advocates the potential for decoupling is significant, the transformation of existing economic practices can be achieved incrementally, and attention should be focused on the environmental ills to be corrected rather than on an abstract repudiation of economic growth (see Chapter 6 in this volume). For the growth critics absolute decoupling on the scale required is impossible, the economic system requires fundamental transformation, and it is necessary to target growth economics explicitly (see Chapters 5, 7, and 8 in this volume by Daly, Hayden, and Sekulova et al., respectively). Yet it is unclear whether the differences between these perspectives matter much in the short term. After all, there is agreement on both sides that economic growth based on expanding appropriations from nature that threaten the integrity of global ecosystems must be ended. Practices that already breach critical environmental limits (like GHG releases driving climate change) must cease and their pressures brought back within environmental frontiers. Of course, the consequences of vigorously pursuing such a change would be understood differently by the two currents: for the growth critics it would lead to an inevitable winding down of economic growth (as all growth would ultimately fall into this extensive/ critical-impact generating category), while for green growth proponents it could open the door to a new era of (non-environmentally destructive) economic expansion. Key policy prescriptions required to end the era of environmentally pernicious growth can appeal to either current: managing (potentially) renewable resources within the regenerative capacity of ecosystems; exploiting non-renewable resources no faster that substitutes can be developed; ending the despoliation of global commons such as the atmosphere

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 54

01/06/2017 16:50

Sustainable development, limits and growth  ­55 and oceans; driving down population growth rates; investing in natural capital; and so on. Since societies have already crossed major ecological thresholds, absolute decoupling of impacts from economic activity is required either way. The changes to current economic practices and institutions will in any case be fundamental. In the short to medium term a shift towards a no-growth political orientation appears unlikely. Current institutional arrangements and social expectations are adapted to economic growth, and when growth stalls or goes into reverse there are serious social consequences (unemployment, cuts to government expenditure, declining health outcomes, and so on). Although government actions have in the past reduced growth rates (to calm economic overheating or control inflation) or as a byproduct of austerity measures, it is hard to envisage deliberate macroeconomic action to address an issue such as climate change until all other measures have been tried and the situation appears desperate. Lower economic growth rates might accompany a more decisive attack on serious environmental problems (although one UNEP report, 2011a, suggests the contrary, but see Victor and Jackson 2012 for a critique of this study), or follow on from catastrophic-impacts and adaptation strategies if governments fail to embrace rigorous environmental policies. Or it may be that economic growth rates fall in coming decades with structural economic change, the stabilization (and/or eventual decline) of population and/or the redefinition of social goals and understandings of human well-being and progress. Such changes will require a substantial reimagining of the worlds of work and welfare (Gough and Meadowcroft 2011; Chapter 14 in this volume). And something resembling a steady state option may beckon in the further future. The key implications of sustainable development appear to be these. Environmental limits are real and the well-being of this and future generations depends on bringing society (and economic activities in particular) back within the frontiers of the support capacity of ecosystems. Issues of international equity are inevitably entangled with the management of environmental issues: space must be made for the legitimate aspirations of all the world’s peoples. The focus should be on bending the socio-economic trajectory to promote authentic development – change that advances human well-being in all its dimensions while addressing critical ­environmental pressures that threaten the integrity of ­ecosystems. Although sustainable development has been most closely linked to the ‘change the quality of growth’ perspective, it is compatible with a stance that says ‘let’s focus on environmentally responsible development and not worry too much about the impacts on conventionally measured GDP’ (what has been dubbed an ‘agrowth stance’; see Chapter 9 in this

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 55

01/06/2017 16:50

56  Handbook on growth and sustainability volume). Indeed, it is entirely open to those who advocate a gradual shift away from a path of economic growth to claim the mantle of sustainable development: after all sustainable development is about development and the extent to which such development can or should include an increase in GDP depends on conditions, time and place. Over the coming century, human societies will face innumerable challenges, including the possibility of far greater insults to environmental integrity as human numbers swell, high-consumption living patterns spread, and we deploy far more powerful technologies. Sustainable development implies an effort to deliberately steer the course of human development to pursue more desirable courses of action and to eschew other less attractive futures. It remains to be determined which paths will be chosen.

REFERENCES Azar, C., J. Holmberg and S. Karlsson (2002), ‘Decoupling: past trends and prospects for the future’, Report 2002:2 for the Swedish Environmental Advisory Council, Stockholm. Biermann, F. (2012), ‘Planetary boundaries and earth system governance: exploring the links’, Ecological Economics, 81 (September), 4–9. Daly, H. (1977), Steady State Economics, New York: Freeman and Company. Davidson, C. (2000), ‘Economic growth and the environment: alternatives to the limits paradigm’, BioScience, 50 (5), 433–40. Deep Decarbonization Pathways Project (DDPP) (2014), ‘Pathways to deep decarbonization’, Deep Decarbonization Pathways Project (DDPP), Sustainable Development Solutions Network (SDSN) and the Institute for Sustainable Development and International Relations (ISDIR) report, accessed 28 February 2017 at http://unsdsn.org/wp-content/ uploads/2014/09/DDPP_Digit_updated.pdf. Dolter, B. and P. Victor (2016), ‘Casting a long shadow: demand-based accounting of Canada’s greenhouse gas emissions responsibility’, Ecological Economics, 127 (July), 156–64. European Environment Agency (EEA) (2010), State of the European Environment 2010, Copenhagen: European Environment Agency. European Environment Agency (EEA) (2014), ‘Effect of air pollution on European ecosystems’, Technical Report 11/2014, EEA, Copenhagen, accessed 28 February 2017 at http:// www.eea.europa.eu/publications/effects-of-air-pollution-on. Ekins, P. (2000), Economic Growth and Environmental Sustainability: The Prospects for Green Growth, London: Routledge. Geels, F. (2005). Technological Transitions and System Innovations: A Co-Evolutionary and Socio-Technical Analysis, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Geo5 (2012), Global Environmental Assessment, Nairobi: United Nations Environment Programme (UNEP). Gough, I. and J. Meadowcroft (2011), ‘Decarbonising the welfare state’, in J. Dryzek, R.  Norgaard and D. Schlosberg (eds), The Oxford Handbook of Climate Change and Society, Oxford: Oxford University Press, pp. 490–503. International Institute for Applied Systems Analysis (IISA) (2012), Global Energy Assessment, Cambridge: Cambridge University Press. Intergovernmental Panel on Climate Change (IPCC) (2014), Climate Change 2014 Synthesis Report Summary for Policymakers, Geneva: IPCC. Jackson, T. (2009), Prosperity Without Growth, London: Earthscan.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 56

01/06/2017 16:50

Sustainable development, limits and growth  ­57 Klimont, Z., S.J. Smith and J. Cofala (2013), ‘The last decade of global anthropogenic sulfur dioxide: 2000-2011 emissions’, Environmental Research Letters, 8, doi:10.1088/1748-9326/8/1/014003. Lafferty, W. and O. Langhelle (eds) (1999), Towards Sustainable Development. On the Goals of Development and the Conditions of Sustainability, London: Macmillan Press. Langhelle, O. (1999), ‘Sustainable development: exploring the ethics of our Common Future’, International Political Science Review, 20 (2), 129–49. Martinez-Alier, J., U. Pascual, F. Vivien and E. Zaccai (2010), ‘Sustainable de-growth: mapping the context, criticisms and future prospects of an emergent paradigm’, Ecological Economics, 69 (July), 1741–7. Meadowcroft, J. (2000), ‘Sustainable development: a new(ish) idea for a new century?’, Political Studies, 48 (2), 370–87. Meadowcroft, J. (2011), ‘Engaging with the politics of sustainability transitions’, Environmental Innovation and Societal Transitions, 1 (1), 70–75. Meadowcroft, J. (2012), ‘Pushing the boundaries: governance for sustainable development and a politics of limits’, in J. Meadowcroft, O. Langhelle and A. Rudd (eds), Governance, Democracy and Sustainable Development: Moving Beyond the Impasse, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 272–96. Meadowcroft, J. (2013), ‘Reaching the limits? Developed country engagement with sustainable development in a challenging conjuncture’, Environment and Planning C, 31 (6), 988–1002. Meadows, D., D. Meadows, J. Randers and W. Behrens III (1972), The Limits to Growth, London: Pan Books. Millennium Ecosystem Assessment (MEA) (2005), Ecosystems and Human Well Being: A Synthesis, Washington, DC: Island Press. NEPP3 (1989) To Choose or to Loose, Third National Environmental Policy Plan, Ministry of Housing and Spatial Planning, The Netherlands, accessed 28 February at http://www. un.org/esa/agenda21/natlinfo/action/netherla.htm#strategy. Neumeyer, E. (2014), Weak versus Strong Sustainability, 4th edn, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Organisation for Economic Co-operation and Development (OECD) (2001), OECD Environmental Strategy for the First Decade of the 21st Century, Paris: OECD. Organisation for Economic Co-operation and Development (OECD) (2002), Indicators to Measure the Decoupling of Environmental Pressure from Economic Growth, Paris: OECD. Organisation for Economic Co-operation and Development (OECD) (2011a), Towards Green Growth, Paris: OECD. Organisation for Economic Co-operation and Development (OECD) (2011b), Towards Green Growth: Monitoring Progress OECD Indicators, Paris: OECD. Pierson, P. (2000), ‘Increasing returns, path dependence and the study of politics’, American Political Science Review, 94 (2), 251–67. Rockstrom, J., W. Steffen, K. Noone, Å. Persson, F. S. Chapin, III, E. Lambin et al. (2009), ‘Planetary boundaries: exploring the safe operating space for humanity’, Ecology and Society, 14 (2), 32, accessed 28 February 2017 at http://www.ecologyandsociety.org/vol14/ iss2/art32/. Sabatier, P. and H. Jenkins-Smith (1993), Policy Change and Learning: An Advocacy Coalition Approach, Boulder, CO: Westview Press. Smil, V. (2013), Harvesting the Biosphere: What We Have Taken from Nature, Cambridge, MA: MIT Press. Smith, S.J., J. van Aardenne, Z. Klimont, R.J. Andres, A. Volke and S. Delgado Arias (2011), ‘Anthropogenic sulfur dioxide emissions: 1850–2005’, Atmospheric Chemistry and Physics, 11 (February), 1101–16, doi:10.5194/acp-11-1101-2011. Stern, N. (2006), The Economic of Climate Change, London: HM Treasury. Stiglitz, J., A. Sen and J.-P. Fitoussi (2009), Report of the Commission on the Measurement of Economic Performance and Social Progress, Paris, accessed 28 February 2017 at http://

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 57

01/06/2017 16:50

58  Handbook on growth and sustainability library.bsl.org.au/jspui/bitstream/1/1267/1/Measurement_of_economic_performance_ and_social_progress.pdf. United Nations Environment Programme (UNEP) (2011a), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication, United Nations Environment Programme, Nairobi. United Nations Environment Programme (UNEP) (2011b), Decoupling Natural Resource Use and Environmental Impacts from Economic Growth, United Nations Environment Programme, Nairobi. Unruh, G. (2000), ‘Understanding carbon lock-in’, Energy Policy, 28 (12), 817–30. Van den Bergh, J.C.J.M. (2010), ‘Environment versus growth – a criticism of “degrowth” and a plea for “a-growth”’, Ecological Economics, 40 (5), 881–90. Victor, P.A. (1991), ‘Indicators of sustainable development: some lessons from capital theory’, Ecological Economics, 4 (3), 191–213. Victor, P.A. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Victor, P.A. and T. Jackson (2012), ‘A commentary on UNEP’s green economy scenarios’, Ecological Economics, 77 (May), 11–15. World Bank (2012), Inclusive Green Growth: The Pathway to Sustainable Development, Washington, DC: World Bank. World Commission on Environment and Development (WCED) (1987), Our Common Future, Oxford: Oxford University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 58

01/06/2017 16:50

4  Sustainability metrics and their use Peter Bartelmus

1 TOWARDS A FRAMEWORK FOR SUSTAINABILITY MEASUREMENT The 2012 Rio Summit on Sustainable Development has been considered as ‘a major step forward in achieving a sustainable future – the future we want’ (United Nations b, n.d.). But what do we want to sustain? Is it the environment, the economy, or ourselves, the people? The conference report is ambivalent. It focuses on greening the economy, but is not ready to give up on the ‘context’ of sustainable development. Growth-oriented policies are increasingly called into question. The epitome of economic growth, gross domestic product (GDP), is often seen as a misleading indicator of social progress. ‘If the GDP is up, why is America down?’ ask Cobb et al. (1995). Stiglitz et al. (2010) explain why GDP ‘mismeasures our lives’. Others seek to ‘dethrone’ the indicator (Talberth 2010), look ‘beyond GDP’ (European Commission 2017), or support ‘degrowth’ (Research and Degrowth n.d.). They all agree that we need new measures of the sustainability of our economies, the environment and human well-being. A framework for measuring sustainability could determine the scope of sustainability metrics and bring order and clarity into proliferating environmental, economic and social indicators. A first step is to specify sustainability categories that define what should be sustained (Bartelmus 2013). Three categories can be distinguished that refer to the conservation of nature, the maintenance of economic productivity and the satisfaction of human needs: ●

ecological sustainability focuses on maintaining the health of e­cosystems; it reflects an eco-centric view if the objective is to keep ecosystems in their natural state, whereas an anthropocentric view seeks to maintain the benefits people draw from ecosystem services; ● economic sustainability caters to the anthropocentric view of ­environmental services that support the economy; it can be defined either theoretically as sustaining economic welfare or operationally as maintaining the capital base of economic activity; and 59 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 59

01/06/2017 16:50

60  Handbook on growth and sustainability Table 4.1  Framework for sustainability metrics

Ecological sustainability

Physical indicators

Monetary indicators

Hybrid indicators

Qualitative evaluation of environmental impacts Sustainability gap Total material input and output Energy accounts Ecological and carbon footprint

Value of ecosystems and their services

Resource productivity Emission intensity

Economic sustainability Sustainable development

●

Genuine progress indicator Economic wealth and welfare indices Sustainable growth models Green accounting indicators Wealth and welfare measures

Hybrid accounts and models Qualitative evaluation of development indicators Sustainable development indices

sustainability of development reflects a broader anthropocentric view as it seeks to meet the needs and wants of society, now and in the future.

Confronting these categories with monetary, non-monetary (physical) and hybrid (monetary and physical) indicators provides a simple framework for sustainability metrics. The key measures of Table 4.1 are representative of attempts to assess the sustainability of ecosystem health and services, economic performance and growth, and socioeconomic development. Underlying any sustainability measure are basic statistics and indicators. The challenge is to combine these data into compound sustainability measures.1 Adding up or otherwise combining physical indicators of ecological and developmental sustainability, expressed in different units of measurement, poses obvious difficulties. Monetary valuation

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 60

01/06/2017 16:50

Sustainability metrics and their use  ­61 for assessing the environmental sustainability of producing goods and services has its own problems of ‘pricing the priceless’. However, aggregation or at least linkage of the interacting areas of environment, economy and development is a prerequisite for measuring their sustainability and setting policy priorities. Aggregation may also hide complementarities in the use of irreplaceable inputs. The assumption of weak sustainability is that renewable or reproducible products can substitute for these inputs. The ability of different sustainability measures to capture weak or strong ­(measuring non-­ substitutable inputs) sustainability is discussed for each of the ­sustainability categories and their indicators.

2  MEASURES OF ECOLOGICAL SUSTAINABILITY The environmental movement of the 1960s and early 1970s created awareness of environmental deterioration. Since then environmentalists and concerned scientists have warned us about potentially disastrous environmental impacts. An eco-centric view of environmental degradation dominated the discussion of ecological sustainability; increasing attention is now given to the use and depletion of natural resources. The search for one or more indicators that could reflect the large variety of ecosystems, their disturbances and their quality standards led to widely different suggestions of how to assess the sustainability of ecosystems. They include, in particular: ●

setting of ecological standards and limits for the impacts of human activities; ● use of common physical units of measurement for environmental pressures and impacts; and ● monetary valuation of ecosystems and their services. All these approaches address impacts on nature, with a view to assessing their effects on human well-being. 2.1  Impacts and Ecological Boundaries Within certain ranges, ecosystems show resilience to natural and human disturbances of their equilibrium. Maintaining resilience is an ­eco-centric objective of ecological sustainability. To protect ecosystems against impacts that might overwhelm their resilience ‘safe minimum standards’ (Perrings 1995) can be set for indicators of ecosystem health and quality.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 61

01/06/2017 16:50

62  Handbook on growth and sustainability The standards reflect strong sustainability of preserving nature in its former (pristine), current or an otherwise desirable state. In practice, anthropocentric views intrude: the condition that the social costs of foregone development from applying the standards be ‘acceptable’ weakens the strength of ecological sustainability (Ciriacy-Wantrup 1952; Perrings 2006). An explicitly anthropocentric view of ecological sustainability seeks to sustain human well-being by maintaining ecosystem services. The Millennium Ecosystem Assessment (MEA) defines these services as ‘benefits people obtain from ecosystems’ (MEA 2005, p. v).2 The MEA suggests that ‘approximately 60% of the ecosystem services evaluated . . . are being degraded or used unsustainably’ (MEA 2005, p. 6). For two services of fish and freshwater provision the report claims – ‘with high certainty’ – that current demand cannot be sustained. In the absence of aggregate measures the MEA (2005, table 1) uses visual aids of upward and downward arrows and a +/– sign to provide an overall picture of positive, negative and insignificant impacts on ecosystem services. Other assessments of environmental impacts apply similar aids. For example, the European Environment Agency (EEA 2014) uses overlay maps and directional arrows for assessing pressures of resource use on the environment and their effects on human well-being. A bolder approach defines a framework of ‘planetary boundaries’, whose transgression might cause abrupt catastrophic changes of the ‘Earth System’ (Rockström et al. 2009). The boundaries are determined by scientists, who admit that ‘normative judgments’ influence the definition and position of the boundaries. The scientists also believe that we have already crossed three (out of nine) boundaries for: ●

climate change, exceeding atmospheric CO2 concentration of 350 parts per million; ● biodiversity, where the loss rate is higher than 10 extinctions per million species per year; and ● nitrogen pollution, when removal from the atmosphere for human use is greater than 35 million tons per year. The planetary framework defines a ‘safe operating space for humanity’, within which human activities can be carried out (ecologically) sustainably. The Living Planet Report (WWF et al. 2014, p. 4) appears to consider its Living Planet Index (LPI), a measure of the population of vertebrate species, as an indicator of ‘the fabric of the ecosystems which sustain life on Earth’. The index shows that these species declined by 52 percent between 1979 and 2010. On the other hand, the report does admit that the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 62

01/06/2017 16:50

Sustainability metrics and their use  ­63 LPI cannot measure ecosystem change and sustainability on its own. Like the planetary framework, the LPI adopts, therefore, boundaries of a safe and just space for human activity (see section 4 below). 2.2  Indices of Environmental Pressure and Impact Indicator averages and the use of a common measuring rod are the main aggregation methods for calculating indices of ecological sustainability. Averages resort to ‘normalizing’ indicators by determining their place within a scale ranging from best to worst scores. Normalization thus weighs the indicators by their distance to best performance, reflecting policy priorities rather than ecological sustainability. For measuring strong sustainability, that is, the preservation of ‘critical’ (non-substitutable) natural assets and their services (Ekins et al. 2003), particular physical indicators need to separately identify and monitor these assets. The reason is that using a common measuring rod (including a normalized scale) caters to weak sustainability: it assumes that exhaustible assets can be substituted within the range of their common measurement unit. The eco-centric view of ecological sustainability would obtain a measure of regional or national sustainability by relating environmental impacts to a region’s or country’s carrying capacity to withstand the impacts. Expressing this capacity in terms of safe minimum standards, extended ‘across all major environmental themes’, and comparing the standards to actual environmental conditions could reveal ‘sustainability gaps’ for different environmental concerns (Ekins 2011, pp. 641–2). However, averaging the normalized gaps for calculating an overall national gap obscures the meaning of sustainability as it gives equal weight to each gap and concern. Alternatively, physical aggregates of human impacts or pre-impact pressures on the environment apply common units of measurement. Common units refer to the amount of energy used in economic activities and natural processes, the weight of material flows through the economy, and the land and water areas needed for obtaining environmental services. Energy economists (Slesser 1975; Costanza 1980) and accountants (Odum 1996; Szargut 2005) explored the availability and use of energy for measuring sustainability. They see energy flows, measured in joules, as an indicator of nature’s own values (Brown and Ulgiatti 1999). Energy flows also assess society’s sustainability since the availability of energy presents the ‘ultimate limitation on Earth’ (Slesser 1975, p. 170). From this point of view, sustainability can be defined as the necessary conservation of useful energy and acceptable dissipation (entropy) of wasted energy.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 63

01/06/2017 16:50

64  Handbook on growth and sustainability Material flows, measured in tons, follow similar laws of conservation and dispersion (Georgescu-Roegen 1979). Material flow accounts (Eurostat 2001; OECD 2008; SERI et al. 2016) add up natural resource inputs into the economy, their accumulation therein, and their ‘output’ (discharge) of wastes and pollutants into the natural environment or other countries. The key aggregates are total material input and output. In order to obtain a measure of the sustainability of the economy, threatened by an excessive material ‘throughput’ (Daly 1996), targets or ‘factors’ need to be set for desirable resource productivity (GDP per natural resource input) or material intensity (material input per GDP). For industrialized countries suggestions of increasing resource productivity range from Factor 2 (Federal Government of Germany 2008, p. 105) to Factor 10 (Factor 10 Club 1994), including the popular Factor 4 target (von Weizsäcker et al. 1997). Tons of material flows are easier to measure than energy flows. Weighting environmental pressures by the weight of materials and substances (pollutants) cannot do justice, however, to the severity of potential impacts. Still, material and substance flows indicate the sources and destinations of these impacts, including those ‘imported’ from or shifted to other countries. The ecological footprint compares the demand for bioproductive land and water to the available ‘biocapacity’ for providing environmental source and sink services (Global Footprint Network 2013). Its unit of measurement is surface area. Per capita, the footprint can be seen as an inverse measure of the carrying capacity of a region’s inhabitants if it approaches the limits of the region’s biocapacity. It appears that we have transgressed the planet’s biocapacity since the 1970s and might need the regenerative capacity of one and a half planets to maintain current demand for nature’s services (WWF et al. 2014, p. 32). Major flaws of the ecological footprint are the questionable conversion of natural resource use and CO2 emission into ‘global hectares’, and the lack of a clear definition of non-sustainability in terms of environmental depletion and degradation. Focusing on biological resources the footprint also ignores the depletion of non-renewable resources, which play a major role in sustainability analysis. Nonetheless, the business-as-usual scenario of the limits-to-growth model (Meadows et al. 2004) predicts a peaking of the ecological footprint in the first half of the twenty-first century; by the end of the century human welfare, measured by the Human Development Index (UNDP n.d.), will decline to year-1900 levels with a corresponding decrease of the footprint to 1970s levels.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 64

01/06/2017 16:50

Sustainability metrics and their use  ­65 2.3  Monetary Valuation of Ecosystems Lacking a common unit of measurement the MEA (2005) uses a wide range of non-monetary indicators. Attempts at estimating the cost of the degradation of selected ecosystems and of protective responses reveal a desire for comparing ecosystem degradation with economic costs and benefits. However, these attempts are too sketchy to measure the ecological sustainability of a region or nation. There are now many studies on how to monetize the large variety of ­ ecosystem benefits. International programs of ‘the economics of ­ecosystems and biodiversity’ (TEEB n.d.) and ‘wealth accounting and the valuation of ecosystem services’ (WAVES n.d.) promote these efforts. So far they have not come up with a definite measure of ecological sustainability. In fact, the TEEB authors doubt that a ‘final classification can capture the myriad of ways in which ecosystems support human life and contribute to human well-being’ (TEEB 2010, p. 10). A handbook on ‘experimental ecosystem accounting’ (European Commission et al. 2013) seeks to organize ecosystem assessments in the more systematic framework of greened national accounts. The handbook is inconclusive: it sees the value of ecosystem services either as the output of a new quasi-institutional sector of nature or as joint products of established economic sectors (European Commission et al. 2013, Annex A6.1). The former would identify ecosystems as individual accounting units and show their ‘outputs’ in a classification of ecosystem services. The latter would simply add the value of ecosystem services to the value of economic outputs to which they contribute. The question remains whether to assess the health of ecosystems case by case as a matter of ecological sustainability or to measure economic sustainability by merging the value of ecosystem services with economic outputs. 2.4  Use of Indicators and Indices Selected physical indicators, whether presented in frameworks or not, can inform those living in situ about the health and sustainability of their surrounding ecosystems, especially with the help of safe minimum standards. The knowledge of local populations, notably in agricultural areas, ­facilitates the understanding and use of indicators for ecosystem management. At national, international and global levels, ecosystems and their services are more difficult to combine, and standards for ecological sustainability become more political. In fact, local ecosystem services tend to receive lower priority by remote administrations. ‘Ecological m ­ anagement rules’ or ‘principles’, based on selected indicators, could be a first step

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 65

01/06/2017 16:50

66  Handbook on growth and sustainability towards developing a national strategy for attaining relatively strong ecological sustainability (Daly 1990; Sachs et al. 1998; Lawn 2007). Averages of normalized indicators rank countries by comparing their environmental performance with best-performing countries. As mentioned, best performances do not necessarily reflect ecological sustainability. Low ranks could alert to failures of environmental policy, but will these rankings shame countries into better environmental policies, let alone into achieving sustainability? Alternatively, high-ranked countries might become complacent, even if they are far from attaining ecological sustainability. Overall factors of resource productivity, based on material flow accounts, can warn us about how far we are from a desirable reduction of environmental pressure. Von Weizsäcker et al. (1997, p. xv) argue that their ‘Factor 4’ target would allow doubling economic output over the next decades while halving resource input; it would ‘put the Earth back into balance’. Corresponding strategies of decoupling physical environmental pressure from economic growth (OECD 2002; UNEP 2011) may reduce or slow down environmental impact, but they do not specify how much ‘dematerialization’ we need to attain sustainability. Most countries appear to be content, therefore, to seek relative dematerialization by increasing material throughput at a slower pace than economic output (European Commission 2011). When the ecological footprint exceeds biocapacity, which it did globally by 50 percent in 2008, it creates an ‘ecological deficit’. Such a deficit should ring the bell for action to maintain ecological sustainability. The Living Planet Report (WWF et al. 2014, pp. 100–101) suggests that sustainability can be regained by ‘better choices from a one planet ­perspective’, including the preservation of natural capital, better resource use and waste management in production, and consuming ‘more wisely’. Problems of estimating the energy content of materials, products and residuals, and of assessing the availability of usable energy sources have so far thwarted the wide use of energy accounts for sustainability policies. In summary, biophysical indicators and indices can warn us about hazardous environmental trends. They may trigger remedial or precautionary action, but they cannot specify how much action is needed to attain overall sustainability. They are thus a means of awareness building and advocacy for policy responses. Monetary valuation represents an alternative to using physical impact indicators. However, ecosystem valuation for larger areas such as a country is still in its infancy. The experimental ecosystem accounts avoid therefore any clear recommendation for valuation. Policy uses of monetary valuations of ecosystems indeed rarely go beyond generalities (Laurans et al. 2013).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 66

01/06/2017 16:50

Sustainability metrics and their use  ­67

3 ACCOUNTING FOR ECONOMIC SUSTAINABILITY An alternative to pricing and aggregating complex and diverse ecosystems is to concentrate on the main source and sink functions of environmental assets across different ecosystems. Environmental assets and their functions serve the economy directly as natural capital; their assessment avoids therefore the detour of ecosystem measurement and valuation (Bartelmus 2015). The trade-off is a loss of knowledge about internal ecosystem ­processes – knowledge that helps understand the causes and magnitude of environmental impacts. Such knowledge could and should be developed separately in case studies of ecosystem quality and management. Measures of economic sustainability compare the value of economic, environmental and possibly also human and social capital with its consumption in production or with the economic benefits of capital use. They include: ●

comprehensive wealth and welfare indices that estimate non-declining economic welfare in line with theoretical economic analysis; ● environmental-economic accounts, which adjust economic indicators for the costs of produced and natural capital consumption; and ● indicators of hybrid accounts, which avoid monetary valuation of environmental impacts by introducing physical indicators into the monetary national accounts. The three methods of assessing economic sustainability reflect different views of what is measurable and manageable. Monetary and hybrid accounts also cater to different strengths of sustainability. The use of a common monetary unit measures weak sustainability: it assumes substitutability among the different types of capital within the range of monetary commensurability. Hybrid accounts could facilitate the assessment of strong sustainability: their physical indicators could identify and measure complementary inputs into economic production. 3.1  Indices of Non-declining Wealth and Welfare Comprehensive measures of wealth include not only produced capital but also non-produced natural, human and social assets. The current (discounted) value of national wealth can be equated with the discounted welfare (aggregate individual well-being) of the consumption of goods and services that are produced by using scarce assets over their lifetime. Economic sustainability can then be defined as the maintenance of current

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 67

01/06/2017 16:50

68  Handbook on growth and sustainability wealth and welfare; it excludes sources of non-economic well-being, whose scarcity cannot be established either because they are ‘freely’ available or because scarcity is difficult to define, for instance for altruistic actions. The World Bank’s (2011) Total Wealth Index (TWI) covers produced, natural and ‘catch-all’ intangible capital, whose use in production generates current and future welfare. Welfare equals the value of consumption of goods and services. Adding up current and discounted future consumption, assumed (modeled) to be constant, obtains thus the value of sustainable wealth. Such wealth would generate sustainable economic growth and non-declining economic welfare. The Inclusive Wealth Index (IWI) (UNU-IHDP and UNEP 2014) also equates sustainable development with non-declining welfare, but does not make it a condition for measurement. Rather, the IWI jumps directly into the valuation of intergenerational well-being: it applies ‘shadow prices’ of the contribution of a marginal unit of a capital asset to current and future well-being (Dasgupta and Duraiappah 2012, p. 18). Direct measures of national welfare add positive and deduct negative welfare effects to and from economic indicators (Merriam 1968; Nordhaus and Tobin 1973; Daly and Cobb 1989). The popular Genuine Progress Indicator (GPI) (Talberth et al. 2007) deducts the ‘cost’ of defensive expenditures, unequal income distribution, pollution damage and underemployment from, and adds benefits of volunteering, household work, leisure and durable goods to, personal consumption. Expenditures for defending society against crime, accidents, preventable disasters and environmental deterioration are considered ‘needless’ (Talberth et al. 2007, p. 2) because they serve only to maintain rather than increase welfare. Adding net capital investment turns adjusted consumption into an adjusted income measure. Global wealth grew at different rates for the TWI (25 percent) and the IWI (15 percent) during 1995–2005. Kubiszewski et al. (2013) extended GPI compilations of 17 countries to estimate the trend of global welfare: GPI per capita stagnated while GDP per capita almost doubled during 1970–2003. The welfare valuations of these measures and models are controversial. The wealth indices apply techniques of cost–benefit analysis designed for particular programs or projects. Extending these techniques to economywide levels ignores price and output changes in the wider economy, brought about by changes in the scope of economic activity. Assessing the damage of environmental degradation reveals further problems: first we would have to measure the complex chain from emission and concentration of pollutants to the exposure of people to toxic substances; then the risks of morbidity and mortality would have to be assessed and translated

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 68

01/06/2017 16:50

Sustainability metrics and their use  ­69 into actual damage values. Surveys of the willingness to pay for risk reduction or to be compensated for risk acceptance suffer from free-rider attitudes and ignorance of environmental effects. The use of defensive expenditures as a proxy for negative welfare effects is also questionable. Such expenses are hardly ‘needless’ in the reality of an imperfect world; and where should one draw the limits? Are expenditures for ‘unhealthy’ food and drink, ‘tasteless’ entertainment and in fact defense – defensive? Who is to judge? Environmental (neoclassical) economists tend to disregard or play down the problems of welfare measurement and valuation. They argue that welfare economics provides the justification for extending the measurement of well-being from economic products to scarce services of ‘ecological capital’ (Barbier 2012). For instance, the IWI introduces ­ implicitly a welfare function through its shadow pricing of marginal welfare contributions of wealth categories. The TWI refers to the Hartwick (1977) rule of capital maintenance and corresponding constant consumption in a model of economic growth. The GPI, on the other hand, uses a mix of market and welfare valuations without a clear explanation of the underlying theory. 3.2  Green Accounting for Capital Maintenance The wealth and welfare measures refer to economic aggregates that are more rigorously, but also more narrowly, defined and priced in the national accounts. ‘Net worth’ comes closest to what is commonly called national wealth: it includes the total value of all economic produced and non-produced (notably natural resources) assets.3 The change in net worth during an accounting period represents a summary of the results of economic activity, that is, of production, income generation, and the consumption and accumulation of wealth. It makes sense to build on the conventional accounts for a transparent and consistent extension into the field of environment and to show how this extension affects the economic aggregates. To this end, a team of the United Nations Statistics Division (Bartelmus et al. 1991) advanced the System for integrated Environmental and Economic Accounting (SEEA). The first 1992 Earth Summit in Rio de Janeiro recommended implementing the SEEA as a ‘satellite’ (rather than a replacement) of the national accounts and as ‘a first step towards the integration of sustainability into economic management’ (United Nations 1994, para. 8.41). Figure 4.1 illustrates (in dark cells) the introduction of environmental assets and costs of natural capital consumption into the national accounts. Deducting both produced and natural capital

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 69

01/06/2017 16:50

70

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 70

01/06/2017 16:50

Capital consumption

Environmental cost (of natural capital consumption)

NATURAL CAPITAL USE

Produced assets

Other asset changes

Capital consumption

= Environmental assets

Other asset changes

Figure 4.1  Incorporating natural capital in the national accounts

Source:  Bartelmus (2013, fig. 6.2), with permission by Taylor and Francis.

Note:  The vertical column of the asset accounts shows the inclusion of natural capital (environmental assets) in opening and closing stocks at the beginning and end of an accounting period. During this period the changes in the value of natural and produced capital overlap with the flow accounts as capital formation and capital consumption. Capital goods used for investing in natural capital are included in gross capital formation. ‘Other asset changes’ such as natural growth (in the wilderness) or the effects of natural disasters are not the result of an economic activity; they are excluded from the supply and use accounts and are recorded as other asset changes in the asset accounts.

CLOSING STOCKS

+

REST OF THE WORLD

Exports

Natural capital consumption

CHANGES IN CAPITAL STOCKS

Intermediate consumption Gross capital formation

CHANGES IN CAPITAL STOCKS

+

Environmental assets

Imports Final consumption

FINAL CONSUMPTION

Produced assets

Outputs

PRODUCTION (industries)

PRODUCED CAPITAL USE

USE OF PRODUCTS

SUPPLY OF PRODUCTS

OPENING STOCKS

Sustainability metrics and their use  ­71 consumption from GDP and gross capital formation obtains the key indicators of environmentally adjusted net domestic product (EDP) and environmentally adjusted net capital formation (ECF). To maintain transparency and consistency the System of National Accounts (SNA) rejects welfare measurement (European Commission et al. 2009, paras 1.75, 1.84). The latest 2012 version of the SEEA, which is closely based on the SNA, uses therefore ‘observable’ market prices for all assets and transactions and, in the absence of markets, estimates ‘what the prices would be if a regular market existed’ (United Nations et al. 2014, paras 5.100, 5.106). The main reason for refuting welfare valuation is the inconsistency of welfare benefits with market prices: welfare values include consumer surplus for those consumers who are willing to pay more than the market price for a particular good or service. The ‘central framework’ of the 2012 SEEA excludes environmental damages as unintended nonmarket effects and accounts only for what is already accounted for in the conventional accounts, that is, the use of natural resources that are traded in markets. ‘Experimental ecosystem accounts’ (cf. section 2.3) are to take up environmental degradation (United Nations et al. 2014, Preface, para. 14). But even these experiments refrain from endorsing its monetary valuation (European Commission et al. 2013, para. 5.12). The original 1993 SEEA is better equipped to assess economic sustainability as a key concern of integrated environmental and economic accounting (United Nations 1993, paras 10, 55). It uses market values to cost natural resource depletion, and ‘maintenance costs’ to assess the value of environmental degradation.4 Economic sustainability is defined and measured as the maintenance of produced capital and of the source and sink functions of natural capital. A rough global application of the 1993 SEEA (Bartelmus 2009) suggests that ECF might be a better sustainability measure than EDP. Measuring sustainable economic growth as non-declining EDP requires longer time series and overshadows capital consumption by final consumption. ECF on the other hand shows whether a country or region has been able to create new capital during each accounting period after taking capital consumption into account. Globally, the additional environmental costs of natural capital consumption amounted to 2–6 percent of GDP (during 1990–2006). Positive values of global ECF indicate that the world economy has been – weakly – sustainable. However, these costs vary considerably at regional and national levels. Negative ECF of almost 18 percent of GDP in Africa and about 5 percent in Latin America and the Caribbean in 2006 indicates that economic growth in these regions was achieved by living off the produced and natural capital base. Accounting for the consumption of produced and non-produced natural

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 71

01/06/2017 16:50

72  Handbook on growth and sustainability capital still ignores the maintenance of human, social, cultural and institutional capital used in economic production and growth. The problems of measuring these intangibles – what is their ‘consumption’? – are the reason why their assessment is left to wealth and welfare modeling (see section 3.1) or political negotiation about sustainable development goals (see section 4). Like the conventional accounts, the SEEA measures changes in stocks and flows for an accounting period of commonly one year. There have been suggestions that this ignores ‘environmental debt’ to future generations, run up in the past (Azar and Holmberg 1995). The correction of current net worth for this liability beyond the ‘borders’ of a particular accounting period is an unexplored issue; it caters to an ethical view of sustainability that is not content with correcting economic indicators for current capital consumption, but seeks to atone for past environmental sins. Measures of environmental debt would therefore trace the depletion and degradation of natural wealth down to a more or less pristine or desirable state of the environment and estimate the corresponding restoration cost. Tinbergen and Hueting (1991, p. 54) suggest deducting these costs to obtain a national income measure that is ‘based on sustainable use of the environment’. Hybrid accounts play a significant role in the 2012 SEEA – perhaps to compensate for failing to account for environmental degradation. They go as far as placing physical flows of natural resources and discharges of residuals next to the economic activities that use the resources or generate residuals. This is an important first step for monetary valuation and the measurement of economic sustainability. Linking economic production and consumption to their environmental impacts also indicates the origins of impacts but does not assess the costs and ultimate effects on the sustainability of economic performance and growth. Still, as mentioned, separately identifying critical non-substitutable natural capital in physical units of measurement would allow monitoring what needs to be conserved ‘at all cost’, that is, elements of strong sustainability in economic growth. 3.3  Policy Use: Greening the Economy Monetary valuation appears to be the only practical way to fully incorporate the wide range of economic and environmental concerns into sustainability measures. Controversial (welfare) valuations can distort, however, the use and usefulness of sustainability indicators. For example, the Genuine Progress Indicator (GPI) applies an obscure mix of actual and surrogate market prices, replacement costs, damage values and defensive expenditures. The indicator reminds us that not all consumption of goods

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 72

01/06/2017 16:50

Sustainability metrics and their use  ­73 and services generates well-being; but, as discussed above, it might be a misguided call for ignoring a good deal of useful economic activity and policy. The authors point out that ‘regardless of concerns about the GPI’s accuracy and rigor’ governmental and non-governmental leaders have used the index for ‘advocacy’ of their policies (Talberth et al. 2007, p. 23). Economic models of general equilibrium and optimal growth provide an analytical justification for wealth and welfare indices.5 They help ­‘conceptualize’ economic sustainability as capital maintenance. The flaw of these models is the use of market-valued consumption or national income as proxies for utility and welfare. Realizing that imperfect market conditions may thwart optimality Arrow et al. (2004) suggest that sustainability could provide a more realistic objective for the growth of imperfect economies. The policy advice from wealth models and indicators is to counter capital losses by ‘building wealth’, that is, investment in run-down assets or their substitutes. The Inclusive Wealth Report focuses on human and renewable natural capital (UNU-IHDP and UNEP 2014), whereas the World Bank (2011) calls for investment of rents from non-renewable resources in produced, human and institutional capital. Both ignore irreplaceable types of capital, catering thus to weak sustainability. The SEEA translates these concepts and strategies into measurable accounting data by restricting their scope and coverage to produced and natural capital. This is in line with the latest Earth Summit’s call for ‘green economy policies’, albeit under a number of ‘contextual’ conditions for sustainable development and poverty eradication (United Nations b, n.d, para. 58). Green accounting à la SEEA can ground these policies on welldefined concepts, statistics and accounts. The SEEA indicators can assess sustainability as a matter of produced and natural capital maintenance.6 The indicators are net of the cost of natural capital consumption brought about by economic activities. Market instruments such as eco-taxes or permits of pollution and natural resource use should be set according to the level of these costs. The purpose is to internalize the environmental costs in the plans and budgets of economic agents. This would make for more precise policies than politically determined incentives and regulations, hoping that they would prompt some reduction of resource use and emission. For the economy and its sectors, capital consumption indicates the amount that needs to be reinvested to offset the wear and tear of capital for maintaining the productivity of the economy. As indicated above, the costs of natural capital consumption can be substantial for some countries, requiring drastic changes in economic and environmental policy. If these costs result from exporting natural resources or importing ‘dirty’ production processes, some payment by countries, which gain from this

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 73

01/06/2017 16:50

74  Handbook on growth and sustainability ‘burden shifting’ (Bringezu et al. 2004), to those that bear the costs would be in order. Accounting for the overall value of produced and natural capital maintenance ignores the depletion of critical irreplaceable capital, which could undermine economic performance and growth. Advocates of strong sustainability call for the full preservation of critical capital. Economic models can include environmental restrictions to predict how they would affect production and consumption patterns and overall economic growth. The relevance of strong versus weak sustainability and the role of technological progress in substituting different types of capital are at the heart of the debate between environmental and ecological economists.7 Hybrid accounts can support models of computable general equilibrium and linear programming. The models seek economic optimality within physical sustainability constraints. Linear (and non-linear) programming is a promising but rather unexplored tool to optimize economic and environmental strategies within the economic and ecological sustainability limits of a ‘feasibility space’ (Victor 1972; Bartelmus 1979, 2008).

4  ASSESSING SUSTAINABLE DEVELOPMENT Long and short (core, headline) sets of monetary and non-monetary indicators claim to relate to the different – economic, environmental and social – pillars or dimensions of sustainable development (United Nations 2007; Eurostat n.d.; United Nations Economic Commission for Europe 2014). The aggregation of these indicators faces even greater challenges than aggregating more narrowly defined indicators of ecological sustainability. A first step towards organizing large sets of indicators of sustainable development could be the addition of further social boundaries into the above-described (section 2.1) framework of planetary (ecological) boundaries. This would create a ‘safe and just space’ (Raworth 2012, p. 7) for human activity; the objective is to avoid, besides environmental decline, ‘critical human deprivations – such as hunger, illiteracy, poverty, and voicelessness’. The next step would be to aggregate indicators for the different limits of the framework. Averages normalize indicators, usually in a range from 1 to 10. A Sustainable Development Index developed for the United Nations University (Nováček and Mederly 2002) averages 58 indicators, and an index of human and ecosystem well-being claims that its own average of 81 indicators also represents the paradigm (Prescott-Allen 2001). Inclusion of per-capita carbon emissions supposedly turns the Human Development Index into a Human Sustainable Development

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 74

01/06/2017 16:50

Sustainability metrics and their use  ­75 Index (UNU 2010); the assumption is that the environmental pressure from these emissions reflects non-sustainability. The problem with indicator averages is their judgmental selection of ‘representative’ indicators and their (usually) equal weighting of unequal issues. Correlational analysis can connect indices of environmental impact and human welfare. Further specifying sustainability standards for the indices could provide an impression of overall developmental sustainability. One such linkage plots the ecological footprint of regions against the inequality-adjusted Human Development Index (WWF et al. 2014, p. 60). Available global biocapacity for the footprint and the requirement of a ‘decent standard of living’ for the Human Development Index (a score of at least 0.71) are the limits for environmental impact and welfare. In these terms, no country seems to be on a path of sustainable development. Alternatively, broadly defined wealth indices (cf. section 3.1) take nondeclining welfare as a monetary measure of sustainable development. The Inclusive Wealth Report (UNU-IHDP and UNEP 2012) presents a framework for the measurement of sustainable development. The framework rejects the ‘arbitrary notion of needs’ (UNU-IHDP and UNEP 2012, p. 6) of the Brundtland definition of sustainable development (WCED 1987, p. 43) in favor of welfare generated for society. Provided we can find realistic monetary values for the welfare effects of wealth, we can of course pack anything that contributes to human well-being or happiness into a broad welfare concept. Low (social) discounting of future welfare could then cater to the needs and wants of future generations and hence to sustainable development. It would however introduce an ethical norm of intergenerational equity into these measurements. To avoid a misleading weighting of sustainable development concerns and unrealistic welfare valuation we could forego aggregation and set indicator targets for different development concerns. This is the approach favored by the international community when it replaced the eight goals and 21 targets of the Millennium Development Goals (United Nations c, n.d.) by 17 goals and 169 targets of sustainable development in 2015 (United Nations a, n.d.). The setting of sustainable development goals and targets is judgmental and normative, even if they are unanimously adopted by the General Assembly of the United Nations. Any summary assessment of these goals by one or more indicators would be as judgmental as earlier attempts at calculating sustainable development indices. The normative character of sustainable development is fertile ground for advocacy. All-encompassing sustainable development looks like a ‘Holy Grail: it appeals to everyone . . . but no one has found it yet’ (Bartelmus 2013, p. 97). This should not necessarily deter society from pursuing sustainable development, even in the absence of a commonly agreed measure.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 75

01/06/2017 16:50

76  Handbook on growth and sustainability Contrary to the World Bank’s (2011, p. xi) assertion – ‘what is not measured is not managed’ – non-countables do count and can be influenced by politically negotiated priorities and programs. However, we should be aware that sustainability priorities and strategies might change with different governments and their vision of strong or weak sustainability.

5 CONCLUSIONS As a macro-concern, sustainability cannot be explained by assessing particular symptoms of social change. The measurement and analysis of sustainability requires aggregation and evaluation of all those impacts that undermine economic activity and, ultimately, human well-being. Piecemeal information tends to bring about piecemeal policy. The measurement framework introduced here is to clarify the meaning and scope of different concepts of sustainability and their measurement. Indicators of ecological sustainability are mostly physical in nature. They measure the health and resilience of ecosystems and the carrying capacity of larger territories. Selected indicators of pressures on ecosystems, expressed in different physical units, can create awareness of hazards of ecological non-sustainability, especially when related to ecological standards or thresholds. The narrow range of disturbances in particular ecosystems makes it easier to identify irreplaceable critical elements in their sustainability. At local levels, the closeness of people to environmental and socioeconomic conditions facilitates choosing indicators that reflect their priorities for ecosystem management. Comprehensive indices for larger regions and countries face far greater challenges of aggregation and evaluation. Ranking countries by index scores can be misleading regarding their sustainability; it could also invite complacency in high-ranked countries and rejection of index scores in those that are low-ranked. Selecting key indicators can alert to hazardous trends of particular concerns such as climate change and can stimulate individual and political action. On their own, the indicators cannot assess overall ecological, economic or developmental sustainability. Models of sustainable wealth, welfare and optimal growth conceptualize sustainability as capital maintenance but do not generate realistic assessments of expected sustainability. As far as measures and models claim to maintain or improve the intangible social and human dimensions of development, they are more a matter of politics than policy. The best – maximizing welfare in theory – could be the enemy of the possible, that is, measuring the sustainability of economic growth. The objective of the SEEA is to measure the performance and growth

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 76

01/06/2017 16:50

Sustainability metrics and their use  ­77 of a green economy. The SEEA is based on the well-established balances and indicators of the national accounts. The original 1993 version of the SEEA extended capital depreciation to losses of source, sink and other services of natural capital. The revised 2012 SEEA version expels environmental degradation from its ‘central framework’. This narrow approach to environmental accounting cannot assess the sustainability of economic activity; it is ground enough for revising the revision of the SEEA. The further development of sustainability metrics depends crucially on what we want to sustain and what we can measure. This chapter argues for measuring the measurable and synthesizing the available data in consistent frameworks and accounts. For now, this means restricting sustainability metrics to green growth at the expense of measuring societal welfare and sustainable development.

NOTES 1. For a discussion of constructing indicators built up from statistical variables see, in particular, the use of stress-response frameworks for organizing and aggregating environmental and related socioeconomic statistics (UNSD 1984, 2016; United Nations 2007; OECD 1993; Bartelmus 2008). The focus here is on the second-stage aggregation of suitable indicators into sustainability indices. 2. Ecosystem services thus defined include the supply of natural resources, regulation of natural impacts and events, cultural (recreational, spiritual) benefits, and support of ecosystem-internal processes; the benefits serve not only human well-being but reflect also the ‘intrinsic’ value of species and ecosystems. 3. The international System of National Accounts (European Commission et al. 2009, para. 13.4) defines net worth as ‘the value of all the assets owned by an institutional unit or sector less the value of all its outstanding liabilities’. At the national level financial claims and liabilities net out, leaving net claims on the ‘rest of the world’ in the balance sheet. Such claims can be a source of financial vulnerability, which is difficult to translate into a measure of sustainability. The focus here is therefore on the sustainability of nonfinancial assets. 4. The 1993 SEEA defines the maintenance costs of environmental degradation as the ‘costs that are required to prevent or mitigate a deterioration of the natural environment’ (United Nations 1993, para. 257). See Bartelmus (2014) for a review of the ‘valuation controversy’ in different SEEA versions. 5. See, for example, Munasinghe’s (2002) reader of green macro-economics for a review of computable general equilibrium and optimal growth models with environmental inputs and capital restrictions. 6. The SNA and 2012 SEEA repudiate any sustainability measurement as an ‘economic theoretical concept’ that would include catastrophic losses and discoveries (European Commission et al. 2009, para. 8.25; United Nations et al. 2014, para. 5.75). Here we follow the original SEEA, suggesting to adjust economic indicators for measuring economic sustainability (United Nations 1993, paras 9, 52–7). 7. The distinction between market-oriented environmental economists, who believe in substitution and technological progress, and more pessimistic ecological economists, who stress the need for rules and regulations to halt environmental deterioration, is of course a simplification of diverse schools of environmental-economic thought. See Bartelmus (2013) for a further discussion of this ‘polarization’.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 77

01/06/2017 16:50

78  Handbook on growth and sustainability

REFERENCES Arrow, K., P. Dasgupta, L. Goulder, G. Daily, P. Ehrlich, G. Heal et al. (2004), ‘Are we consuming too much?’, Journal of Economic Perspectives, 18 (3), 147–72. Azar, C. and J. Holmberg (1995), ‘Defining the generational environmental debt’, Ecological Economics, 14 (1), 7–19. Barbier, E.B. (2012), ‘Ecosystem services and wealth accounting’, in United Nations University – International Human Dimensions Programme on Global Environmental Change and United Nations Environment Programme, Inclusive Wealth Report 2012, Measuring Progress toward Sustainability, Cambridge: Cambridge University Press. Bartelmus, P. (1979), ‘Limits to development, environmental constraints of human needs satisfaction’, Journal of Environmental Management, 9, 255–69. Bartelmus, P. (2008), Quantitative Economics, How Sustainable Are Our Economies? Dordrecht: Springer. Bartelmus, P. (2009), ‘The cost of natural capital consumption: accounting for a sustainable world economy’, Ecological Economics, 68 (6), 1850–57. Bartelmus, P. (2013), Sustainability Economics: An Introduction, London and New York: Routledge. Bartelmus, P. (2014), ‘Environmental-economic accounting, progress and regression in the SEEA revisions’, Review of Income and Wealth, 60 (4), 887–904, accessed 24 March 2017 at http://onlinelibrary.wiley.com/doi/10.1111/roiw.12056/abstract. Bartelmus, P. (2015). ‘Do we need ecosystem accounts?’, Ecological Economics, 118 (October), 292–8, accessed 24 March 2017 at doi:10.1016/j.ecolecon.2014.12.026. Bartelmus, P., C. Stahmer and J. van Tongeren (1991), ‘Integrated environmental and economic accounting: framework for a SNA satellite system’, Review of Income and Wealth, 37 (2), 111–48. Bringezu, S., H. Schütz, S. Steger and J. Baudisch (2004), ‘International comparison of resource use and its relation to economic growth’, Ecological Economics, 51 (1–2), 97–124. Brown, M.T. and S. Ulgiati (1999), ‘Emergy valuation of the biosphere and natural capital’, Ambio, 28 (6), 486–93. Ciriacy-Wantrup, S.V. (1952), Resource Conservation: Economics and Policies, Berkeley, CA: University of California Press. Cobb, C., T. Halstead and J. Rowe (1995), ‘If the GDP is up, why is America down?’, Atlantic Monthly, October, 59–78. Costanza, R. (1980), ‘Embodied energy and economic valuation’, Science, 210 (4475), 1219–24. Daly, H.E. (1990), ‘Toward some operational principles of sustainable development’, Ecological Economics, 2 (1), 1–6. Daly, H.E. (1996), Beyond Growth, Boston, MA: Beacon Press. Daly, H.E. and J.B. Cobb Jr (1989), For the Common Good: Redirecting the Economy Towards Community, the Environment, and a Sustainable Future, Boston, MA: Beacon Press. Dasgupta, P. and A. Duraiappah (2012), ‘Well-being and wealth’, in United Nations University – International Human Dimensions Programme on Global Environmental Change and United Nations Environment Programme (2012), Inclusive Wealth Report 2012, Measuring Progress Toward Sustainability, Cambridge: Cambridge University Press. Ekins, P. (2011), ‘Environmental sustainability: from environmental evaluation to the sustainability gap’, Progress in Physical Geography, 35 (5), 629–51. Ekins, P., S. Simon, L. Deutsch, C. Folke and R. de Groot (2003), ‘A framework for the practical application of the concepts of critical natural capital and strong sustainability’, Ecological Economics, 44 (2–3), 165–85. European Commission (2011), ‘Analysis of the key contributions to resource efficiency’, accessed 24 March 2017 at http://ec.europa.eu/environment/natres/pdf/Resource_ Efficiency_Final.pdf.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 78

01/06/2017 16:50

Sustainability metrics and their use  ­79 European Commission (2017), ‘Beyond GDP, measuring progress, true wealth, and wellbeing’, accessed 24 March 2017 at http://www.beyond-gdp.eu/. European Commission, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations and World Bank (2009), System of National Accounts 2008, New York: United Nations, accessed 24 March 2017 at http:// unstats.un.org/unsd/nationalaccount/sna2008.asp. European Commission, Organisation for Economic Co-operation and Development, United Nations and World Bank (2013), System of Environmental-Economic Accounting 2012, Experimental Ecosystem Accounting, accessed 24 March 2017 at http://unstats.un.org/ unsd/envaccounting/eea_white_cover.pdf. European Environment Agency (EEA) (2014), Environmental Indicator Report 2014, Copenhagen: European Environment Agency, accessed 24 March 2017 at http://www.eea. europa.eu//publications/environmental-indicator-report-2014. Eurostat (2001), Economy-wide Material Flow Accounts and Derived Indicators: a Methodological Guide, ‘Sustainable Development Indicators’, Luxembourg: European Communities. Eurostat (n.d.), ‘Sustainable development indicators’, accessed 24 March 2107 at http:// ec.europa.eu/eurostat/web/sdi/indicators. Factor 10 Club (1994), Carnoules Declaration, Wuppertal: Wuppertal Institute for Climate, Environment and Energy. Federal Government of Germany (2008), Progress Report 2008 on the National Strategy for Sustainable Development, for a Sustainable Germany, Berlin: Press and Information Office of the Federal Government, accessed 25 March 2017 at http://www.nachhaltig​ keitsrat.de/fileadmin/user_upload/English/strategy/2008/German_Govt_NSDS_pro​ gress_report_08_E.pdf. Georgescu-Roegen (1979), ‘Energy analysis and economic valuation’, Southern Economic Journal, 45 (4), 1023–58. Global Footprint Network (2013), The National Footprint Accounts, Oakland, CA, USA: Global Footprint Network, accessed 25 March 2017 at http://www.footprintnetwork.org/ images/article_uploads/National_Footprint_Accounts_2012_Edition_Report.pdf. Hartwick, J.M. (1977), ‘Intergenerational equity and the investing of rents from exhaustible resources’, American Economic Review, 67 (3), 972–4. Kubiszewski, I., R. Costanza, C. Franco, P. Lawn, J. Talberth, T. Jackson and C. Aylmer (2013), ‘Beyond GDP: measuring and achieving global genuine progress’, Ecological Economics, 93 (September), 57–61. Laurans, Y., A. Rankovic, R. Billé, R. Pirard and L. Mermet (2013), ‘Use of ecosystem services economic valuation for decision making: questioning a literature blindspot’, Journal of Environmental Management, 119 (April), 208–9. Lawn, P. (2007), Frontier Issues in Ecological Economics, Cheltenham, UK and Northampton MA, USA: Edward Elgar. Meadows, D., J. Randers and D. Meadows (2004), Limits to Growth, the 30-Years Update, White River Junction, VT: Chelsea Green. Merriam, I.C. (1968), ‘Welfare and its measurement’, in E.B. Sheldon and W.E. Moore (eds), Indicators of Social Change, Concepts, and Measurements, New York: Russell Sage Foundation, pp. 721–84. Millennium Ecosystem Assessment (MEA) (2005), Ecosystems and Human Well-being: Synthesis, Washington, DC: Island Press. Munasinghe, M. (ed.) (2002), Macroeconomics and the Environment, Cheltenham, UK and Southampton, MA, USA: Edward Elgar. Nordhaus, W.D. and J. Tobin (1973), ‘Is growth obsolete?’, in M. Moss (ed.), The Measurement of Economic and Social Performance, New York and London: Columbia University Press. Nováček, P. and P. Mederly (2002), Global Partnership for Development, Sustainable Development Index, Olomouc, Czech Republic: Palacky University (for the American Council for the United Nations University).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 79

01/06/2017 16:50

80  Handbook on growth and sustainability Odum, H.T. (1996), Environmental Accounting, Emergy and Decision Making, New York: Wiley. Organisation for Economic Co-operation and Development (OECD) (1993), Core Set of Indicators for Environmental Performance Reviews, Environmental Monograph No. 83, Paris: OECD. Organisation for Economic Co-operation and Development (OECD) (2002), Indicators to Measure Decoupling of Environmental Pressure from Economic Growth, Paris: OECD, accessed 25 March 2017 at http://www.oecd.org/officialdocuments/publicdisplaydocumen tpdf/?doclanguage5en&cote5sg/sd(2002)1/final. Organisation for Economic Co-operation and Development (OECD) (2008), Measuring Material Flows and Resource Productivity, Synthesis Report, Paris: OECD, accessed 25 March 2017 at http://old.seri.at/documentupload/pdf/oecd_2008_material_flows_and_ resource_productivity.pdf. Perrings, C. (1995), ‘Ecology, economics and ecological economics’, Ambio, 24 (1), 60–64. Perrings, C. (2006), ‘Resilience and sustainable development’, Environment and Development Economics, 11 (4), 417–27. Prescott-Allen, R. (2001), The Wellbeing of Nations: a Country-by-country Index of Quality of Life and the Environment, Washington, DC: Island Press. Raworth, K. (2012), ‘A safe and just space for humanity: can we live within the doughnut?’, Oxfam discussion paper, accessed 25 March 2017 at https://www.oxfam.org/sites/www. oxfam.org/files/file_attachments/dp-a-safe-and-just-space-for-humanity-130212-en_5. pdf. Research and Degrowth (n.d.), accessed 6 October 2015 at http://www.degrowth.org/. Rockström, J., W. Steffen, K. Noone, Å. Persson, F.S. III Chapin, E. Lambin et al. (2009), ‘Planetary boundaries: exploring the safe operating space for humanity’, Ecology and Society, 14 (2), 32, accessed 25 March 2017 at http://www.ecologyandsociety.org/vol14/ iss2/art32/. Sachs, W., R. Loske and M. Linz (1998), Greening the North, Post-industrial Blueprint for Ecology and Equity, London: Zed Books. Slesser, M. (1975), ‘Accounting for energy’, Nature, 254 (5497), 170–72. Stiglitz, J.E., A. Sen and J.P. Fitoussi (2010), Mismeasuring Our Lives, Why the GDP Doesn’t Add Up, New York and London: New Press. Sustainable Europe Research Institute (SERI), WU Vienna, IFEU and the Wuppertal Institute (2016), ‘www.materialflows.net, the online portal for material flow data’, accessed 25 March 2017 at http://www.materialflows.net. Szargut, J. (2005), Exergy Method, Technical and Ecological Applications, Southampton and Boston, MA: WIT Press. Talberth, J. (2010), ‘Measuring what matters: GDP, ecosystems and the environment’, accessed 25 March 2017 at http://www.wri.org/stories/2010/04/measuring-what-mattersgdp-eco​systems-and-environment. Talberth, J., C. Cobb and N. Slattery (2007), Genuine Progress Indicator 2006, a Tool for Sustainable Development, Oakland, CA: Redefining Progress, accessed 25 March 2017 at http://www.scribd.com/doc/3061355/Genuine-Progress-Indicator-2006. The Economics of Ecosystems and Biodiversity (TEEB) (2010), ‘The economics of ecosystems and biodiversity (TEEB), ecological and economic foundations’, accessed 25 March 2017 at http://www.teebweb.org/publication/the-economics-of-ecosystems-and-biodiver​ sity-teeb-ecological-and-economic-foundations/. The Economics of Ecosystems and Biodiversity (TEEB) (n.d.), ‘The economics of ecosystems and biodiversity’, accessed 25 March 2017 at www.teebweb.org. Tinbergen, J. and R. Hueting (1991), ‘GNP and market prices, wrong signals for sustainable economic success that mask environmental destruction’, in R. Goodland, H. Daly, S. El Serafy and B. von Droste (eds), Environmentally Sustainable Economic Development: Building on Brundtland, Paris: UNESCO, accessed 25 March 2017 at http://www.sni-huet​ ing.info/EN/Publications/1991-Tinbergen-Hueting-GNP-and-market-prices.pdf. United Nations (1993), Integrated Environmental and Economic Accounting, New York:

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 80

01/06/2017 16:50

Sustainability metrics and their use  ­81 United Nations, accessed 25 March 2017 at http://unstats.un.org/unsd/publication/ SeriesF/SeriesF_61E.pdf. United Nations (1994), Earth Summit, Agenda 21, the United Nations Programme of Action from Rio, New York: United Nations, accessed 25 March 2017 at http://www.un.org/esa/ sustdev/documents/agenda21/english/Agenda21.pdf. United Nations (2007), Indicators of Sustainable Development: Guidelines and Methodologies, 3rd edn, New York: United Nations, accessed 25 March 2017 at http://www.un.org/esa/ sustdev/natlinfo/indicators/guidelines.pdf. United Nations (a, n.d.), ‘Sustainable development goals’, accessed 25 March 2017 at http:// www.un.org/sustainabledevelopment/sustainable-development-goals/. United Nations (b, n.d.), ‘The future we want’, accessed 25 March 2017 at. https//sustaina​ bledevelopment.un.org/content/documents/733FutureWeWant.pdf. United Nations (c, n.d.), ‘We can end poverty, Millennium Development Goals and beyond 2015’, accessed 25 March 2017 at http://www.un.org/millenniumgoals/. United Nations Development Programme (UNDP) (n.d.), ‘Human development index (HDI)’, accessed 25 March 2017 at http://hdr.undp.org/en/statistics/hdi. United Nations, European Commission, Food and Agriculture Organization of the United Nations, International Monetary Fund, Organisation for Economic Co-operation and Development, and the World Bank (2014), System of Environmental-Economic Accounting 2012, Central Framework, New York: United Nations, accessed 25 March 2017 at http:// unstats.un.org/unsd/envaccounting/seeaRev/SEEA_CF_Final_en.pdf. United Nations Economic Commission for Europe (2014), Conference of European Statisticians Recommendations on Measuring Sustainable Development, New York and Geneva: United Nations, accessed 25 March 2017 at http://www.unece.org/fileadmin/ DAM/stats/publications/2013/CES_SD_web.pdf. United Nations Environment Programme (UNEP) (2011), Decoupling Natural Resource Use and Environmental Impacts from Economic Growth, accessed 25 March 2017 at http://www. gci.org.uk/Documents/Decoupling_Report_English.pdf. United Nations Statistics Division (UNSD) (1984), A Framework for the Development of Environment Statistics, New York: United Nations, accessed 25 March 2017 at http:// unstats.un.org/unsd/publication/SeriesM/SeriesM_78e.pdf. United Nations Statistics Division (UNSD) (2016), Framework for the Development of Environment Statistics (FDES 2013), final official edited version, accessed 25 March 2017 at http://unstats.un.org/unsd/environment/FDES/FDES-2015-supporting-tools/FDES.pdf. United Nations University (UNU) (2010), ‘Our world, 2010 Human Sustainable Development Index’, accessed 25 March 2017 at http://ourworld.unu.edu/en/the-2010-hu​ man-sustainable-development-index. United Nations University – International Human Dimensions Programme on Global Environmental Change and United Nations Environment Programme (UNU-IHDP and UNEP) (2012), Inclusive Wealth Report 2012, Measuring Progress Toward Sustainability, Cambridge: Cambridge University Press. United Nations University – International Human Dimensions Programme on Global Environmental Change and United Nations Environment Programme (UNU-IHDP and UNEP) (2014), Inclusive Wealth Report 2012, Measuring Progress toward Sustainability, Cambridge: Cambridge University Press. Victor, P.A. (1972), Pollution: Economy and Environment, Toronto: University of Toronto Press. Von Weizsäcker, E.U., A. Lovins and H. Lovins (1997), Factor Four: Doubling Wealth, Halving Resource Use, London: Earthscan. WAVES (n.d.), ‘Wealth accounting and the valuation of ecosystems’, accessed 25 March 2017 at http://www.wavespartnership.org. World Bank (2011), The Changing Wealth of Nations, Measuring Sustainable Development in the New Millennium, Washington, DC: World Bank, accessed 25 March 2017 at http:// siteresources.worldbank.org/ENVIRONMENT/Resources/ChangingWealthNations. pdf.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 81

01/06/2017 16:50

82  Handbook on growth and sustainability World Commission on Environment and Development (WCED) (1987), Our Common Future, Oxford: Oxford University Press. World Wide Fund for Nature (WWF), Global Footprint Network, Water Footprint Network and Zoological Society of London (2014), Living Planet Report 2014, Biodiversity, Biocapacity and Better Choices, Gland: WWF, accessed 25 March 2017 at http://www. worldwildlife.org/pages/living-planet-report-2014.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 82

01/06/2017 16:50

PART II CAN GROWTH BE SUSTAINABLE?

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 83

01/06/2017 16:50

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 84

01/06/2017 16:50

5  A new economics for our full world* Herman Daly

1 BASIC VISION: THE ECONOMY AS SUBSYSTEM OF THE ECOSPHERE When I worked at the World Bank, I often heard the statement, “There is no conflict between economics and ecology. We can and must grow the economy and protect the environment at the same time”. I still hear that a lot today. Is it true? Is it possible? Although it is a comforting idea, I fear that it is at most half true. The “true” part comes from a confusion of reallocation with aggregate growth. There are generally always possibilities of better allocation – more of something desired in exchange for a reduction in something less desired. This is the domain of microeconomics. Aggregate growth, by contrast, means more of everything as measured by gross domestic product (GDP) – it is the domain of macroeconomics, and is the meaning of growth in this discussion. The economy, as shown in Figure 5.1, is an open subsystem of the larger ecosphere that is finite, non-growing, and materially closed, although open to a continual, but non-growing, throughput of solar energy.1 When the economy grows in physical dimensions, it incorporates matter and energy from the rest of the ecosystem into itself. It must, by the law of conservation of matter and energy (first law of thermodynamics), encroach on the ecosystem, diverting matter and energy from previous natural uses. More human economy (more people and commodities) means less natural ecosystem. In this sense the statement is false. There is an obvious physical conflict between the growth of the economy and the preservation of the environment. That the economy is a subsystem of the ecosphere seems perhaps too obvious to emphasize. Yet the opposite view is common in high places. For example, “As the White Paper rightly emphasised, the environment is part of the economy and needs to be properly integrated into it so that growth opportunities will not be missed” (Helm 2014). On the contrary, it is the economy that is the part and needs to be integrated into the whole of the finite and entropic ecosphere so that growth limits will not be missed. Is this physical conflict economically important? Some think not. Some believe that we still live in an empty world. In the “empty world” the 85 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 85

01/06/2017 16:50

86  Handbook on growth and sustainability

Empty world Solar energy Recycle

Matter

Matter Economy

Energy

Energy Heat

Ecosystem Economic services Ecosystem services

Welfare

Full world Solar energy

Recycle Matter

Matter

Economy Energy

Energy Heat

Ecosystem

Ecosystem services

Economic services

Welfare

Source: From Ecological Economics 2nd Edition, by Herman E. Daly and Joshua Farley. Copyright © 2004 & 2011 Herman E. Daly and Joshua Farley. Reproduced by permission of Island Press, Washington, DC.

Figure 5.1  Welfare in a full versus empty world

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 86

01/06/2017 16:50

A new economics for our full world  ­87 economy was small relative to the containing ecosystem (relatively empty of us and our things), and our technologies of extraction and harvesting were not very powerful, and our numbers were small. Fish reproduced faster than we could catch them, trees grew faster than we could harvest them, concentrated minerals in the earth’s crust were abundant – natural resources were not really scarce. In the empty world it made economic sense to say that there was no conflict between economic growth and the ecosystem, even if it was not strictly true in a physical sense. However, physical growth has transformed the empty world into a full world in which the remaining ecosphere is scarce. This has happened in a surprisingly short time thanks to the explosive nature of exponential growth. Neoclassical economic theory developed during the empty-world era, and still embodies many assumptions from that past era. However, the empty world has rapidly turned into the full world thanks to growth, the numberone goal of all countries, capitalist, communist, or in between. In my lifetime the world population has more than tripled – from 2 billion to over 7 billion. Similarly, for the populations of cattle, chickens, pigs, and soybean plants and corn stalks. The non-living populations of cars, buildings, refrigerators and cell phones have grown even more rapidly. All these populations, both living and non-living, are what physicists call “dissipative structures”  – that is, their maintenance and reproduction requires a metabolic flow, a throughput that begins with depletion of low-entropy resources from the ecosphere and ends with the return of polluting high-entropy waste back to the ­ecosphere. This metabolic throughput imposes a cost to the ecosphere at both ends, an unavoidable cost that is necessary for the production, maintenance, and reproduction of the stock of both people and wealth. Until recently the concept of metabolic throughput was absent from standard economic theory, and even now its importance is greatly downplayed, in spite of the important contributions of Nicholas Georgescu-Roegen and Kenneth Boulding (Boulding 1966; Georgescu-Roegen 1971). Recognizing the concept of metabolic throughput in economics brings with it the laws of thermodynamics that are inconvenient to the growthist ideology. The first law, as noted above, imposes a quantitative trade-off of matter/energy between the environment and the economy. The second law imposes a qualitative degradation of the environment – by extracting low-entropy resources and returning high-entropy wastes. The second law of thermodynamics thus imposes an additional conflict between ­expansion of the economy and preservation of the environment, namely, that the order and structure of the economy is paid for by imposing disorder in the sustaining ecosphere. Furthermore, this disorder, exported from the economy, disrupts the complex ecological interdependencies of our lifesupporting ecosystem.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 87

01/06/2017 16:50

88  Handbook on growth and sustainability Another common denial of the conflict between growth and environment is the claim that because GDP is measured in value units it has no necessary physical impact on the environment. Although GDP is measured in value units, we must remember that a dollar’s worth of gasoline is a physical quantity – recently about one-fourth of a gallon in my country. Gross domestic product is an aggregate of all such “dollar’s worth” quantities bought for final use, and is consequently a value-weighted index of physical quantities. Gross domestic product is certainly not perfectly correlated with resource throughput – but, for matter-dependent creatures like ourselves, the positive correlation is quite high. Prospects for absolute “decoupling” of resource throughput from GDP are quite limited, even though much discussed and wished for (Victor 2008; Jackson 2009). These limits are made visible by considering an input–output matrix for an economy. It reveals that nearly every sector requires inputs from, and provides outputs to, nearly every other sector, and these inputs require a further round of inputs for their production, and so on. The economy grows as a deeply integrated whole, not as a loose mix of sectors. Even the information and service sectors have substantial physical resource inputs. In addition to the supply limit of inter-industry dependence there is the demand limit of “lexicographic ordering of wants” – unless we first have sufficient physical food on the plate we are just not interested in the information contained in a million recipes on the Internet. The lexicographic sequence of demand provides an additional limit to any policy of lowering material intensity by substitution in the final bill of goods of GDP. In addition, the Jevons paradox leads us to use even more of a resource that we have learned to use more efficiently. More miles per gallon makes travel cheaper, we travel more as a result, and may well end up consuming more gallons, albeit more efficiently. This is not to deny real possibilities of using less resources, and ethical improvement in the ordering of our priorities in using them. These represent qualitative development and are frequently not captured in real GDP, which mainly reflects quantitative growth. To the extent that GDP can grow without increase in throughput, it presents no problem and, if GDP really measured welfare, could be considered development rather than growth. Legitimate confusion arises from the fact that we have no good independent measure of aggregate resource throughput. We therefore often resort to using real GDP, a price-weighted index of final production, as a proxy for physical throughput. This may seem odd, but GDP is more tightly correlated with throughput (cost) than with either measured welfare or self-evaluated happiness (benefit). Kenneth Boulding (tongue only slightly in cheek) suggested relabeling gross domestic product as gross domestic cost. We could use energy content or mass as direct physi-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 88

01/06/2017 16:50

A new economics for our full world  ­89 cal measures of throughput, and that has been done (World Resources Institute 2000). The important thing is first to limit physical resource throughput thereby making efficiency more necessary, and blocking the Jevons tendency to increase resource throughput. Since GDP reflects both costly and beneficial activity, ecological economists have not considered it to be a desideratum. Instead they have distinguished growth (quantitative increase in size by accretion or assimilation of matter), from development (qualitative improvement in design, technology, or ethical priorities). Ecological economists advocate development without growth – qualitative improvement without quantitative increase in resource throughput beyond an ecologically sustainable scale. Given this distinction, we could indeed say that there is no necessary conflict between qualitative development and the environment, and that would be true; but there is certainly a conflict between quantitative growth and the environment. Calling different things (quantitative increase and qualitative improvement) by the same name (GDP growth) is a recipe for confusion. It is better to call different things by different names. Gross domestic product accounting mixes together both growth and development, as well as costs and benefits. It is a number that confuses more than it clarifies.

2 FROM EMPTY WORD TO FULL WORLD: THE LIMITING FACTOR HAS CHANGED When the entropic throughput becomes too large it overwhelms either the regenerative capacity of nature’s sources, or the assimilative capacity of nature’s sinks. That is the main signal that we no longer live in the empty world but now inhabit a full world. Natural resource flows are now the scarce factor, and labor and capital stocks are now relatively abundant. The basic pattern of scarcity has been reversed by a century of growth. In the past the fish catch was limited by number of fishing boats and fishermen. Now it is limited by number of fish and their capacity to reproduce. More fishing boats will not result in more caught fish. The limiting factor is no longer the manmade capital of boats, but remaining natural capital of fish populations and their aquatic habitat. Economic logic says invest in the limiting factor. Economic logic has not changed, but the identity of the limiting factor has. The old economic policy of building more fishing boats is now uneconomic. We need to invest in natural capital, which is now the limiting factor. How do we do that? For one thing by reducing the catch to allow fish populations to increase to their previous levels, and by other measures such as fallowing

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 89

01/06/2017 16:50

90  Handbook on growth and sustainability agricultural land to refresh its fertility, by restoration ecology, biodiversity conservation, and sustainable use practices. Of course the same logic applies to other natural resources, not just fish. What limits the production of cut timber? Is it the number of chainsaws, sawmills and lumberjacks, or the remaining forests and the growth rate of new trees? What limits the crops from irrigated agriculture? Is it the number of pipes, sprinklers and pumps, or the stock of water in aquifers, their recharge rate, and the flow of surface water in rivers? What limits the number of barrels of pumped crude oil – the number of drilling rigs or the remaining accessible deposits of petroleum? What limits the use of all fossil fuels – our mining equipment and combustion engines, or the capacity of the atmosphere to absorb the resulting greenhouse gasses without causing drastic climate change? In all cases it is the latter, the natural capital (whether source or sink), rather than the manmade capital. I think these examples, while not rising to the level of proof, are enough to establish the strong presumption that the limiting factor is no longer manmade capital, but has become remaining natural capital. Traditional GDP growth, based on increasing manmade capital stocks, becomes uneconomic in the full world as the complementary factor of natural resources becomes limiting. How have traditional economists reacted to this change in the identity of the limiting factor, this new pattern of scarcity? In three ways. First, by ignoring it – by continuing to believe that we live in the empty world. Second, by pretending that real GDP is an ethereal angelic number rather than a physical aggregate. Third, by claiming that it cannot be true that natural capital has replaced manmade capital as the limiting factor, because manmade and natural capital are substitutes, they say. Only if factors of production are complements can the one in short supply be limiting. So even if natural capital is now scarcer than before, this would not be a problem, neoclassical economists claim, because manmade capital is a “near perfect” substitute for natural resources. It is represented as such in multiplicative production functions such as the widely used Cobb-Douglas. However, multiplying “factors” of production to get a “product” is mathematics, not economics. It assumes substitutability and rules out complementarity. In the real world, what we call “production” is in fact transformation, not multiplication. Natural resources are transformed (not multiplied) by capital and labor into useful products and waste. While the Cobb-Douglas and similar production functions may be useful in expressing statistical correlations, they fail as an analytical description of the production process – as a recipe for how to actually make anything. While improved technologies can certainly reduce wastage in the use of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 90

01/06/2017 16:50

A new economics for our full world  ­91 resources, as well as make recycling easier, it is hard to imagine how the fund of agents of transformation (capital or labor) can substitute for or replace the flow of that which is being transformed (natural resources). Can we produce a ten-pound cake with only one pound of ingredients, simply by using more cooks and ovens? Further, how could we make more capital (or labor) without also using more natural resources? While a capital investment in sonar may help locate those remaining fish it is hardly a good substitute for more fish in the sea. Also, what happens to the capital value of fishing boats, including their sonar, as the fish disappear?

3 IN DEFENSE OF THE CONCEPT OF NATURAL CAPITAL The preceding section makes use of the concept of “natural capital”. Some people object to the concept of “natural capital” because they say it reduces nature to the status of a commodity to be marketed at its exchange value. This is indeed a danger implicit in monetization, but I am using “capital” in its original non-monetary sense of “a stock or fund that yields a flow of useful goods or services”. The word “capital” derives from the Latin “capita” meaning “heads” and referring to heads of cattle in a herd. The herd is the capital stock, the annual increase in the herd is the flow of useful goods or “income” yielded by the capital stock – all in physical, not financial terms, quite independent of prices. It is especially worth remembering that the main reason for introducing the concept of natural capital was to call attention to the error of counting its drawdown as income in our national accounts. That is a strong point in favor of the concept, since counting capital consumption as if it were income is a cardinal sin against sustainability. Indeed, the whole problem of unsustainability might be viewed as a national accounting error – counting capital consumption as if it were income. Income is the maximum that a community can consume in a time period without reducing its capacity to produce and consume the same amount in the next period. That is, without reducing future capacity to produce, or “capital” in the broad sense. This definition comes from standard economics (Sir John Hicks, Nobel Laureate). Historically the whole reason for income accounting is to avoid impoverishment by inadvertently consuming our capital. Although we mainly neglect natural capital consumption, we also consume manmade capital beyond realistic depreciation set-asides. A related accounting error is to count defensive expenditures (for example, pollution clean-up) as income, with no corresponding deduction for the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 91

01/06/2017 16:50

92  Handbook on growth and sustainability cost of the pollution that made the clean-up necessary – “asymmetric accounting”, as Dutch economist Roefie Hueting called it. Add the critical new fact that natural capital has become the physically limiting factor in production and it is hard to see how economists could do without the concept. The fact that natural capital and manmade capital are both called “capital” does not make them substitutes. They are complements, as was argued in section 2. The complementarity might be cleared of linguistic obfuscation if we spoke of natural resource (flow) instead of natural capital (stock), since the flow is the material transformed and capital is the transforming agent – obvious complements. However, the flow of natural resources is derived from the stock of natural capital so the relation of complementarity between natural and manmade capital remains true in the stock dimension. The problem is not in the concept of natural capital but in the neoclassical assumption that it can be substituted by other forms of “capital”. This is a danger. I recall that the World Bank justified its relaxed attitude toward depletion of natural capital by pointing to its many alleged substitutes: industrial capital, educational capital, social capital, and, worst of all, financial capital. With so many “substitutes” for natural capital the World Bank worried little about depleting the natural resource base, and could not see its emerging limitationality. As a further reductio ad absurdum, consider the obvious question: if manmade capital is a substitute for natural capital, then natural capital is also a substitute for manmade capital, since the relation of substitution is reversible; but then why would we ever have bothered to make and accumulate manmade capital in the first place if nature had already endowed us with a “near perfect” substitute? Certainly big problems arise if we take money in the bank growing at the interest rate as the “substitutable” standard by which to judge whether particular natural capital stocks are growing fast enough, and then liquidate populations growing slower than the interest rate and replace them with faster growing ones. The fungible common denominator of money reinforces the misleading neoclassical assumption of substitutability between manmade and natural capital. Money in the bank is a stock that yields a flow all by itself without diminishing itself, and without the aid of other flows. Can a herd of cattle yield a flow of additional cattle all by itself, and without diminishing itself? No – the existing stock of cattle transforms a resource flow of grass and water into new cattle faster than old cattle die. Like cattle, real capital transforms resources into products and wastes, obeying the laws of thermodynamics. Capital is not a magic substance that creates something out of nothing. Thinking that real capital can behave like financial “capital” is a prime example of the “fallacy of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 92

01/06/2017 16:50

A new economics for our full world  ­93 misplaced concreteness” – mistaking the abstract symbol for the concrete reality. A good symbol should not be allowed to do things that the reality it symbolizes cannot do. Moving from fractional reserve banking to a system of 100 percent reserves on demand deposits would force money to behave more like real wealth, at least in some important ways.

4 LIMITS TO GROWTH AND OPTIMAL SCALE OF THE ECONOMY IN A FULL WORLD It is clear from Figure 5.1 that the transition from empty to full world involves both costs and benefits. The brown arrow from Economy to Welfare represents economic services (benefits from the economy). It is small in the empty world but large in the full world. It grows at a diminishing rate (because as rational beings we satisfy our most important wants first – law of diminishing marginal utility). The costs of growth are represented by the shrinking ecosystem services (green arrow) that are large in the empty world and small in the full world. It diminishes at an increasing rate as the ecosystem is displaced by the economy (because we presumably sacrifice the least important ecosystem services first – law of increasing marginal costs). We can restate this in terms of Figure 5.2, showing declining marginal benefit of growth of the economy and increasing marginal cost of the resulting environmental sacrifice. From the figure we can distinguish three concepts of limits to growth:

Utility or disutility

Economic growth

Uneconomic growth Ecological catastrophe limit

Mar

gina

l util

ity

Economic limit

Utility exceeds disutility ty

isutili

inal d

Marg

Disutility exceeds utility

0 Futility limit Increasing production and consumption

Source:  Illustration by Jen Christiansen.

Figure 5.2  Three limits to growth

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 93

01/06/2017 16:50

94  Handbook on growth and sustainability 1. The futility limit occurs when marginal utility of production falls to zero. Even with no cost of production there is a limit to how much we can consume and still enjoy it. There is a limit to how many goods we can enjoy in a given time period, as well as a limit to our stomachs and to the sensory capacity of our nervous systems. In a world with considerable poverty, and in which the poor observe the very rich apparently still enjoying their extra wealth, this futility limit is thought to be far away, not only for the poor, but for everyone. By its non-satiety postulate neoclassical economics formally denies the concept of the futility limit. However, studies showing that, beyond a threshold, self-evaluated happiness (total utility) ceases to increase with GDP, strengthen the relevance of the futility limit. 2. The ecological catastrophe limit is represented by a sharp increase to the vertical of the marginal cost curve (dashed line). Some human activity, or novel combination of activities, may induce a chain reaction, or tipping point, and collapse our ecological niche. The leading candidate for the catastrophe limit at present is runaway climate change induced by greenhouse gasses emitted in pursuit of economic growth. Where along the horizontal axis it might occur is uncertain. I should note that the assumption of a continuously and smoothly increasing marginal cost curve is quite optimistic. Given our limited understanding of how the ecosystem functions we cannot be sure that we have correctly sequenced our sacrifices of ecological services from least to most important. In making way for growth we may ignorantly sacrifice a vital ecosystem service ahead of a trivial one. Thus the marginal cost curve might in reality zig-zag up and down discontinuously, making it difficult to define the third and most important limit, namely the economic limit. 3. The economic limit is defined by marginal cost equal to marginal benefit and the consequent maximization of net benefit. The good thing about the economic limit is that it would appear to be the first limit encountered. It certainly occurs before the futility limit, and perhaps as shown, before the catastrophe limit, although that is quite uncertain. At worst the catastrophe limit might coincide with and discontinuously determine the economic limit. Therefore, it is very important to estimate the risks of catastrophe and include them as costs counted in the disutility curve, as far as possible. Standing at the economic limit and looking backwards we see the large net benefit of growth, and will be asked, “How can you oppose growth when it has done so much good?” Looking forward the answer is clear – we have reached the optimum and now growth yields net costs, not net

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 94

01/06/2017 16:50

A new economics for our full world  ­95 benefits. How much uneconomic growth must we experience before we can look back at it and recognize what is happening? From the graph it is evident that increasing production and consumption is rightly called economic growth only up to the economic limit. Beyond that point it becomes uneconomic growth because it increases costs by more than benefits, making us poorer, not richer. Unfortunately, it seems that we perversely continue to call it economic growth! Indeed, you will not find the term “uneconomic growth” in any textbook in macroeconomics. Any increase in real GDP is called “economic growth” even if it increases costs faster than benefits. Richer (more net wealth) is better than poorer – that is a truism. The relevant question is, does growth any longer make us richer, or has it begun to make us poorer by increasing “illth” faster than wealth? The relevant question is seldom asked. Examples of illth are everywhere, even if they are still unmeasured in national accounts. They include things like nuclear wastes and radiation risks, climate change from excess carbon in the atmosphere, biodiversity loss, depleted mines, deforestation, eroded topsoil, dry wells and rivers, sea level rise, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, and the ozone hole. They also include exhausting and dangerous labor, and the un-repayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector. It is difficult to measure the marginal costs (shadow price) of these collective “bads”, because they are not traded in markets. Consequently their costs are not borne individually on the margin, but collectively and infra-­ marginally, where the real sacrifice is greater. Economists will note that the logic of Figure 5.2 is familiar in microeconomics – marginal cost equal to marginal benefit defines the optimal size of a microeconomic unit, be it a firm or household. That logic is not applied to the macro-economy, however, because the latter is thought to be the whole rather than a part. When a part expands into the finite whole it imposes an opportunity cost on other parts that must shrink to make room for it. When the whole itself expands it is thought to impose no opportunity cost because it displaces nothing, presumably expanding into the void. However, as seen in Figure 5.1, the macro-economy is not the whole. It too is a part, a part of the larger natural economy, the ecosphere, and its growth does inflict opportunity costs on the finite whole that must be counted. Ignoring this fact is why many economists cannot conceive of the possibility that growth in GDP could ever be uneconomic. Standard economists might accept this diagram as a static picture, but argue that in a dynamic world technology will shift the marginal benefit curve upward and the marginal cost curve downward, moving their intersection (economic limit) ever to the right, so that continual growth

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 95

01/06/2017 16:50

96  Handbook on growth and sustainability remains both desirable and possible. However, the macroeconomic curveshifters need to remember three things. First, the physically growing macro-economy is still limited by its displacement of the finite ecosphere, and by the entropic nature of its maintenance throughput. Second, the timing of new technology is uncertain. The expected technology may not be invented or come on line until after we have passed the economic limit. Do we then endure uneconomic growth while waiting and hoping for the curves to shift? Third, let us remember that the curves can also shift in the wrong directions, moving the economic limit back to the left. Did the technological “advances” of tetraethyl lead and chlorofluorocarbons shift the cost curve down or up? How about nuclear power? Or fracking? Adopting a steady-state economy allows us to avoid being shoved past the economic limit. We could take our time to evaluate new technology rather than letting it blindly push growth that may well be uneconomic. And the steady state gives us some insurance against the risks of ecological catastrophe that increase with growthism and technological impatience.

5 THREE STRATEGIES FOR INTEGRATING ECONOMY AND ECOSYSTEM It follows that our vision and policies should be based on an integrated view of the economy as a subsystem of the finite and non-growing ecosphere. Attempts at integration, leading to policy, have been based on three different theoretical understandings (Figure 5.3). All three start from the vision of the economy as a subsystem of the ecosphere. Thus all three recognize limits to growth. The differences concern the way they each treat the boundary between the economy and the rest of the ecosystem, and that has large policy consequences for how we accommodate to limits. Economic imperialism seeks to expand the boundary of the economic subsystem until it encompasses the entire ecosphere. The goal is one system, the macro-economy as the Whole. This is to be accomplished by complete internalization of all external costs and benefits into prices. Those myriad aspects of the biosphere not customarily traded in markets are treated as if they were by imputation of “shadow prices”– the economist’s best estimate of what the price of the function or thing would be if it were traded in a competitive market. Everything in the ecosphere is theoretically rendered comparable in terms of its priced ability to help or hinder individuals in satisfying their wants. Implicitly, the end pursued is an ever-greater level of consumption, and the way to effectively achieve this end is growth in the aggregate exchange value of marketed final goods and services (GDP).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 96

01/06/2017 16:50

A new economics for our full world  ­97 Economic imperialism

Ecological reductionism

Steady-state subsystem

Ecosystem

Ecosystem

Ecosystem

Economy

Economy

Economy

Source: From Ecological Economics 2nd Edition, by Herman E. Daly and Joshua Farley. Copyright © 2004 & 2011 Herman E. Daly and Joshua Farley. Reproduced by permission of Island Press, Washington, DC.

Figure 5.3  Approaches to integrating economy and ecosystem Economic imperialism is basically the neoclassical approach. Subjective individual preferences, however whimsical or uninstructed, are taken as the ultimate source of value. This is a perverse value judgment, although usually treated as the avoidance of a value judgment. Since subjective wants are thought to be infinite in the aggregate, as well as sovereign, there is a tendency for the scale of activities devoted to satisfying them to expand. The expansion is considered legitimate as long as “all costs are internalized into prices”. While costs should certainly be internalized into prices, this procedure should not become an excuse for allowing excessive takeover of the ecosphere by economic growth. Many of the costs of growth that we have experienced have come as surprises. We cannot internalize them if we cannot first imagine and foresee them. Furthermore, even after some external costs have become visible to all (for example, climate change), internalization has been very slow, partial, and much resisted. Profit maximizing firms have an incentive to externalize costs. As long as the evolutionary fitness of the environment to support life is not perceived by economists as a value, it is likely to be destroyed in the imperialistic quest to make every molecule and photon in creation pay their way according to the pecuniary rules of present value maximization. There is no doubt that once the scale of the economy has grown to the point that formerly free environmental goods and services become scarce,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 97

01/06/2017 16:50

98  Handbook on growth and sustainability it is better that they should have a positive price reflecting their scarcity than to continue to be priced at zero. However, there remains the prior question: Are we better off at the new larger scale with formerly free goods correctly priced, or at the old smaller scale with free goods also correctly priced (at zero)? In both cases, the prices are right. This is the suppressed question of optimal macro scale, not answered, indeed not even asked, by either neoclassical or Keynesian economics in their blind quest for growth. Ecological reductionism begins with the true insight that humans and markets are not exempt from the laws of nature. It then proceeds to the false inference that human action is totally explainable by, reducible to, the laws of nature. It seeks to explain whatever happens within the economic subsystem by exactly the same natural laws that it applies to the rest of the ecosystem. It subsumes the economic subsystem indifferently into the natural system, erasing its boundary. Taken to the extreme, in this view all is explained by a materialist deterministic system that has no room for purpose or will. This is a sensible vision from which to study the ecology of a coral reef or a rainforest. However, if we adopt it for studying the human economy, we are stuck from the beginning with the inconvenient policy implication that policy can make no difference. In a way the human body metaphor is more apt than the ecosystem metaphor. The human body contains within it the dynamics of a small ecosystem; but the ecosystem metaphor does not contain the emergent property of consciousness that is part of the human body metaphor. Also, it is the emergent property of consciousness that, although mysterious, is also the reality that we most directly experience and inhabit. It is the locus of purpose and value, without which economics collapses into physics; and it is the locus of rational thought without which physics too collapses. Ecology has inherited from its parent discipline, biology, a measure of modern biology’s materialist, mechanistic philosophy. This stems from a neo-Darwinian fundamentalism that is often uncritically accepted by many leading biologists as a deterministic metaphysics validated by science, rather than as a fruitful working hypothesis for doing science. Determinism is totally at odds with purposeful policy of any kind, and consequently with any economic thought aiming at policy. A happy marriage between economics and ecology, as in “ecological economics”, must overcome this latent incompatibility. Economic imperialism reduces everything to human will and utility, neglecting objective constraints of the natural world. Ecological reductionism sees only deterministic natural laws, and imperiously extends these into materialist “explanations” of human will and consciousness as mere illusions. It is a tragic irony that the discipline whose scientific findings have done most to awaken us to the environmental dangers we face, is also the discipline

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 98

01/06/2017 16:50

A new economics for our full world  ­99 whose metaphysical presuppositions have done most to weaken our will to respond to these dangers through purposeful policy. This contradiction is most apparent in the work of the acclaimed naturalist and environmentalist, Edward O. Wilson, who strongly affirms both materialistic determinism and environmental activism. He recognizes the contradiction, and, unable to resolve it, has simply chosen to live with it. (Wilson 1978; Berry 2000; Daly 2007). Economic imperialism and ecological reductionism have in common that they are monistic visions, albeit rather opposite monisms. It is the monistic quest for a single entity or principle by which to explain everything that leads to excessive reductionism on both sides. Certainly science should strive for the most reduced or parsimonious explanation possible without ignoring the facts, but respect for the basic empirical facts of natural laws, on the one hand, and self-conscious purpose and will, on the other, should lead us to a kind of practical dualism. After all, that our world should consist of two fundamental features offers no greater inherent improbability than that it should rest on one only. How these two fundamental features of our world (material cause and final cause) interact is a venerable mystery – precisely the mystery that the monists of both kinds are seeking to avoid. However, economists are too much in the middle of things to adopt either extreme. Economists are better off denying the tidy-mindedness of either monism than denying the facts that point to an untidy dualism. The remaining strategy is the steady-state subsystem. It does not attempt to eliminate the subsystem boundary, either by expanding it to coincide with the whole system or by reducing it to nothing. Rather, it affirms both the interdependence and the qualitative difference between the human economy and the natural ecosystem. The boundary must be recognized and drawn in the right place. The scale of the human subsystem defined by the boundary has an optimum, and the throughput by which the ecosphere physically maintains and replenishes the economic subsystem must be ecologically sustainable. That throughput is indeed entropic, but rather than maximizing entropy, as some natural systems seem to do, the economy seeks to minimize entropy subject to the maintenance of production levels sufficient for a good life for all. The goal of the economy is to minimize the low-entropy used up to attain a sufficient standard of living  – by sifting it slowly and carefully through efficient technologies aimed at important purposes. The economy should not be viewed as an idiot machine dedicated to maximizing waste. Its final cause is not competitive exclusion by preemption of energy and maximization of waste, as some ecological reductionists seem to claim, but the maintenance and enjoyment of life for a long time (not forever) at a sufficient level of wealth for a good (not luxurious) life.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 99

01/06/2017 16:50

100  Handbook on growth and sustainability The idea of a steady-state economy comes from classical economics, and was most developed by John Stuart Mill (Mill 1857) who referred to it as the “stationary state”. The main idea was that population and the capital stock were not growing, even though the art of living continued to improve. The constancy of these two physical stocks defined the scale of the economic subsystem. Birth rates would be equal to death rates and production rates equal to depreciation rates. Today we add that both rates should be equal at low levels rather than high levels because we value longevity of people and durability of artifacts, and wish to minimize throughput, subject to maintenance of the stock of wealth and people. Also we add today that the stock of wealth relative to the population must be sufficient for a good life, and distributed equitably enough that all may share in that good life. Alternatively the definition of a steady-state economy might start with a given ecologically sustainable throughput, and then seek to maximize the stock of wealth maintainable, and resulting experience of welfare derivable, from that given throughput (Daly 2014). Either approach gives analytic content to the rather vague idea of “sustainability”. Abstract nouns, like sustainability, are notoriously difficult to define. If we consider instead the adjective “sustainable”, which requires an object, as in “sustainable fish catch”, then we at least have some concrete idea of what we are talking about. Better yet is the transitive verb form, “to sustain”, which requires both a subject and an object, as in “the fish catch sustains the activity of the cannery”, or, “the ecosphere sustains the economy”. How does it do this? By supplying natural resource inputs and absorbing waste outputs. If the scale of this throughput flow is within the regenerative and absorptive capacities of the ecosystem then the economic subsystem is “sustainable”, which means that it can do next year what it did this year, and so on. This fits the standard economic definition of “income” as the maximum that a community can consume this year without reducing its capacity to produce and consume the same amount next year, and the following year, and so on. That is, sustainability means living on income and not on capital consumption, including consumption of natural capital. Growth all the way to the very limit of carrying capacity, even if then maintained in a steady state, has an unrecognized political cost as well. Excess capacity is a necessary condition for freedom and democracy. Living in a steady state very close to the carrying capacity limit, as on a submarine or spaceship, requires very strict discipline. On submarines and spaceships we have a captain with absolute authority, not a democracy. If we want democracy, we should not grow to the limit of carrying capacity – better to leave some slack – a generous margin of tolerance for the errors that freedom entails.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 100

01/06/2017 16:50

A new economics for our full world  ­101

6 OUTLINE OF POLICIES FOR A STEADY-STATE ECONOMY Ecological economics should seek to develop the steady-state vision, and get beyond the dead ends of both economic imperialism and ecological reductionism. Ten initial policies for moving in this direction are outlined below. Ten, of course, is an arbitrary number, just a way to get specific. Some policies could be adopted independently and gradually, but the totality fits together in the sense that some compensate for the shortcomings of others.   1. Cap-auction-trade systems for basic resources (especially fossil fuels). (a) Set caps with reference to 3 rules for resource exploitation:2 this gives sustainable scale and avoids the Jevons effect. (b) The auction revenues substitute for income taxes, especially on the poor, providing just distribution. (c) Market exchange of auctioned depletion or pollution quotas allows efficient allocation.   2. Shift the tax base from “value added” (labor and capital) to “that to which value is added” (natural resource throughput). (a) Resource throughput (depletion and pollution) is a cost so tax it when not already limited by cap-auction-trade. (b) Value added to resources is a benefit so stop taxing it and substitute revenue from resource taxes. (c) Resources have become the limiting factor, so raise their price by tax to induce more efficient use.   3. Limit the range of inequality in distribution. (a) Establish minimum and maximum income limits, (b) a range of income differences sufficient for incentives, (c) but not sufficient for plutocracy.   4. Move from fractional reserve banking system to 100 percent reserve requirements on demand deposits. (a) This eliminates interest-bearing money created by private banks. (b) It requires that every dollar loaned for investment is a dollar previously saved by someone. (c) It dampens boom and bust business cycle, and captures seigniorage for the public Treasury which becomes the sole creator of money and spends it into circulation for purchase of public goods.   5. Move from free trade and free capital mobility to balanced and regulated international trade. (a) Interdependence of national economies recognized; integration into one global economy resisted.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 101

01/06/2017 16:50

102  Handbook on growth and sustainability   6.   7.   8.   9.

10.



(b) National policies are undercut in a globalized world by capital mobility. (c) In addition, free capital mobility undercuts the basic comparative advantage argument for free trade in goods (Daly and Farley 2004).3 Free up the length of the working day, week, and year. (a) Allow greater option for part-time or personal work, and enjoying progress as more leisure rather than more production. Stabilize population. (a) Work toward a balance in which births plus in-migrants equals deaths plus out-migrants, and in which every birth is a wanted birth. Reform national accounts. (a) Separate GDP into a cost account and a benefits account. Compare costs and benefits of a growing throughput at the margin, stop throughput growth when marginal costs equal marginal benefits. Restore the US Full Employment Act of 1945 or its equivalent. (a) Once again make full employment the end, and economic growth the temporary means, rather than economic growth the permanent end, with unemployment the price to be paid for growth based on the cheap-labor policies of automation, off-shoring, deregulated trade, and large scale immigration. Seek federated community of nations. (a) Seek world community as a federation of national communities, not the dissolution of nations into a single “world without borders”. Globalization by free trade, free capital mobility, and free migration dissolves national community, leaving nothing to federate. Such globalization is individualism writ large – a post-national corporate feudalism in a global commons. Instead, strengthen the original Bretton Woods vision of interdependent national economies, and resist the World Trade Organization (WTO) vision of a single integrated global economy. (b) Respect the principle of subsidiarity: although climate change and arms control require global institutions, basic law enforcement and infrastructure maintenance remain local issues. Focus our limited capacity for global cooperation on those needs and functions that truly require it.

7 THE LARGER ETHICAL AND ECOLOGICAL CONTEXT OF ECONOMICS It is one thing to suggest an outline of policies. It is something else to say from where we will get the will, strength, and clarity of purpose to carry

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 102

01/06/2017 16:50

A new economics for our full world  ­103 Philosophy and theology

Ultimate end (summum bonum)

Ethics

Ultimate political ecomomy (stewardship)

Intermediate ends (hierarchy)

Political economy

Intermediate means (artifacts)

Technology

Physics

Ultimate means (low entropy matter-energy)

Source: From Ecological Economics 2nd Edition, by Herman E. Daly and Joshua Farley. Copyright © 2004 & 2011 Herman E. Daly and Joshua Farley. Reproduced by permission of Island Press, Washington, DC.

Figure 5.4  Ends-means structure of human activity out these policies that limit growth – especially when for the past century we have treated growth as the summum bonum. This requires a major change in philosophical vision and ethical practice. There is no guarantee that we can do it. As a way to contemplate such a change, consider the “ends-means pyramid” in Figure 5.4. The policies I have suggested belong in the middle, under “Political Economy”. At the base of the pyramid are our ultimate means, low entropy matter-energy – that which we require to satisfy our wants, but which we cannot make, but only use up. We use these ultimate means directly, guided by technology, to produce intermediate means (artifacts, commodities, services . . .) that directly satisfy our needs. These intermediate means are allocated by political economy to serve our intermediate ends (health, comfort, education . . .), which are ranked ethically in a hierarchy by how strongly they contribute to the ultimate end in present circumstances. We can perceive the ultimate end only dimly and vaguely, but in order to ethically rank our intermediate ends we must compare them to some ultimate criterion. We cannot avoid philosophical

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 103

01/06/2017 16:50

104  Handbook on growth and sustainability and theological inquiry into the ultimate end just because it is difficult. To prioritize requires that something must go in first place. The ends-means pyramid or spectrum relates the basic physical requirement for usefulness (low entropy matter-energy) through technology, political economy, and ethics, to the service of the ultimate end, dimly perceived but logically necessary. The goal is to unite the material of this world with our best vision of the good. The middle position of economics is significant. Economics traditionally deals with the allocation of given intermediate means to satisfy a given hierarchy of intermediate ends. It takes the technological problem of converting ultimate means into intermediate means as solved. Likewise, it takes the ethical problem of ranking intermediate ends with reference to a vision of the ultimate end as also solved. So all economics has to do is efficiently allocate given means among a given hierarchy of ends. In neglecting the ultimate end and ethics, economics has been too materialistic; in neglecting ultimate physical means and technology, it has not been materialistic enough. Ultimate political economy (stewardship) is the total problem of using ultimate means to best serve the ultimate end, no longer taking technology and ethics as given, but as steps in the total problem to be solved. The overall problem is too large to be tackled without breaking it down into its pieces; but without a vision of the total problem the pieces do not add up or fit together. The dark base of the pyramid is meant to represent the fact that we have relatively solid and consensual knowledge of various sources of low entropy matter-energy. The light apex of the pyramid represents the fact that our knowledge of the ultimate end is uncertain and not nearly as consensual as physics. The single apex will annoy pluralists who think that there are many “ultimate ends”. Grammatically and logically, however, “ultimate” requires the singular. Yet there is certainly room for more than one perception of the nature of the singular ultimate end, and much need for tolerance and patience in reasoning together about it. Such reasoning together is short-circuited by a facile pluralism that avoids ethical ranking of ends by declaring them to be “equally ultimate”. This reasoning appears rather top-down, but in practice it is the concrete bottom-up struggle to rank particular intermediate ends that often gives us a clue or insight into what the ultimate end must be to justify our proposed ranking. As a start in that reasoning together I suggest the proposition that the ultimate end, whatever it may be, cannot be growth. A better starting point for reasoning together is John Ruskin’s aphorism that “there is no wealth but life”. How might that insight be restated as an economic policy goal? For initiating discussion I suggest: “maximizing the cumu-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 104

01/06/2017 16:50

A new economics for our full world  ­105 lative number of lives ever to be lived over time at a level of per capita wealth sufficient for a good life”. This leaves open the traditional ethical question of what is a good life, while conditioning its answer to the realities of economics and ecology. It also leaves open the question of how to account for non-human lives in addition to human. We already know from ecology that non-human life has enormous instrumental value to humans. However, in addition there is the intrinsic value of other sentient beings, other creatures who presumably enjoy their own lives. Our previous discussion of optimal scale of the human economy was only in terms of instrumental value of non-human to human life. Consideration of intrinsic value of non-human life would argue for a smaller scale of human presence than that based on instrumental value alone, but we are at a loss to say by how much. The technical language of ­“maximizing cumulative number of lives over time, subject to the constraint of a per capita wealth sufficient for a good life” is admittedly a too-exacting analytical statement of a dialectical problem. Even so, it seems a more coherent and ethically appealing approximation to the ultimate end than the current logically and ecologically impossible triple maximization of “ever more things, for ever more people, forever”.

NOTES * An earlier, shorter version of this chapter was published by the Tellus Institute in their Great Transition Initiative (GTI) series, June 2015 (http://www.greattransition.org/pub​ lication/economics-for-a-full-world). I am grateful for helpful comments received from the GTI discussants, and from the editors of this volume. 1. Figure 5.1 has four main purposes: (1) to depict the economy as an open physical subsystem of the finite ecosphere; (2) to illustrate its growth in scale relative to the constant ecosphere and its dependence on the ecosphere for a maintenance throughput; (3) to show that welfare has two basic sources, and that, with growth of the economy, economic welfare increases at a decreasing rate while ecosystem welfare decreases at an increasing rate. The last feature is carried forward into Figure 5.2 showing more clearly that (4) the scale of the economy relative to the ecosphere has an optimum at which total welfare (the sum of the two sources of welfare) is maximized.   The diagram could be elaborated to represent other features of reality that are interesting as well. The solar input could be drawn as a high-frequency wave of radiant energy, and the heat outflow could be drawn as low-frequency wave. This would represent low entropy energy in and high entropy energy out. The matter and energy throughput arrows for the economy should be thin in the empty world and thick in the full world illustrating greater flow volume in the full world. The entropic difference between the input and output parts of the throughput could be represented by making the input a solid line and the output a dotted line. There really should be two material recycles, one through the green (light grey) ecosphere, “ecosystem slow recycle”, and the other through the brown (dark grey) economy representing “economic fast recycle”. The thickness of each returning recycle arrow should be less than the thickness of the matter input depletion arrow.   The reader can probably imagine other elaborations. My reason for not including

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 105

01/06/2017 16:50

106  Handbook on growth and sustainability these added features in the diagram is twofold: first, my incompetence with computer graphics; second, my uncertainty as to when the elaborations would detract attention from the main points to be emphasized – yet another problem of optimization! 2. The three rules are: (1) renewable resources should not be depleted faster than they regenerate; (2) non-renewable resources should not be depleted faster than renewable substitutes are developed; and (3) wastes from all resource use should not be returned to the ecosystem faster than it can be absorbed and reconstituted by natural systems. 3. Capitalists are interested in maximizing absolute profits and therefore generally seek to reduce absolute costs. If capital is mobile between nations it will move to the nation with lowest absolute costs. Only if capital is internationally immobile will capitalists have any reason to compare internal cost ratios of countries, and chose to specialize in the domestic products having the lowest relative cost compared to other nations, and to trade that good (in which they have a comparative advantage) for other goods. In other words, comparative advantage is a second-best policy that capitalists will follow only when the first-best policy of following absolute advantage is blocked by international capital immobility. This is straight out of Ricardo. It is therefore very puzzling to see the International Monetary Fund (IMF) and some trade theorists advocating free trade based on comparative advantage, and at the same time advocating free capital mobility – as if the latter were an extension of the comparative advantage argument rather than the denial of its main premise. For further discussion, see Daly and Farley (2004, ch. 18).

REFERENCES Berry, W. (2000), Life is a Miracle: An Essay against Modern Superstition, Washington, DC: Counterpoint Press. Boulding, K. (1966), ‘The economics of the coming spaceship earth’, in H. Jarrett (ed.), Environmental Quality in a Growing Economy, Baltimore, MD: Johns Hopkins University Press. Daly, H. (2007), Ecological Economics and Sustainable Development, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Daly, H. (2014), From Uneconomic Growth to a Steady-State Economy, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Daly, H. and J. Farley (2004), Ecological Economics, Washington, DC: Island Press. Georgescu-Roegen, N. (1971), The Entropy Law and the Economic Process, Cambridge, MA: Harvard University Press. Helm, D. (2014), ‘The state of natural capital: restoring our natural assets’, Chairman’s Message in Second Report to the Economic Affairs Committee, March, Natural Capital Committee, London, accessed 28 February 2017 at https://www.gov.uk/government/ uploads/system/uploads/attachment_data/file/516698/ncc-state-natural-capital-secondreport.pdf. Jackson, T. (2009), Prosperity without Growth: Economics for a Finite Planet, London: Earthscan. Mill, J.S. (1857), Principles of Political Economy, bk IV, London: Parker. Victor, P. (2008), Managing without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Wilson, E.O. (1978), On Human Nature, Cambridge, MA: Harvard University Press. World Resources Institute (2000), The Weight of Nations: Material Outflows from Industrial Economies, Washington, DC: World Resources Institute.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 106

01/06/2017 16:50

6  Ecological modernization and green growth: prospects and potential Paul Ekins

1 INTRODUCTION The first economist to make an unequivocal prognosis of the unsustainable nature of human development was Thomas Malthus (Malthus 1798). To summarize drastically, he noted that human population had an exponential growth trajectory, that agricultural productivity had a linear growth trajectory, and that fertile land was absolutely limited, and drew the conclusion that human population growth would be brought to a halt by a shortage of food, and that such population as remained would bump along between subsistence and famine, disease and war. He considered that technology might increase the productivity of land, but ruled out the possibility that it could do so sufficiently to negate for long the difference in human and agricultural production which led him to his dismal conclusion. Malthus was wrong. At the time of his writing, the human population was around 1 billion. It is now around 7.5 billion and still growing. If people still go to bed hungry (as they do) it is because they cannot afford to buy food, rather than because the earth cannot grow enough. Obesity, often caused by eating too much food, is a problem of epidemic proportions, and it is estimated that around 30 per cent of global food production is wasted (Gustavsson et al. 2011). However, this does not mean that the basic insight of Malthus – that the physical resources of the planet are finite, and that attempts at the indefinite growth in the use of these resources by humans will lead to catastrophe – will always prove wrong. This chapter seeks to explore the Malthusian prognosis from a contemporary perspective to discover whether it is realistic to imagine a process of technological change that increases resource productivity and reduces environmental impacts to such an extent that the physical limits of resources and environment can be transcended as they were in Malthus’s day, to permit the further expansion of the human population and its associated economic activity, the former of which seems inevitable barring catastrophe and the latter of which is profoundly desired by the great majority of the populations of both rich and poor countries. 107 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 107

01/06/2017 16:50

108  Handbook on growth and sustainability Such a process has been termed ‘ecological modernization’, the basic idea behind which, according to Barry (2003, p. 191), is ‘that the z­ ero-sum character of environment-economic trade offs is more apparent than real . . . Ecological modernisation suggests that economic competitiveness and growth are not incompatible with environmental protection.’ On this reading ecological modernization is a very similar process to that envisaged by the term ‘green growth’, the more recent emergence of which is noted below. The most powerful expression of the Malthusian prognosis in modern times was from Meadows et al. (1972), with the famous Club of Rome report, The Limits to Growth. The limits here were expanded to include resources apart from food, and pollution, but the message was essentially the same. Growing population and economic activity would exhaust resources and this and the pollution from this activity would result in the ‘overshoot and collapse’ of both human numbers and economic output. In contrast to that of Malthus, this prognosis has not yet been proved wrong, because the authors envisaged this outcome within 100 years, a period that is not yet halfway through. Moreover, the same authors have issued periodic updates of their prognosis claiming that their original projections were either essentially on track, or even optimistic, and overshoot and collapse could occur earlier (Meadows et al. 1992, 2005), writing in the 2005 book ‘We believe the world will experience overshoot and collapse in resource use and emissions . . . We think it will be another decade before the consequences of overshoot are clearly observable and two decades before the fact of overshoot is generally acknowledged’ (Meadows et al. 2005, pp. xxi–xxii). The premier ecological economist of the period who expressed these thoughts in more formal economic terms was Herman Daly (see for example Daly 1991), a chapter from whom appears in this volume. Other economists who have drawn similar conclusions, who also appear in this volume, are Victor (2008) and Jackson (2009). The great majority of economists reject these conclusions. They continue to hold to their critique of The Limits to Growth, which was forcibly expressed at the time (see, for example, Beckerman 1974) and which held that scarcity would be expressed in markets through rising prices, and would stimulate substitution away from scarce to more abundant resources, while technological progress would continue to make resources more productive, and control pollution, well before overshoot and collapse took place. There has, however, been a change in what might be called the mainstream ‘green’ economic view in the intervening period. There is acknowledgement from quarters that include the World Bank, the United Nations Environmental Programme (UNEP) and the Organisation for Economic Co-operation and Development (OECD) that current patterns

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 108

01/06/2017 16:50

Ecological modernization and green growth  ­ 109 of economic growth are environmentally unsustainable and will need to change to ‘green growth’ (see, for example, Hallegatte et al. 2011; OECD 2011), in order to create a ‘green economy’ (UNEP 2011a). What is not in question, however, in any of these ‘green growth’ publications, is that economic growth, in both rich and poor countries and as expressed by the growth in gross domestic product (GDP), is both desirable and feasible for the foreseeable future. There is therefore a sharp difference in views about the possibility of economies growing in the coming decades and, to a lesser extent, about the desirability of such growth. Both views cannot be right. The purpose of this chapter is to probe this difference in views, principally in respect of the feasibility of growth, but also touching on its desirability, in order to arrive at a judgement on the balance of evidence on each side.

2  ON DIFFERENT KINDS OF GROWTH Any exploration of the growth/environment relationship should start from a conception of the broader relationship between the economy and planet Earth. One such conception, which lies at the heart of ecological economics, is given in Figure 6.1. This shows the human economy as a sub-system of the biosphere and lithosphere, with human populations and economic activities extracting high-grade energy, materials and ecosystem services from the natural environment, and discharging low-grade energy and wastes back into it, with consequent degradation of the ecosystems that produce the services. As economic activity has expanded, so has the throughput of energy and materials, which may be described as the physical growth of the economy. Clearly such physical expansion cannot continue indefinitely in a biosphere and lithosphere of finite size subject to the laws of thermodynamics. If this was all there was to the growth/environment conundrum, then it would be easily solved. Indefinite physical growth is impossible in a finite physical system. However, this is very much only part of the issue at question. Most economists are neither aware of the physical size of the economy, nor do they find this matter of much interest. Representations of the economy from which the physical and ecological dimensions are completely absent are by no means unusual. As Daly (1991, p. 33) has observed, all too often the economy is conceived as an abstract flow of exchange value between households and firms, and, through taxes and transfers, between these and governments. This representation reflects what is important to practically all economists, namely, the size of the money flows in terms of its GDP,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 109

01/06/2017 16:50

110  Handbook on growth and sustainability SOLAR ENERGY

HEAT

BIOSPHERE Eco-system services

Energy

Source functions

Energy

HUMAN POPULATION AND ECONOMIC ACTIVITY

Materials

Sink functions Wastes

Materially growing economic sub-system, leaving less space for nature

Source:  Adapted from Goodland (1992, p. 5).

Figure 6.1  The economy as a sub-system of the biosphere and the growth of GDP from year to year, which is hereafter called economic growth. Economic growth is growth in money flows through the economy, which flows may be equivalently (because the flows are circular) computed in terms of incomes, value added, or expenditure. Gross domestic product is calculated according to the following simple formula: GDP 5 C + I + G + (X – M), where C is consumption, I is investment, G is government expenditure, X is exports and M is imports, all measured in money terms over a period of a year. The important point to note in the context of this chapter is that, unlike physical growth, there is no theoretical limit to economic growth, because money per se has no physical dimension. Since the industrial revolution, growth in money flows (economic

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 110

01/06/2017 16:50

Ecological modernization and green growth  ­ 111 growth) has been positively correlated with growth in physical flows (physical growth), but there is no theoretical reason why this has always to be the case. Indeed, as will be seen below, for many environmental issues in a number of countries there has been ‘absolute decoupling’ between economic growth and the environmental impacts from the economy. This gets closer to the argument being explored here: if it could be shown that ‘absolute decoupling’ between economic activity, resource use and environmental impacts could be achieved, then it might indeed be the case that indefinite economic growth could be sustained in a finite physical world. The evidence on this possibility is examined in some detail in later sections. For the moment it is desirable to round off the discussion on different kinds of growth by introducing the concept of human welfare. Economists generally agree that it is the growth of human welfare (or utility, wellbeing or even happiness, to give it other names by which it has been called) that is the purpose of economic activity and therefore its increase is the purpose of economic growth. Economic growth is supposed to be a means to this end. However, as with economic and physical growth, the relationship between economic growth and growth in human welfare is neither constant nor straightforward. Growth in human welfare is dependent on a number of factors apart from money incomes. Layard (2005) argues that his research shows that human welfare depends mainly on seven issues: family relationships, financial situation, work, community and friends, health, personal freedom and personal values. A moment’s reflection reveals why, despite the importance of the elements on Layard’s list, economic growth has such a strong attraction for decision-makers and citizens in all countries: it increases average incomes; it increases tax revenues; it increases business profits; and, historically, at least, it has increased employment, and economists generally expect it to go on doing so. These reasons to favour economic growth can be guaranteed to maintain a powerful, broad-based political constituency in its support, evidence for which is the practically universal commitment to economic growth that is expressed both nationally and internationally. There are two concepts that are notably absent from Layard’s list. The first is inequality. Wilkinson and Pickett (2009) have argued that inequality is associated with very many social ills, such that greater equality would actually be better for everyone, and therefore for society as a whole. Piketty (2014) argues that increasing inequality is a natural tendency of capitalism, which in due course will undermine democracy, unless controlled through state intervention. The other issue which is conspicuously absent from Layard (2005)’s list

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 111

01/06/2017 16:50

112  Handbook on growth and sustainability is anything to do with the natural environment, which is curious given the total dependence of humans, in terms of both their health and their economies, on clean air and water, soil and other natural resources. It is to a detailed exploration of the contribution of the natural environment and its resources to human life that this chapter now turns.

3  ON ENVIRONMENTAL SUSTAINABILITY Figure 6.1 shows that the natural environment provides high-grade energy and material resources for the human economy, and receives back lowgrade energy and material wastes from the economy. It also provides a wide range of what have come to be called ‘ecosystem goods and services’. These contributions of the natural environment to human life may be called environmental (or ecosystem) functions. One of the first systematic investigations of the nature, extent and health of these ecosystem functions was the Millennium Ecosystem Assessment (MEA 2005). In the absence of humans, environmental functions tend to feed back positively into the biosphere, which becomes more diverse and complex, and in turn supports a wider range and variety of functions. These functions benefit humans, providing resources for their economy, absorbing their wastes, and increasing their health and wider well-being in other ways. As the population has grown and its economic activities expanded, these activities have fed back negatively on the biosphere, degrading it and making it less diverse and complex, so that it supports a narrower range and variety of functions. At some point, this will start reducing the benefits supplied by environmental functions to humans, as is becoming apparent now with the first signs of breakdown of climate stability, characterized by increasing extreme events, such as storms, floods, drought and fires, in many parts of the world. This can be interpreted as a modern manifestation of the Malthusian hypothesis, that indefinitely expanding human populations and economies (at least along present lines) are unsustainable. The concept of sustainability itself simply means that whatever is being considered has the capacity for continuance. Environmental sustainability may be defined as the maintenance of important environmental functions and the natural systems and cycles (sometimes generically called natural capital) which generate them, such that their contributions to human health, wealth and well-being may be projected to continue into the indefinite future. In this context, important environmental functions may be considered to be: those that are not substitutable; those whose loss is irreversible and is likely to lead to ‘immoderate’ losses (that is, losses considerably greater than the costs of maintaining the functions); and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 112

01/06/2017 16:50

Ecological modernization and green growth  ­ 113 those that are crucial for the maintenance of health, for the avoidance of substantial threats (such as the loss of climate stability), and for economic sustainability (see Ekins 2000, p.76ff., for the derivation of these criteria of importance and further discussion). The question of the possibility of continuing economic growth on a finite planet may now be framed in terms of environmental sustainability: economic growth is only environmentally sustainable if it does not degrade or destroy important environmental functions. With this formulation, it becomes possible to assess the empirical record pertaining to economic growth and the environment – has it maintained and is it maintaining important environmental functions, and what are the projections in this regard for the future?

4 ECONOMIC ACTIVITY AND THE ENVIRONMENT This is not the place, because there is not the space, to go into the detail of the impacts of human activities on the natural environment. However, there is now ample evidence, of which just a few examples will be given, to show that there are causes for serious concern about a number of these impacts. The Millennium Ecosystem Assessment (MEA 2005) was the first comprehensive evaluation of the impact of human activities on the natural environment and the ecosystem functions it provides. It identified three main problems arising from these activities. First ‘approximately 60 per cent (15 out of 24) of the ecosystem services examined during the Millennium Ecosystem Assessment are being degraded or used unsustainably, including fresh water, capture fisheries, air and water purification, and the regulation of regional and local climate, natural hazards, and pests’ (MEA 2005, pp. 1–2). Second: there is established but incomplete evidence that changes being made in ecosystems are increasing the likelihood of nonlinear changes in ecosystems (including accelerating, abrupt, and potentially irreversible changes) that have important consequences for human well-being. Examples of such changes include disease emergence, abrupt alterations in water quality, the creation of ‘dead zones’ in coastal waters, the collapse of fisheries, and shifts in regional climate. (MEA 2005, pp. 1–2, original emphasis)

Third ‘the harmful effects of the degradation of ecosystem services (the persistent decrease in the capacity of an ecosystem to deliver services) are being borne disproportionately by the poor, are contributing to growing

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 113

01/06/2017 16:50

114  Handbook on growth and sustainability inequities and disparities across groups of people, and are sometimes the principal factor causing poverty and social conflict’ (MEA 2005, pp. 1–2). In the terms being used in this chapter, this is unequivocal evidence of environmental unsustainability. In 2009, a group of scientists developed the concept of a ‘safe operating space’ for humanity within the environment, and published evidence of human activities in relation to this space across nine environmental issues. Their work suggested that for biodiversity loss, climate change, and the nitrogen cycle, human activities were already outside the safe operating space, with the phosphorus cycle fast approaching this condition (Rockström et al. 2009). The Fifth Global Environmental Outlook of the United Nations Environment Programme (UNEP 2012) was timed to appear in advance of the UN Rio+20 Conference on Sustainable Development. Its message was very like that of the MEA: As human pressures within the Earth System increase, several critical thresholds are approaching or have been exceeded, beyond which abrupt and nonlinear changes to the life-support functions of the planet could occur. This has significant implications for human well-being now and in the future. For example: climate variability and extreme weather influence food security; crossing of thresholds leads to significant health impacts, as shown by the increase in malaria in response to rising temperatures; increased frequency and severity of climatic events affect both natural assets and human security; and accelerating changes such as of temperature and sea level rise affect the social cohesion of indigenous communities . . . There is an urgent need to address the underlying drivers of the human pressures on the Earth System. (UNEP 2012, p. 194)

It is not surprising that many of the examples of worrying environmental impacts from human activities relate to climate change, because in 2013 the Intergovernmental Panel on Climate Change (IPCC), in its Fifth Assessment Report, gave its starkest assessment yet on the threats to humanity because of its continuing large-scale emission of greenhouse gases (GHGs). Its Working Group 2 (WG2) on impacts from and possibilities for adaptation to climate change gave five reasons for concern about climate change, relating to: the risk to unique and threatened ecosystems and cultures; extreme weather events; the uneven distribution of impact risks, being generally greater for disadvantaged people and communities; risks of global negative aggregate impacts, including extensive biodiversity loss with associated loss of ecosystem goods and services with around 3°C additional warming; risks of large-scale singular events, with some physical systems or ecosystems at risk of abrupt and irreversible changes. In addition, ‘Risks increase disproportionately as temperature increases between 1–2°C additional warming and become high above 3°C, due to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 114

01/06/2017 16:50

Ecological modernization and green growth  ­ 115 the potential for a large and irreversible sea level rise from ice sheet loss’ (IPCC 2014, p. 12). For reference, the IPCC’s Working Group 1 (WG1), on the physical science of climate change, made it clear that on the current trajectory of greenhouse gas emissions (roughly corresponding to their Representative Concentration Pathways, RCP, 8.5 scenario) average global warming of the atmosphere in 2100 was likely to be in the range of 3–4°C above the level in 1850 (IPCC 2013, p. 21), the level at which the maximum impacts identified by WG2 in the previous paragraph occur. The evidence from these four large-scale scientific reviews, and from the much more detailed and varied bodies of work on which they are based, is clear. Human activities are environmentally unsustainable, in the sense that they are disrupting and threatening further serious disruption to important environmental functions. On this evidence the scale of the human population and its economic activity is physically too large. In order to be compatible with environmental sustainability, any further economic growth must do more than simply keep key environmental impacts at their current level. It must reduce them substantially. In the terms to be defined in the next section, economic growth must become absolutely decoupled from the impacts on the environment that are unsustainable because they are degrading important environmental functions.

5  ON DECOUPLING Decoupling is the term used to describe a situation in which some environmental pressure (resource depletion or polluting emissions to air, water or land) grows less rapidly than the economic activity which is causing it (relative decoupling) or declines while the activity continues to grow (absolute decoupling). In the schematic of Figure 6.2, human well-being is shown growing faster than GDP, while resource use is shown growing less fast (relative decoupling), and environmental impact is shown declining (absolute decoupling). In fact, UNEP 2011b (p. xiv, fig. 2) does show relative decoupling between resource use and GDP (as in Figure 6.2) over the period 1970– 2005 (but not over 1900–1970). With regard to environmental impacts, some evidence on decoupling in relation to six different air emissions is shown in Table 6.1. All the countries shown in the Table 6.1 experienced economic growth in the period 1990–2005 (the GDP index in 2005 is greater than 100). Relative decoupling of GDP growth from these air emissions has occurred over this period when their air pollution index is more than 100 but below that of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 115

01/06/2017 16:50

116  Handbook on growth and sustainability Human well-being Economic activity (GDP)

Resource decoupling Resource use Impact decoupling Time Environmental impact

Source:  UNEP (2011b, p. xiii, fig. 1).

Figure 6.2  Decoupling of resource use and environmental impacts from GDP growth their GDP index. Absolute decoupling has occurred when their air pollution index is below 100. Five of the air pollutants (all but CO2) are local, and it can be seen that all the countries in Table 6.1 achieved absolute decoupling for CO (carbon monoxide) and VOC (volatile organic compounds), all but Turkey achieved it for sulphur oxides (SOx), all but Portugal and Turkey achieved it for nitrogen oxides (NOx), and all but Portugal and Ireland achieved it for particulates. The countries that failed to achieve absolute decoupling for these pollutants at least managed relative decoupling. However, Table 6.1 also shows that the story for the greenhouse gas carbon dioxide (CO2) was much less positive over the same period. Only France, Germany and the UK achieved absolute decoupling, and Portugal and Turkey did not even achieve relative decoupling. Given the importance of fossil energy use to the economy, and the lack to date of costeffective abatement opportunities for CO2, it is perhaps not surprising that these emissions are harder to decouple from GDP than the local air emissions. Yet the previous section has shown that it is precisely GHG emissions, of which the most important is CO2, that are the principal source of concern about environmental unsustainability. Thus this chapter so far suggests that economic growth and environmental sustainability are theoretically compatible, in that there is no necessary connection between resource use and emissions and the growth

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 116

01/06/2017 16:50

Ecological modernization and green growth  ­ 117 Table 6.1  GDP and domestically produced emissions indices, selected OECD countries, 2005 (1990 5 100)

France Germany Ireland Japan Portugal Turkey UK USA

GDP

SOx

NOx

Particulates

CO

VOC

CO2

132 123 258 120 135 173 143 155

35 10 38 76 69 128 19 63

66 50 95 94 104 166 55 74

67 10 106

50 33 55 67 70 92 29 62

52 35 58 88 94

98 82 126 107 143 184 85 116

133 53 81

41 69

Notes: Shading 5 no absolute decoupling. International aviation and shipping emissions are excluded from the ‘territorial’ emissions figures, but the economic benefits from aviation and shipping are included in GDP. Source:  Everett et al. (2010, p. 22).

of GDP, and that for some environmental impacts absolute decoupling between them and GDP growth has been achieved. However, it also suggests that, for the most important pollutants, such as those responsible for human-induced climate change, absolute decoupling is proving much more difficult. The rest of this chapter largely concentrates on the reduction of GHGs as the test case as to whether economic growth and environmental sustainability (defined in the case of GHGs as stabilization of their atmospheric concentration at 450 parts per million by 2100, in order to provide a greater than 50 per cent chance of limiting the global average temperature increase from pre-industrial times to 2°C) are compatible in practice as well as theory, for two reasons. First, fossil energy, the combustion of which is the main source of GHGs is fundamental to current economic activity and opportunities for end-of-pipe GHG abatement are very limited, and other major sources of GHGs, from deforestation and agriculture, are also the result of fundamental social processes. If absolute decoupling of GHG emissions from economic activity can be achieved, then arguably such decoupling is feasible for other major environmental problems. Second, there has been far more analysis of the microeconomic and macroeconomic costs of GHG reduction, and therefore its effect on GDP, than for other environmental issues. The evidence base is much better and therefore allows more robust conclusions to be drawn. The next section therefore explores: how much GHGs (concentrating on CO2) need to be reduced in order to re-enter the ‘safe operating space’ for climate change of Rockström et al. (2009), which is here taken to be

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 117

01/06/2017 16:50

118  Handbook on growth and sustainability the same as environmental sustainability as far as the climate is concerned; what needs to be done to achieve these reductions; and whether doing it is likely to result in more, the same, or less growth in GDP.

6 REDUCING CARBON EMISSIONS: POLICIES, TECHNOLOGIES AND COSTS Economic growth arises from applied knowledge and innovation that turn non-resources into resources or find better ways of doing things. Fossil fuels existed for millennia before they became resources for human activity, because of lack of knowledge about how to use them. The discovery of semi-conductivity, and that silicon had this property, meant that common sand could provide one of the building blocks for today’s information and communication technologies. There is no shortage of renewable energy if humans knew how to harness it (cost-)effectively for their purposes, just as there is no shortage of materials if humans knew how to manipulate and use them to make possible new goods and services, as happened with sand and silicon. This is the global potential of technological progress, as has been illustrated time and again since Malthus made his dismal, and erroneous, predictions. Moreover, investment in knowledge and innovation in order to realize this potential, including in GHG-reducing clean technologies, is now at an all-time high globally. However, achieving the levels of GHG emissions reduction required to keep global warming below 2°C, which for the purposes of this chapter is taken as the environmentally sustainable level, would require the carbon and energy intensity of economic activity (where these are defined as carbon emissions or energy use divided by GDP) to decrease at an unprecedented rate. To illustrate, Jackson (2009, pp. 79–80) notes that global carbon intensity over 1990–2008 decreased by 0.7 per cent per annum on average, but this was overwhelmed by population and economic growth over the same period, so that global emissions grew by 2 per cent per annum. To keep below atmospheric concentrations of GHGs of 450 parts per million (which broadly corresponds to more than a 50 per cent chance of keeping the global temperature increase to below 2°C; IPCC 2014, p. 20) by 2050, emissions would need to fall by about 5 per cent per annum. With continuing economic growth of 2.1 per cent per annum, carbon intensity would have to fall by around 7 per cent per annum, or about ten times faster than it has since 1990.1 The policy challenge to achieve these kinds of changes in energy use is enormous. The Stern Review (Stern 2007) recommended the simultaneous application of three kinds of policies to mitigate climate change. Most important

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 118

01/06/2017 16:50

Ecological modernization and green growth  ­ 119 was carbon pricing, which could be implemented through carbon taxes or emission trading. This needed to be supplemented with policies in two other areas: technology and innovation policy, and policies to stimulate behavioural change. This need for the simultaneous application of policies in these three areas to achieve GHG emission reductions to the required extent has been given detailed theoretical and empirical foundations in Grubb (2014). Technology and innovation policy are required to accelerate the development and deployment of low-carbon energy sources and high-efficiency end-use appliances/buildings, to incentivize a huge investment programme and to remove other barriers to technology deployment; policies for the promotion of behaviour change need to facilitate the take-up by consumers of new technologies and high-efficiency end-use options, and the adoption of low-(carbon) energy behaviours (including less driving, flying, meat-eating, and lower building temperatures in winter and higher in summer). Both low-carbon technology development and behaviour change would of course be assisted by rising carbon prices, but the evidence of Grubb (2014) is persuasive that emissions reduction could be achieved more quickly, at lower carbon prices, if carbon pricing was supplemented by policies in these other two areas. There is little agreement among economists as to the costs likely to be incurred by applying these policy instruments to the extent necessary to reduce GHG emissions to a level consistent with environmental sustainability. Optimists tend to stress that the ‘costs’ are really investments, which can contribute to GDP growth; that there are considerable opportunities for zero (or even negative) cost mitigation; that a number of resource-efficient technologies are (nearly) available at low incremental cost over the huge investments in the economic system that need to be made anyway; that ‘learning curve’ experience suggests that the costs of new technologies will fall dramatically; and that resource efficiency policies can spur innovation, new industries, exports and growth. Pessimists tend to counter that constraining resource use, or substituting more expensive for less expensive energy sources, is bound to constrain growth, and their models tend to confirm this, as will be seen; and that cheap, abundant energy and other resources have been and continue to be fundamental to industrial development (see Ayres and Warr 2009 for an empirical justification of this latter point). The hope for no or low economic costs in the mitigation of climate change essentially rests on three hypotheses: that carbon emissions can be reduced substantially by changes in human behaviour that have essentially nil cost (for example, cycling short distances instead of driving; turning

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 119

01/06/2017 16:50

120  Handbook on growth and sustainability down the thermostat and wearing more clothes indoors and so on); that further significant emission reduction can come from improved energy efficiency in households, companies and transport that is also available at low or nil cost; and that renewable and low-carbon energy sources are now available at low cost as a percentage of GDP, and that their costs may be expected to reduce further. An often cited example of the relatively low costs of substantial initial tranches of carbon abatement is the so-called McKinsey marginal abatement cost curve, shown in Figure 6.3. This shows that, globally, 5GtCO2e can be abated at negative net cost, and a further 21GTCO2e can be abated at a marginal cost of less than €40/tonCO2e. The impact on GDP growth of such abatement would not be high. Another way of looking at the same issue is through the technological potential identified by the so-called Socolow wedges (Pacala and Socolow 2004; Socolow 2005). With no abatement it was projected that global greenhouse gas emissions would increase from their 2004 level of around 7GtC-equivalent (Ce) to 14GtCe.2 Pacala and Socolow identified 15 technologies that they considered had the potential, if extensively deployed, to reduce these additional emissions by 1GtCO2e each. The technologies, and their required deployment, included: ● ●

● ● ● ●

● ●

efficient vehicles: increase fuel economy for 2 billion autos from 30 to 60 miles per gallon; nuclear: tripling of capacity to 1050 GW; gas for coal substitution: 1400 gigawatt (GW) of electricity generation switched from coal to gas; carbon capture and storage (CCS): introduce CCS at 800 1-GW coal stations; wind power: 50 times as much wind power as at present; solar photovoltaics (PV): 700 times 2004 capacity; hydrogen: additional 4000 GW of wind capacity or additional CCS capacity; and biomass fuel: 100 times the current Brazilian ethanol production.

It can be seen that the required deployments are very considerable, and would require huge investments. However, the Pacala and Socolow argument is that the technologies are now available, or very close to being so, and what is now required are the incentives to cause them to be deployed at scale. These technologies currently cost more, and in some cases significantly more, than their fossil alternatives. However, it is expected that their

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 120

01/06/2017 16:50

121

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

per tCO2e2

–150

–100

–50

0

50

100

Building insulation

5

15

25

per tCO2e2

~40

~25 Marginal cost,5

26 450 ppm4

18

Figure 6.3  A global cost curve for greenhouse gas abatement

Source:  Enkvist et al. (2007).

Copyright © 2007 McKinsey & Company

30

33 ~50

35

400 ppm4

Further potential3

Higher-cost abatement

Biodiesel Industrial CCS

550 ppm4

20

Avoided deforestation

Waste Coal-to-gas shift CCS; coal retrofit Industrial motor systems

Abatement beyond ‘business as usual,’ GtCO2e1 per year in 2030

10

Industrial non-CO2 Standby losses Sugarcane biofuel Fuel efficiency in vehicles Water heating Air-conditioning Lighting systems Fuel efficiency in commercial vehicles

Livestock Nuclear

CCS, enhanced oil recovery, new coal Low-cost forestation

Industrial feedstock substitution

Medium-cost forestation Cofiring biomass Wind; low penetration

Carbon, capture, and storage (CCS); new coal

2e = gigaton of carbon dioxide equivalent; “business as usual” based on emissions growth driven mainly, by increasing demand for energy and transport around the world, and by tropical deforestation. 2tCO e = ton of carbon dioxide equivalent. 2 3Measures costing more than 40 a ton were not the focus of this study. 4Atmospheric concentration of all greenhouse gases recalculated into CO equivalents; ppm = parts per million. 2 5Marginal cost of avoiding emissions of 1 ton of CO equivalents in each abatement demand scenario. 2

1GtCO

Cost of abatement,

M4269-VICTOR_9781783473557_t (colour).indd 121

01/06/2017 16:50

122  Handbook on growth and sustainability large-scale deployment would cause their cost to be reduced. For example, between 1985 and 1995 PV reduced in cost over one doubling period to 65 per cent of the cost at the beginning of the period (Stern 2007, p. 254). Since 1995, the cost of PV panels has reduced by about another 90 per cent (IRENA 2012, p. 16, fig. 4.1). However, cost reductions are not exhibited by all technologies – the costs of supercritical coal-fired and natural gas combined cycle (NGCC) power stations hardly reduced at all as their deployment increased (Stern 2007). From Microeconomic to Macroeconomic Costs of Mitigation The microeconomic costs of individual technologies of energy efficiency or supply may be viewed as investments in the energy system, which contribute to economic activity. It is the macroeconomic costs or benefits of such investments that are of interest in calculating the overall economic impacts of GHG emission reduction. To go from the microeconomic costs to the macroeconomic impacts of carbon abatement, it is necessary to make use of energy and economic models, the development and application of which in respect of carbon emission reduction has mushroomed over the last two decades. Some examples of the use of such models, and the impacts of GHG reduction on GDP, follow. The first example is of a hybrid model, consisting of a MARKAL energy system model linked to a small macroeconomic model of the UK (Strachan and Kannan 2008). MARKAL stands for MARKet Allocation, and the MARKAL model is a dynamic optimization model with over 100 users in over 30 countries coordinated by the Energy Technology Systems Analysis Programme (ETSAP) network of the International Energy Agency (IEA). It is a least-cost optimization model based on the life-cycle costs of competing technologies (to meet energy service demands). It is technology rich, depicting in detail end-use technologies, energy conversion technologies, refineries, resource supplies, infrastructure, and so on, and combining these into an integrated energy system including energy carriers, resources, processes, electricity/combined heat and power (CHP), industry, services, residential, transport, and agriculture, and a range of physical, economic and policy constraints to represent the UK energy system. The linkage to a macroeconomic model enables the GDP cost of energy system changes to be calculated. Figure 6.4 shows an example of such a calculation. The model was used to simulate a number of scenarios all of which entailed a 60 per cent reduction in UK CO2 emissions from 1990’s levels by 2050. Different scenarios incorporated central, high and low fuel prices; a straight-line trajectory

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 122

01/06/2017 16:50

Ecological modernization and green growth  ­ 123 % 0.2 0.0

Change in GDP – 60% CO2 reduction

2000

2010

2020

2030

2040

2050

% difference

–0.2 –0.4 –0.6 –0.8 –1.0 –1.2 –1.4 –1.6 Central fuel prices High fuel prices Low fuel prices SLT

No nuclear No CCS, nuclear 2020 innovation limit 2010 innovation limit

Source:  Strachan and Kannan (2008, p. 2960).

Figure 6.4  GDP percentages changes – UK MARKAL MACRO  (SLT) of emission reduction; two scenarios that constrained the introduction of nuclear power and carbon capture and storage (CCS); and two scenarios that constrained innovation (represented in the model by cost reduction). Figure 6.4 shows that the GDP cost of the most expensive scenario of carbon reduction (when no innovation was permitted after 2010) was 1.6 per cent by 2050. The second example comes from three related projects that investigated the economic and environmental implications of a policy instrument called environmental (or ecological) tax reform (ETR), which is the shifting of taxation from ‘goods’ (like income, profits) to ‘bads’ (such as resource use

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 123

01/06/2017 16:50

124  Handbook on growth and sustainability Economic impacts ETR

Increased output Higher employment

Green innovation Green technology development

Environmental impacts

Less pollution Less resource use

Higher human well-being

Figure 6.5  The potential contribution of environmental tax reform to human well-being and pollution, including from carbon emissions). Environmental (or ecological) tax reform may therefore be an example of the implementation of carbon pricing. The tax shift has often been implemented, and is normally modelled, to be revenue-neutral, that is, taxes on labour or businesses are reduced in line with the revenues from the environmental taxes, such that there is no change in the overall fiscal balance. The basic hypothesis of ETR is illustrated in Figure 6.5, which suggests that ETR can lead to higher human well-being (or welfare) both by improving the environment, and by increasing output and employment, and potentially also by stimulating green innovation. The COMETR project, investigated the competitiveness effects of environmental tax reforms (see http://www2.dmu.dk/cometr/ and, for a full exposition of the results, Andersen and Ekins 2009). In the COMETR project, the environmental and economic effects of the ETRs that had been implemented in six European Union (EU) countries (Denmark, Finland, Germany, Netherlands, Sweden, and the UK) were modelled. As would be expected, environmental impacts in those countries were reduced by the policy measure. Perhaps more significantly, the modelling showed that the ETR countries experienced slightly faster economic growth than they had without the ETR (the counterfactual scenario), and the non-ETR countries in the then EU-15 showed practically no change. This suggests that, far from damaging the competitiveness of ETR countries compared to the non-ETR countries, the ETR countries benefited economically, as well as environmentally, from the policy. The second project, called PETRE, was one of four final projects of the Anglo-German Foundation under the collective title ‘Creating sustainable growth in Europe’. PETRE explored the subject of ‘Resource productivity, environmental tax reform (ETR) and sustainable growth in Europe’.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 124

01/06/2017 16:50

Ecological modernization and green growth  ­ 125 Its final report is at www.petre.org.uk (Ekins 2009a), and a full account of the work carried out, and further detailed information from the wider literature on ETR may be found in Ekins and Speck (2011). The major objective of the PETRE project was to investigate through modelling the implications of a large-scale ETR in Europe. The project used two European macro-econometric models, E3ME and GINFORS, and explored six scenarios: ● ●

● ● ●

●

Baseline with low energy price (LEP); Baseline sensitivity with high energy price (HEP, reference case); S1(L): ETR with revenue recycling designed to meet the 20 per cent EU 2020 GHG target (scenario compared with LEP Baseline); S1(H): ETR with revenue recycling designed to meet the 20 per cent EU 2020 GHG target (scenario compared with HEP Baseline); S2(H): ETR with revenue recycling designed to meet the 20 per cent EU 2020 GHG target (scenario compared with HEP Baseline), with 10 per cent of the environmental tax revenues spent on ­eco-­innovation measures; and S3(H): ETR with revenue recycling designed to meet 30 per cent ‘international cooperation’ EU 2020 GHG target (scenario compared with Baseline with HEP, with the CO2 prices in major OECD and emerging economies respectively the same as, and 25 per cent of, the EU CO2 prices).

Details of the environmental taxes applied in the ETR may be found in Ekins and Speck (2011, p. 208), while revenue neutrality (or the ­near-­neutrality of S2(H)) was achieved by reducing taxes on incomes and employers’ social security contributions. Table 6.2 shows the results of the modelling. It shows the carbon prices required to meet the scenarios’ CO2 targets in 2020. It also shows that the E3ME model projects a small GDP gain from the baseline through the ETR policy, while GINFORS projects a slightly larger loss. Even the 30 per cent EU CO2 reduction target of S3(H) is reached in GINFORS with the loss of less than 2.0 per cent of GDP. Both models suggest that ETR will increase employment. Environmentally the S3(H) scenario has the effect of stabilizing global greenhouse gas emissions over 2010–20. The third recent body of work on ETR to shed light on the effects of this policy instrument was that of the UK Green Fiscal Commission (for its final report, see Ekins 2009b). This was set up in 2007, with its major objective being to investigate the economic, social and environmental implications of major green fiscal reform (GFR), such that the share of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 125

01/06/2017 16:50

126  Handbook on growth and sustainability Table 6.2  Results from the ETR in the PETRE project Scenario

CO2 price Euro 2008/t

GDP % change from baseline

Employment Labour % change from productivity baseline % change from baseline

S1(L) E3ME GINFORS

142 120

0.6 −3.0

22 0.0

−1.6 −3.0

S1 (H) E3ME GINFORS

59 68

0.2 −0.6

1.1 0.4

−0.9 −1.0

S2(H) E3ME GINFORS

53 61

0.8 −0.3

1.1 0.4

−0.8 −0.7

S3(H) E3ME GINFOES

204 184

0.5 −1.9

27 0.8

−2.1 −2.6

Source:  Ekins (2009a, p. 31).

environmental taxes in total revenues might rise from 5 per cent to 15–20 per cent in 2020. A further objective was to explore public attitudes to ETR. As with the PETRE project, the environmental and economic effects of ETR were explored through scenarios, which found that the ETR resulted in substantial reductions in GHG emissions, but very little change to GDP. Such results suggest that ETR is a very cost-effective way of reducing GHG emissions and stimulating new eco-industries which could contribute to future competitiveness. It would also result in a different trajectory for economic development. It would rule out a resource-intensive growth path, and this would constrain growth unless it led to innovation in lowresource and resource-saving technologies. Environmental tax reform would stimulate such innovation, but the implementation of complementary policies would probably be desirable to enhance its effect. Over the past 20 years, there have been a very large number of macroeconomic modelling exercises such as those reported above. Barker (2008) carried out a meta-analysis of four of the most important such exercises (IMCP, WRI, post-SRES, EMF-21), which carried out hundreds of model runs, using different mainly computable general equilibrium

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 126

01/06/2017 16:50

Ecological modernization and green growth  ­ 127 6 Global & US GDP difference from base (%)

4

–100

2 0 –2 –4 –80

–60 –40 –20 CO2 difference from base (%) IMCP with ITC dataset WRI dataset (USA only)

–6

0

20

post-SRES dataset EMF-21 with multigas

Note:  Each point refers to one year’s observation from a particular model for changes from reference case for CO2 and the associated change in GDP from four sources for years over the period 2000–2050. Source:  Barker (2008, p. 7, exh. 1). This is an extension of the figure from Barker et al. 2006 (cited in Stern 2007, p. 270), with the addition of the EMF-21 studies.

Figure 6.6  Scatter plot of model cost projections (CGE) models, in order to estimate the GDP costs of different levels of decarbonization. As shown in Figure 6.6, the majority of the runs estimated that a 60–80 per cent reduction in carbon emissions would cost between 1 per cent and 4 per cent of GDP. The Barker et al. (2006) paper was one of the pieces of evidence that caused Stern (2007, p. 267) to come to the conclusion that: Overall, the expected annual cost of achieving emissions reductions, consistent with an emissions trajectory leading to stabilisation at around 500-550 ppm CO2e, is likely to be around 1 per cent GDP by 2050, with a range of +/−3 per cent, reflecting uncertainties over the scale of mitigation required, the pace of technological innovation and the degree of policy flexibility.

The IPCC’s Fifth Assessment Report in 2014 arrived at a similar assessment of the macroeconomic costs of mitigation on the basis of more recent published evidence, summarizing thus the costs of mitigation to a rather lower GHG concentration level (450 parts per million): Most scenario studies collected for this assessment . . . estimate that reaching about 450 ppm CO2eq by 2100 would entail global consumption losses of 1–4% in 2030 (median of 1.7 per cent), 2–6% in 2050 (median of 3.4%), and 3–11%

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 127

01/06/2017 16:50

128  Handbook on growth and sustainability in 2100 (median of 4.8%) relative to what would happen without mitigation. (Clarke et al. 2014, pp. 418–19)

It is important to note that none of the baselines in the model runs shown in Figure 6.6, or in the IPCC Working Group 3 (WG3) analysis quoted above, with which the mitigation runs were compared, incorporated any projections of the costs of damage from climate change. That is, the baselines simply assumed that, with no attempt to reduce GHG emissions, economic growth would simply continue into the future at historical rates.3 This is a very strong assumption given that the concern about climate change is based explicitly on the possibility that, unmitigated, it could result in very considerable economic costs (which Stern 2007, p. 187, estimates could eventually be up to 20 per cent global GDP). Were such costs to be included in the baseline of the model runs shown in Figure 6.6, or those in the model runs considered by IPCC WG3, then, instead of showing costs, the modelled emission reductions would almost certainly result in net benefits, once the lower carbon emissions had resulted in lower damage from climate change, mostly beyond 2050. These kinds of considerations reframe the approach to the growthenvironment issue from perceptions that cast environmental protection as a constraint on economic growth (as shown in Figure 6.6) to questions as to how long environment-degrading economic growth can continue before it undermines the environmental conditions necessary for such growth and slows down or comes to a halt (that, after all, is the meaning of the word ‘unsustainable’). Because of the uncertainties of the extent of environmental impacts from climate change and other environmental degradation, and the difficulties of modelling these impacts in macroeconomic models, formal analysis and modelling of such issues is still in its infancy, but UNEP (2011a) explicitly seeks to determine how the rate of environmentally sustainable (or green) economic growth would compare to the rate of environment-degrading (or brown) economic growth into the future. Figure 6.7 shows UNEP’s modelling of this issue. It compares two enhanced investment scenarios (G2 and BAU2) with a BAU scenario. The difference between G2 and BAU2 is that in the latter the investment is simply enhanced along BAU lines, whereas in the former the investment is explicitly in natural capital, and low-carbon and other clean technologies, which slows the depletion of fossil fuels and increases forests and fish stocks. As a result, as shown in Figure 6.7, the growth of G2 and BAU2 are always higher than the BAU scenario, because of their higher investment, but the ‘green growth’ of the G2 scenario becomes faster than that in BAU2 by about 2017, as the productivity of natural capital (in mone-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 128

01/06/2017 16:50

Ecological modernization and green growth  ­ 129 Growth rate 0.05 0.04 G2 scenario

0.03

BAU scenario

0.02 0.01

Historical trend (WDI)

BAU2 scenario PROJECTION

0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source:  UNEP (2011a, p. 523, fig. 13).

Figure 6.7 Trends in annual GDP growth rate, historical data (World Bank’s World Development Indicators database 2009) and projections in BAU, BAU2 and G2 scenarios tary terms, as usually accounted) associated with the BAU2 scenario starts to exceed that of the conventional investment for which it substitutes. The New Climate Economy (NCE) report, published in September 2014, takes this kind of analysis one stage further by stressing the non-GDP benefits that could accompany strong action to reduce GHG emissions, including fairer distribution, greater resilience, stronger local communities, improved quality of life, including from reduced air pollution and less commuting, and an enhanced natural environment (NCE 2014, p. 19). It cites the same GDP costs from the IPCC WG3 as quoted above, but noted that current macroeconomic models do not handle well three sets of variables, in addition to avoided climate damages, that are crucial to the outcome of mitigation efforts: ‘processes of structural transformation, the dynamics of technological change and innovation . . . and the valuation of non-market outputs (such as better air quality)’ (NCE 2014, p. 21). In an attempt to capture in a microeconomic way at least the non-market outputs, the NCE report re-works the marginal abatement cost curve of Figure 6.3 into a marginal abatement benefits curve, as shown in Figure 6.8. This suggests that GHG emissions could be reduced by more than 15 GtCO2e by 2030 at net benefit to GDP as conventionally measured (the original abatement curve, in Figure 6.8), but that if the non-GDP benefits were also included, this would both greatly increase the benefits (by adding the co-benefits onto the original benefits), and increase to more than 20 GT CO2e the net-benefit emissions abatement potential.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 129

01/06/2017 16:50

130

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 130

01/06/2017 16:50

5

15 20

New coal power plant with CCS Improved grassland management Biomass co-firing In coal power plants Reforestation of degraded forest Organic solls restoration Concentrated solar panel (CSP) power generation Air transport Pastureland afforestation CCS retrofit on existing coal power plants Reduced deforestation from Intensive agriculture New gas power plant with CCS Second generation lignocellulosic biofuels

10

Figure 6.8  Marginal abatement benefits curve for 2030

Source:  New Climate Economy (2014, p. 26, fig. 5).

–100

–80

–60

–40

–20

0

20

40

60

80

100

Abatement benefit US$ per tonne CO2e

25 30

35

Benefit curve with co-benefit savings

Original abatement curve

Gt CO2e per year

Abatement potential

Other low-cost levers (mainly buildings and Industry sector) Efficient heavy duty trucks Electric vehicles Residential bulldings envelope retrofit Modal shift from cars to buses Top gas recycllng – iron and steel sector Efficient new commercial bulldings Geothermal electricity generation Efficient llghting in new commercial bulldings Cllinker substitution – cement sector Hybrid vehicles Efficiency Improvements In other Industry (estimated) Small hydropower Efficient windows In residential buildings Nuclear First generation sugarcane biofuels Onshore wind power – low penetration Waste heat recovery – chemical Industry Efficient new residential bulldings Onshore wind power – low penetration Landfill gas electricity generation Solar photovoltaics Recyclling new waste Offshore wind Reduced deforestation from slash-and-burn agriculture Reduced deforestation from conversation of land to pasture

Ecological modernization and green growth  ­ 131 This analysis permits the following conclusions to be drawn about the macroeconomic (GDP) and wider economic impacts of reducing GHGs to an environmentally sustainable level (here, as noted above, taken to be an atmospheric concentration stabilized at 450 parts per million by the end of the century). First, there is absolutely no suggestion in any of the scientific modelling literature that has been reviewed that such emission reduction will require negative GDP growth (that is, economic contraction, sometimes called ‘degrowth’), even in rich countries. Second, in the short and medium terms (that is, to 2030), it is possible that GDP growth with such emission reduction would turn out to be marginally slower than GDP growth with no emission reduction (resulting in a world GDP that was perhaps 1–4 per cent lower by 2030), if no account was taken of the negative net cost energy efficiency opportunities (as shown in Figures 6.3 and 6.8) and the avoided climate damages or co-benefits of GHG emission reduction. Factoring in the efficiency gains, avoided damages and co-benefits, which current macroeconomic models are unable to do satisfactorily, would almost certainly offset the pure GDP loss, so that GHG emission reduction even in the short term would result in an increase in human welfare (which is distinct from GDP growth, as section 2 above made clear). Applying this analytical approach beyond climate change, to consider a wider range of environmental sustainability issues, it may be that ‘green’ economic growth would be somewhat slower than ‘brown’ economic growth in the short term unless: ●

There are widespread resource efficiency opportunities beyond energy that are available at negative net cost (as suggested in Dobbs et al. 2011); ● Enhanced ecosystem services contribute more to monetary output than alternative investment of the policy costs (this would be particularly the case if the many opportunities for cost-effective restoration of degraded land were taken up – see NCE 2014, p. 31 ff. for examples); ● Disruption to ecosystem services (from causes other than climate change), that would have resulted in monetary costs greater than the policy implementation cost, is prevented. While many valuable ecosystem goods and services are unpriced and are not reflected in money flows or GDP, others do support market-based production and consumption in explicit ways. Preventing loss of the latter can contribute to GDP – see TEEB (2010) for a discussion as to how the value of all ecosystem goods and services can be accounted for. ● Currently higher-cost technologies to protect ecosystems become

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 131

01/06/2017 16:50

132  Handbook on growth and sustainability cheaper than the currently cheaper technologies that damage them (for example, solar photovoltaics, discussed above, and see Branker et al. 2011). ● International demand develops for technologies stimulated by environmental policy, stimulating the growth of export markets. If the world as a whole moves towards ‘green’ growth, then the relatively high-growth countries in this world will be those that have developed, and can export, resource-efficient technologies and industries (Jakob et al. 2005 discuss in depth a number of these so-called ‘lead markets’). ● Environmental policy stimulates innovation in the economy that would produce greater monetary output than would have been produced in its absence (the well-known Porter hypothesis, evidence concerning which is reviewed in Ambec et al. 2011). Moreover, green growth could produce higher employment, a major policy goal in many countries distinct from GDP growth, than brown growth if: ●

with unemployment, environmental policy gives skills and training to people who would otherwise have remained unproductive; ● with unemployment, environmental policy such as ETR reduces the cost of labour; and ● the new environmental industries stimulated by environmental policy are more labour-intensive than the industries they replace. There is evidence, albeit often mixed and not conclusive, in support of every single one of the bullet points above, which gives good grounds for anticipating at least a neutral effect on GDP growth of policies to promote environmental sustainability including and beyond mitigating climate change. As with GHG emissions reduction, there is virtually no evidence that wider policies for environmental sustainability would have a significant negative effect on economic growth rates, still less choke off economic growth altogether.

7 THE POLITICS OF MOVING TOWARDS ENVIRONMENTAL SUSTAINABILITY A final question then arises as to why, if the economic costs of moving towards environmental sustainability are relatively low, governments everywhere are finding carbon reduction and other systemic measures of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 132

01/06/2017 16:50

Ecological modernization and green growth  ­ 133 environmental improvement (for example, relating to the conservation of biodiversity) so difficult. The answer to this question has more to do with politics than economics. It may be true that the technologies for large-scale climate change mitigation are, or soon will be, available at affordable cost, but, to realize their potential in the near term, government funding of research, development and demonstration (R, D&D) will need to increase dramatically, and governments will also need to put in place clear incentives for the private sector to deploy and diffuse these technologies, which can only be driven at scale by markets. Such deployment will require huge investments in low-carbon and other clean technologies right along the innovation chain (research, development, demonstration, diffusion). Financing this investment will require a substantial shift from today’s consumption-oriented economy of Western countries to an investment economy that builds up low-carbon infrastructure and clean technologies and industries. This shift need not impact negatively on GDP and employment (remembering from section 2 of this chapter that GDP  5 C + I + G + (X – M)), but will require a shift from consumption to investment through higher savings and lower consumption rates. This is unlikely to be politically popular in a consumer society in which welfare is so closely identified with consumption. Countering this identification is likely to be a necessary condition of achieving a transition to environmental sustainability. A second reason for the political difficulty of reducing carbon emissions is that stimulating the required investment will require significant carbon prices to be imposed immediately (one of the ten recommendations in NCE 2014), and for them then to rise over the next half century, to choke off investment in high-carbon technologies and incentivize low-carbon investments. These high carbon prices will necessitate changed consumption patterns, as high-carbon lifestyles become increasingly unaffordable to many people. This, too, is unlikely to be politically popular, because many forms of high-carbon consumption (for example, related to travel) are both very attractive and deeply embedded in society.

8 CONCLUSIONS The conclusions from the analysis in this chapter can therefore be summarized thus. The adequate mitigation of climate change will require a fundamental shift in the direction of innovation, in order to generate ‘green’ economic growth. In the short term, rates of green growth will be little different to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 133

01/06/2017 16:50

134  Handbook on growth and sustainability the rate of ‘brown’ growth, and in the medium to long term will exceed it, as the latter succumbs to the environmental damage it is causing. The barriers to the policies that are required to achieve this shift in the direction of innovation necessary to drive green growth do not derive from technological factors or cost, but from politics – specifically people’s attachment to consumption rather than savings/investment, and to highcarbon lifestyles. It is this political situation that will need to be changed for green growth to become a reality. This change seems a far more likely political prospect than changing the attachment of politicians and the public to economic growth per se, given the powerful reasons for its attractiveness that were outlined in section 2. Because economic growth is so attractive to so many people, it is only the possibility of and prospects for green economic growth that will persuade policy makers and the public to go for environmental sustainability at all and, in respect of climate change, its adequate mitigation to avoid the future climate risks of which climate scientists are now warning. If people have to make a choice between economic growth and environmental sustainability, all the evidence suggests that they would currently choose the former. Luckily, this is not a choice that has to be made. Well-designed and targeted policies can achieve green growth which reconciles these objectives. Implementing such policies will be far from easy, but is a much more feasible task that persuading people to turn their backs on economic growth altogether.

NOTES 1. Note that this would take 2050 CO2 emissions down to around 4GtCO2, allowing non-CO2 emissions to account for the great majority of the 20GtCO2-equivalent (CO2e) emissions of GHGs in 2050 estimated to be compatible with a 2° C global warming limit, because of the greater difficulty in reducing these non-CO2 emissions. 2. Emissions of carbon dioxide may be measured in terms of tonnes carbon dioxide (tCO2) or tonnes carbon (tC), where 1tC 5 44/12 tCO2 5 3.67 tCO2 (because the carbon dioxide counts also the weight of the oxygen (O2)). 3. Clarke et al. (2014, p. 419), states:  To put these losses in context, studies assume annual average consumption growth rates without mitigation between 1.9 per cent and 3.8 per cent per year until 2050 and between 1.6 per cent and 3.0 per cent per year over the century. These growth rates correspond to increases in total consumption from roughly four-fold to over ten-fold over the century.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 134

01/06/2017 16:50

Ecological modernization and green growth  ­ 135

REFERENCES Ambec, S., M. Cohen, S. Elgie and P. Lanoie (2011), ‘The Porter hypothesis at 20: can environmental regulation enhance innovation and competitiveness?’ Resources for the Future: Discussion Paper, RFF DP 11-01, Resources for the Future: Washington DC, accessed 28 February 2017 at http://www.rff.org/documents/RFF-DP-11-01.pdf. Andersen, M.S. and P. Ekins (eds) (2009), Carbon Taxation: Lessons from Europe, Oxford and New York: Oxford University Press. Ayres, R. and B. Warr (2009), The Economic Growth Engine: How Energy and Work Drive Material Prosperity, Cheltenham, UK; Northampton, MA, USA: Edward Elgar. Barker, T. (2008), ‘The macroeconomic effects of the transition to a low-carbon economy’, Breaking the Climate Deadlock: Briefing Paper, The Climate Group, accessed 28 February 2017 at http://www.theclimategroup.org/_assets/files/Macroeconomics-effectsof-the-Low-Carbon-Economy.pdf. Barker, T., M. Qureshi and J. Köhler (2006), ‘The costs of greenhouse gas mitigation with induced technological change: a meta-analysis of estimates in the literature’, Tyndall Centre for Climate Change Research and Cambridge Centre for Climate Change Mitigation Research, University of Cambridge. Barry, J. (2003), ‘Ecological modernisation’, in E. Page and J. Proops (eds), Environmental Thought, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 191–213. Beckerman, W. (1974), In Defence of Economic Growth, London: Jonathan Cape. Branker, K., M. Pathak and J. Pearce (2011), ‘A review of solar photovoltaic levelized cost of electricity’, Renewable and Sustainable Energy Reviews, 15 (9), 4470–82. Clarke, L., K. Jiang, K. Akimoto, M. Babiker, G. Blanford, K. Fisher-Vanden et al. (2014), ‘Assessing transformation pathways’, in O. Edenhofer, R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth et al. (eds), Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge and New York: Cambridge University Press. Daly, H.E. (1991), ‘Elements of environmental macroeconomics’, in R. Costanza (ed.), Ecological Economics: The Science and Management of Sustainability, New York: Columbia University Press. Dobbs, R., J. Oppenheim, F. Thompson, M. Brinkman and M. Zornes (2011), ‘Resource revolution: meeting the world’s energy, materials, food and water needs’, McKinsey Global Institute, accessed 28 February 2017 at http://www.mckinsey.com/features/ resource_revolution. Ekins, P. (2000), Economic Growth and Environmental Sustainability: The Prospects for Green Growth, London and New York: Routledge. Ekins, P. (2009a), Resource Productivity, Environmental Tax Reform and Sustainable Growth in Europe, London and Berlin: Anglo-German Foundation for the Study of Industrial Society. Ekins, P. (2009b), ‘The case for green fiscal reform: final report of the Green Fiscal Commission’, Green Fiscal Commission, London, accessed 28 February 2017 at http:// www.greenfiscalcommission.org.uk/index.php/site/about/final_report/. Ekins, P. and S. Speck (eds) (2011), Environmental Tax Reform: A Policy for Green Growth, Oxford and New York: Oxford University Press. Enkvist, P.-A., T. Nauclér and J. Rosander (2007), ‘A cost curve for greenhouse gas reduction: a global study of the size and cost of measures to reduce greenhouse gas emissions yields important insights for business and policy makers’, The McKinsey Quarterly, No. 1, McKinsey, London. Everett T., M. Ishwaran, G.P. Ansaloni and A. Rubin (2010), ‘Economic growth and the environment’, Defra Evidence and Analysis Series, Paper 2, DEFRA, London. Goodland, R. (1992), ‘The case that the world has reached limits’, in R. Goodland, H.E. Daly and S. El Serafy (eds), Population, Technology and Lifestyle: The Transition to Sustainability, Washington, DC: Island Press, pp. 3–22.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 135

01/06/2017 16:50

136  Handbook on growth and sustainability Grubb, M. (2014), Planetary Economics, New York: Routledge. Gustavsson, J., C. Cederberg, U. Sonesson, R. van Otterdijk and A. Maybeck (2011), ‘Global food losses and food waste: extent, causes and prevention’, Food and Agriculture Organization of the United Nations (FAO), Rome: FAO and Gothenburg: Swedish Institute for Food and Biotechnology (SIK), accessed 28 February 2017 at http://www.fao. org/docrep/014/mb060e/mb060e.pdf. Hallegatte, S., G. Heal, M. Fay and D. Treguer (2011), ‘From growth to green growth: a framework’, Policy Research Working Paper 5872, November, World Bank, Washington DC, accessed 28 February 2017 at http://www-wds.worldbank.org/servlet/ WDSContentServer/WDSP/IB/2011/12/07/000158349_20111207171314/Rendered/PDF/ WPS5872.pdf. Intergovernmental Panel on Climate Change (IPCC) (2013), ‘Summary for policymakers’, in T.F. Stocker, D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung et al. (eds), Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge and New York: Cambridge University Press. Intergovernmental Panel on Climate Change (IPCC) (2014), ‘Summary for policymakers’, in C.B. Field, V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir et al. (eds), Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge and New York: Cambridge University Press, pp. 1–32. International Renewable Energy Agency (IRENA) (2012), ‘Solar photovoltaics’, IRENA Working Paper, Renewable Energy: Cost Analysis Series, vol. 1: Power Sector, issue 4/5, June, accessed 28 February 2017 at http://www.irena.org/DocumentDownloads/ Publications/RE_Technologies_Cost_Analysis-SOLAR_PV.pdf. Jackson, T. (2009), Prosperity without Growth: Economics for a Finite Planet, London and New York: Routledge. Jacob, K., M. Beise, J. Blazajcak, D. Edler, R. Haum, M. Jänicke et al. (2005), Lead Markets for Environmental Innovations, Heidelberg and New York: Physica-Verlag. Layard, R. (2005), Happiness: Lessons from a New Science, London: Penguin. Malthus T.R. (1798), An Essay on the Principle of Population, London: J Johnson, accessed 28 February 2017 at http://www.esp.org/books/malthus/population/malthus.pdf. Millennium Ecosystem Assessment (MEA) (2005), Ecosystems and Human Well-being: Synthesis, Washington DC: Island Press. Meadows, D., D. Meadows, J. Randers and W. Behrens (1972), The Limits to Growth, New York: Potomac Associates. Meadows, D., D. Meadows and J. Randers (1992), Beyond the Limits, Post Mills, VT: Chelsea Green. Meadows, D., D. Meadows and J. Randers (2005), The Limits to Growth: the 30-Year Update, London: Earthscan. New Climate Economy (NCE) (2014), ‘Better growth, better climate: the new climate economy report – the Synthesis Report’, New Climate Economy, Washington, DC, accessed 28 February 2017 at http://static.newclimateeconomy.report/wp-content/ uploads/2014/08/NCE-SYNTHESIS-REPORT-web-share.pdf. Organisation for Economic Co-operation and Development (OECD) (2011), Towards Green Growth, Paris: OECD. Pacala, S. and R. Socolow (2004), ‘Stabilization wedges: solving the climate problem for the next 50 years with current technologies’, Science, 305 (5686), 968–72. Piketty, T. (2014), Capital in the 21st Century, Cambridge, MA: Harvard University Press. Rockström, J., W. Steffen, K.Å. Noone Persson, F.S. Chapin III, E.F. Lambin, T.M. Lenton et al. (2009), ‘A safe operating space for humanity’, Nature, 461 (7263), 472–5. Socolow, R. (2005), ‘Can we bury global warming?’, Scientific American, 293 (July), 29–55. Stern, N. (2007), The Economics of Climate Change: The Stern Review, Cambridge and New York: Cambridge University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 136

01/06/2017 16:50

Ecological modernization and green growth  ­ 137 Strachan, N. and R. Kannan (2008), ‘Hybrid modelling of long-term carbon reduction scenarios for the UK’, Energy Economics, 30 (6), 2947–63. The Economics of Ecosystems and Biodiversity (TEEB) (2010), ‘Mainstreaming the economics of nature: a synthesis of the approach, conclusions and recommendations of TEEB’, October, accessed 28 February 2017 at http://www.teebweb.org/our-publications/ teeb-study-reports/synthesis-report/. United Nations Environment Programme (UNEP) (2011a), ‘Towards a green economy: pathways to sustainable development and poverty eradication’, accessed 28 February 2017 at https://web.unep.org/greeneconomy/sites/unep.org.greeneconomy/files/field/image/ green_economyreport_final_dec2011.pdf. United Nations Environment Programme (UNEP) (2011b), ‘Decoupling Natural Resource Use and Environmental Impacts from Economic Growth: A Report on the Working Group on Decoupling to the International Resource Panel’, accessed 28 February 2017 at http://www.gci.org.uk/Documents/Decoupling_Report_English.pdf. United Nations Environment Programme (UNEP) (2012), ‘An Earth system perspective’, in UNEP (ed.), Global Environment Outlook 5: Environment for the Future We Want, Nairobi: United Nations Environment Programme, ch. 7. Victor, P. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Wilkinson, R. and K. Pickett (2009), The Spirit Level: Why More Equal Societies Almost Always Do Better, London: Penguin.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 137

01/06/2017 16:50

7  Climate change, growth, and sustainability Anders Hayden

INTRODUCTION Economic growth continues to be one of the “most important drivers of increases in CO2 emissions from fossil fuel combustion”, according to the latest Intergovernmental Panel on Climate Change report (IPCC 2014, p. 8). That being the case, can climate change be successfully addressed if contemporary societies continue to pursue economic growth (as measured by gross domestic product) as a dominant priority? The answer is not entirely straightforward. No clear dividing line exists between success and failure. The analysis in this chapter will focus on  the internationally agreed goal of limiting temperature increases to no more than 2°C above pre-industrial levels, often portrayed as the threshold beyond which “dangerous” climate change or “catastrophe” lies. However, that target should not suggest that temperature increases below 2°C are without significant danger. Small island nations, at risk of losing significant territory or even disappearing entirely as a result of rising seas, have called for global action to keep warming below 1.5°C. Some scientists have suggested that limiting warming to 1°C is the appropriate goal to avoid highly dangerous outcomes (Hansen et al. 2013). Even with temperature increases of only 0.85°C since 1880 (IPCC 2013, p. 5), we have already witnessed significant and damaging changes, such as the rapid decline of Arctic sea ice and more frequent and intense heatwaves (Rahmstorf and Coumou 2011; NASA 2015), and some further warming and impacts are unavoidable at this point. Strong climate action has been delayed – in large part due to the greater political priority given to economic growth – to the point that it is already too late for some people, places, and species; however, the most catastrophic outcomes can still be avoided. The socio-economic, political, and technological challenges in limiting warming to 2°C or less will be enormous, but some positive developments are providing grounds for optimism. The cost of renewable energy, especially solar power, has been falling rapidly and renewable deployment has accelerated. Some countries appear to be breaking with historical patterns 138 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 138

01/06/2017 16:50

Climate change, growth, and sustainability  ­139 and decoupling gross domestic product (GDP) growth from greenhouse gas (GHG) emissions, at least as measured by official territorial emissions statistics. There is evidence of significant co-benefits from climate action, such as reduced air pollution and enhanced energy security. With such points in mind, some observers have suggested that meeting a 2°C target need not require a significant sacrifice of economic growth. “Green growth” arguments of this kind, which have been politically important in making the case for climate action, will be outlined in more detail in the first part of this chapter. That will be followed by a critical assessment of these points. Future possibilities cannot be predicted with certainty, but available evidence suggests that limiting warming to no more than 2°C is unlikely if economic growth continues to be such a dominant social priority. A greater role for an ethic of sufficiency and efforts to make contemporary societies less dependent on growth thus deserve to be a high priority.

GREEN GROWTH ARGUMENTS Ecological Modernization and Decoupling The idea that economic growth is compatible with strong action to address climate change – and other environmental challenges – is a core tenet of (EM) (Ekins, Chapter 6 in this volume; Jänicke 2008; Mol et al. 2009; Mol 2011). EM aims to decouple growth from GHG emissions (and other sources of negative environmental impacts) through improved efficiency and technology, backed mainly by market-oriented policies. Some EM theorists also see a role for “smart regulations” that stimulate technological innovation (Jänicke 2008). The “win-win” discourse accompanying an EM reform project portrays environmental action as “a positive-sum game: pollution prevention pays” (Hajer 1995, p. 3). Indeed, strong environmental action is seen to offer opportunities for “green growth”. Ecological modernization seeks to link economic and environmental strategy through, for example, ecological industrial policy to create green jobs and expand the renewable energy sector and other green technology production (Paterson 2001). Rather than a threat to business competitiveness, EM theory maintains that ecological action can be a source of competitive advantage, as the “first movers” who develop green solutions can capture the expanding global market for environmental technologies (for example, Jänicke and Jacob 2004). Ecological modernization has a fundamental political advantage over some other forms of environmentalism since, rather than questioning

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 139

01/06/2017 16:50

140  Handbook on growth and sustainability endless growth of production and consumption in favor of a concept of sufficiency, it promises to link environmental action to the perceived political imperative of economic growth (Dryzek et al. 2003, p. 58; see also Hayden 2014). A related attraction of EM ideas is the potential foundation they provide for a powerful political coalition – including government, business, labor, mainstream environmentalists, and others – in support of carbon-reduction policies. Indeed, EM ideas have been prominent and such coalitions have emerged – albeit with some resistance from defenders of business as usual – in countries, such as Sweden, Denmark, Germany, and the UK, that have ranked highly on indices of international climate performance (for example, Burck et al. 2011, 2014). Official United Nations Framework Convention on Climate Change (UNFCCC 2014, p. 9) data – based on emissions within each country’s territory – show GHG declines of 20 to 25 percent in these four countries from 1990 to 2012, during which GDP grew substantially (up 65 percent in the case of the UK, for example). In other words, these leading nations have shown some evidence of absolute decoupling of emissions from economic growth (although the situation is not quite so rosy when we view the whole picture, as discussed below). Benefits of Action and “Better Growth” The idea that the “world does not need to choose between averting climate change and promoting growth and development” was put forward with considerable impact by Nicholas Stern (2006, p. xi) in his review of the economics of climate change for the UK Treasury. Stern concluded that the costs of acting to address climate change – which he then estimated to be 1 percent of global GDP per year by 2050 – were far less than the costs of inaction, as a business-as-usual path would produce climate-related costs of 5 to 20 percent of global per-capita consumption.1 Given the high costs of inaction, Stern argued that “tackling climate change is the pro-growth strategy for the longer term” (2006, p. ii). Stern’s report had a significant impact in Britain, where it contributed to the all-party political consensus behind the Climate Change Act of 2008, which committed the country to ambitious, legally binding carbon-reduction targets, and at the European Union (EU) level, where Stern’s growth-and-climate message was important in building support for the EU’s 2008 climate and energy package (Barroso 2008). The idea of “win-win” climate policy that is compatible with, and even boosts, growth is based, in part, on the existence of co-benefits from reducing emissions. Economists at the International Monetary Fund (IMF) concluded that countries need not wait for a global climate deal

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 140

01/06/2017 16:50

Climate change, growth, and sustainability  ­141 before introducing their own climate policies as it is in their national interest to act, even if others do not (Parry et al. 2014). The IMF study found that, when taking into account the co-benefits of climate action, primarily fewer air pollution deaths and savings on health costs from burning coal, then a substantial carbon price – averaging $57.5 per tonne of CO2 in the top 20 emitting countries – is justified in nationally self-interested economic terms.2 Had nationally efficient carbon prices been in place, emissions in 2010 would have been an average 13.5 percent lower in the 20 biggest ­emitters – equivalent to a 10.8 percent global GHG reduction. Co-benefits were also a major theme in the Better Growth, Better Climate report of the Global Commission on the Economy and Climate (2014), cochaired by Nicholas Stern. In addition to health benefits and cost savings from lower air pollution, the report noted that less sprawling cities benefit from less traffic congestion, lower infrastructure costs, higher quality of life, and greater economic productivity – while producing fewer GHGs. Restoring degraded land can boost food production and rural development, while helping to reduce deforestation and related carbon emissions. The report also highlighted greater energy security and savings on energy imports that result from more energy efficiency and domestic renewable energy output. With regard to the latter, the report reflected the growing optimism about the prospects for renewable energy, stating that we are “on the cusp of a clean energy future”, while pointing to the “rapidly falling costs, particularly of wind and solar power” (Global Commission on the Economy and Climate 2014, p. 8). Climate action would still have costs, but those would be manageable. The report estimated that the current high-carbon infrastructure (for transport, energy, water systems, and cities) requires $6 trillion in annual investment globally in the next 15 years, while investing instead in low-carbon infrastructure would cost $270 billion more – an additional 4.5 percent. The overall message of Better Growth, Better Climate was that there is an “opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change” (Global Commission on the Economy and Climate 2014, p. 8). This was a welcome message to many of those in power, including President Obama (2014), who tweeted: “This study concludes that no one has to choose between fighting climate change and growing the economy.” Defenders of the idea that avoiding warming of 2°C is compatible with continued prioritization of economic growth also point to the cost estimates in IPCC assessment reports. The estimated cost of meeting a 450 parts per million (ppm) carbon dioxide equivalent (CO2e) target3 is a mere 0.06 percent reduction in annual economic growth (with estimates ranging from 0.04 to 0.14 percent), which is only a fraction of the estimated 1.6 to 3.0 percent annual growth globally over the remainder of this century

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 141

01/06/2017 16:51

142  Handbook on growth and sustainability (IPCC 2014, pp. 418–19). By 2100, meeting a 2°C/450 ppm target would leave consumption levels just 4.8 percent below the projected baseline trend, according to the central estimate. With economic growth projected to lead to a global economy roughly four to ten times bigger by the end of the century, limiting warming to no more than 2°C is estimated to shave off only a small amount of that growth. These IPCC estimates prompted influential climate blogger Joe Romm (2014) to proclaim that “avoiding climate catastrophe is super cheap”, a message echoed by economist Paul Krugman (2014).

REASONS FOR SCEPTICISM ABOUT GREEN GROWTH CLAIMS Although claims of “win-win” green growth and “super cheap” climate salvation can have a beneficial political impact in countering those who oppose strong climate policies, there are strong reasons to doubt that continued prioritization of GDP growth can be so easily reconciled with climate solutions. Imported Carbon and Illusions of Decoupling As noted above, some climate-reform leaders, such as Germany, the UK, Denmark, and Sweden, appear to be breaking the strong historical link between economic output and GHG emissions. They have reported significant declines of one-fifth or more in the emissions occurring within their territories, even as their economies have grown considerably. However, the apparent decoupling of economic growth and GHG emissions has been illusory for most of these countries when viewed from the consumption side. Consumption-based accounting considers all emissions linked to goods consumed within a country, wherever they were produced in the world. This changes the picture substantially since most affluent nations are net importers of carbon emissions and have seen large increases in carbon embedded in imports from other countries, including China (Davis and Caldeira 2010; Clark 2011; Peters et al. 2011; Dolter and Victor 2016). In the UK, several sources showed that emissions linked to goods consumed in the UK rose from the 1990s onwards (Druckman et al. 2008; Baiocchi and Minx 2010; Carbon Trust 2011; Clark 2011; Defra 2012; HOCECCC 2012; CCC 2013). Estimating emissions on the consumption side is more difficult and imprecise than calculating territorial figures; however, despite some uncertainty over the exact numbers, the UK’s Committee

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 142

01/06/2017 16:51

Climate change, growth, and sustainability  ­143 on Climate Change noted “a consistent finding across available studies that the UK’s carbon footprint has increased” (CCC 2013, p. 7; see also Barrett et al. 2013). Its own estimate was that, from 1993 to 2010, UK consumption-side GHG emissions increased 10 percent, while for CO2 alone the increase was 15 percent. More recent UK environment department estimates do show a sharp fall in consumption-based emissions after 2007 (Defra 2015); however, this does not represent a clear pattern of absolute decoupling of emissions and growth since the decline only began with the economic crisis, and other sources show different results.4 University of Leeds researchers summed up the situation: the “UK’s consumption emissions closely follow GDP and were rising until the recession” (Barrett 2015). Meanwhile, Scandinavia’s green leaders show no signs of carbon reduction on the consumption side. Although Swedish territorial emissions were 20 percent lower in 2012 than 1990, CO2 emissions linked to consumption in Sweden increased 13 percent from 1990 to 2011 (Eora MRIO 2015; see also OECD 2014, pp. 106, 109). In 2009, Sweden’s consumption-based emissions were 62 percent greater than its production-based emissions – the highest difference in any Organisation for Economic Co-operation and Development (OECD) nation. Renewable-energy leader Denmark has also seen increased consumption-based CO2 emissions, up some 6 percent from 1990 to 2011 (Lenzen et al. 2013; Eora MRIO 2015; see also OECD 2013). Germany is the one country frequently considered a climate leader that appears to be decoupling growth and carbon emissions on the consumption side, according to some estimates.5 Germany is something of an anomaly within the affluent global North as it remains a major net exporter of manufactured goods with a persistent trade surplus (OECD 2012, p. 115); its difference between production and consumption-side emissions – 16 percent more on the consumption side in 2009 (OECD 2013) – is smaller in percentage terms than many other wealthy nations, although still ­considerable.6 Despite apparent progress on both the production and consumption side, Germany has nevertheless struggled to cut emissions sufficiently to meet its commitment of 40 percent GHG-reduction below 1990 levels by 2020 (Deutsche Welle 2014),7 a target roughly in line with a fair-share contribution to limiting warming to no more than 2°C. Although the countries discussed here have taken some important steps (for example, ambitious promotion of renewable energy, carbon pricing and ecological tax reform, energy efficiency measures, and commitments to significant medium and long-term emissions reductions), even these leaders have yet to show that they are capable of an unambiguous, absolute decoupling of GHG emissions and economic growth and, more

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 143

01/06/2017 16:51

144  Handbook on growth and sustainability importantly, doing so on the scale necessary.8 The lack of adequate action by any individual nation to date is reflected in the annual Climate Policy Performance Index, where the top three spots in the ranking are left empty (Burck et al. 2014). Behind the Construction of a Growth-Friendly Narrative Prominent reports outlining a green-growth response to climate change also turn out to be less impressive after closer review. Indeed, there is a pattern of constructing a growth-friendly narrative by limiting the ecological ambitions of climate action to what is compatible with the continued prioritization of growth. This phenomenon was evident in the Stern Review, which, behind its message of growth and climate action going hand in hand, had a weak and dangerous GHG concentration target (Hayden 2014, pp. 268–74). A curious contrast existed between Stern’s (2006) warnings of the dangers of surpassing GHG concentrations of 450 ppm CO2e and his implicit rejection of efforts to keep concentrations below that level. Stern concluded that stabilizing concentrations at no more than 450 ppm – which would give, according to the data he had available, a 50–50 chance of not exceeding a 2°C threshold (Stern 2006, pp. v, 294) – would be “very difficult and costly” (Stern 2006, p. 299; see also Stern 2006, p. xvii). In arguing that “very rapid emission cuts are unlikely to be economically viable”, Stern wrote, “Experience suggests it is difficult to secure emission cuts faster than about 1% per year except in instances of recession”, such as the collapse of the former Soviet economies (Stern 2006, pp. 203–4). By opting instead for slower GHG reduction and a maximum 550 ppm target, Stern could claim that the cost of dealing with climate change would be just one percent of annual world GDP.9 However, many critics noted that Stern was, in effect, prioritizing continued economic growth over the deep emission cuts and significant social transformation necessary to address the climate challenge (for example, Baer 2007; Foster et al. 2010, p. 156; Hayden 2014). A similar problem is evident in the more recent Better Growth, Better Climate report, in which Stern also played a lead role (Global Commission on the Economy and Climate 2014). Behind its “win-win” rhetoric, the report does not actually outline a plan to avoid warming of 2°C while maintaining steady economic growth. The wording of the text is very precise – it only claims that it is possible to take action that contributes to growth while “reducing the immense risks of climate change” (Global Commission on the Economy and Climate 2014, p. 8). The authors acknowledge this issue, admitting that their action plan “would not be sufficient to achieve the full range of emissions reductions [likely to be]

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 144

01/06/2017 16:51

Climate change, growth, and sustainability  ­145 needed by 2030 to prevent dangerous climate change” of more than 2°C (Global Commission on the Economy and Climate 2014, p. 24). They cite IPCC estimates of the need to reduce GHG emissions by 26 gigatonnes by 2030. Their plan could deliver “at least half”, or 14 gigatonnes, of the emissions reductions needed – a figure that could be higher under optimistic assumptions.10 What about the remaining gigatonnes? A full response would require more costly options, making it harder to maintain the “green growth” narrative. Rather than showing that limiting warming to 2°C is compatible with continued economic growth, the report sidestepped that issue, and merely presented a plan to reduce climate risks in a growth-friendly way. As Williams (2014) suggested, the headlines could have read, “Economists unveil action plan to get halfway to stopping climate change”. Similar limitations of a green-growth framing are evident in the aforementioned IMF study showing that significant carbon prices are justified in terms of national interest and economic efficiency, due to co-benefits such as reduced air pollution and health costs. It concluded that “nationally efficient” carbon prices would have reduced emissions by 13.5 percent below their 2010 levels in the top 20 emitting nations (Parry et al. 2014). Such reductions would be a very valuable step, but GHG reductions of much greater magnitudes are needed, many of them lying beyond the “win-win” economic sphere in which actions have no cost in terms of foregone GDP growth. Not So Much Win-Win after the Rebound In addition to shifting to lower-carbon energy sources, reductions in energy use are a key way to limit energy-related GHG emissions. Ecological modernization promises to limit energy use, even as economic growth continues, through “win-win” improvements in energy efficiency. However, this aspect of a “green growth” vision faces another significant limitation that is often ignored in climate analysis: the rebound effect (Sorrell 2007; Barker et al. 2009; van den Bergh 2011; Santarius 2012; Gillingham et al. 2013). Although greater energy efficiency can help to reduce emissions, it is not as useful as you might think, leading to smaller net gains than expected. Increased efficiency frequently relieves limits – in terms of money, scarce resources, and time – that constrain material and energy use, thereby enabling resource use to expand (van den Bergh 2011, p. 49). Energy efficiency gains make energy services cheaper and thus increase consumption of those services, such as driving more in a fuel-efficient car (direct rebound effect). Some of the monetary savings are also spent consuming other energy-intensive goods and services (indirect rebound

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 145

01/06/2017 16:51

146  Handbook on growth and sustainability effect) – for example, using the savings on lower transportation or heating costs to pay for a big-screen television or holiday flight. Indirect rebound effects also result from the fact that the capital needed to achieve energy efficiency – for example, thermal insulation – requires energy to produce and install.11 The direct and indirect effects add up to the economy-wide rebound effect (Sorrell 2007; see also IPCC 2014, pp. 249–50). In some cases, rebound effects can exceed 100 percent, that is, “backfire”, as efficiency gains lead to higher total resource use. This is also known as the Jevons’ paradox, named after the nineteenth-century British economist William Jevons, who noted that increased efficiency of coal use led to much greater demand for the resource, as coal use became more profitable and found new applications (Alcott 2005). The magnitude of rebound effects is an empirical question that is the subject of considerable debate (IPCC 2014, pp. 249–50, 390–91). One challenge that makes generalization difficult is that rebound effects are context specific, and vary between sectors, technologies, and nations – there is some evidence, for example, that they are higher in developing nations (IPCC 2014, p. 391; Sorrell 2007). Sorrell’s (2007) extensive review of over 500 rebound-effect studies concluded that “while little confidence can be placed in the quantitative estimates, the frequent finding that economywide rebound effects exceed 50% should be cause for concern” (Sorrell 2007, p. 60). In addition, “the available studies suggest that economy-wide effects are frequently large and that the potential for backfire cannot be ruled out” (Sorrell 2007, p. 57).12 Meanwhile, Barker et al. (2009) estimated that, for the global economy as a whole, “no-regrets” energy efficiency investments that pay for themselves through reduced energy consumption would have a total rebound effect of 31 percent by 2020, rising to 52 percent by 2030. That is, half the expected gains from such efficiency investments would disappear on the rebound, which, for some observers, is a rough rule of thumb based on available evidence (Santarius 2012, pp. 15–16). A particularly troubling conclusion for a green growth strategy relying heavily on greater eco-efficiency is that, paradoxically, the bigger the win-win gains from energy efficiency in the first instance, the lower the environmental gain is likely to be after the rebound (Sorrell 2007, pp. viii, ix, 93). The greater the gains in total factor productivity – including capital, labor, and materials – from eco-efficiency investments, the more firms can increase output and lower their prices, thereby contributing to economic expansion and additional energy demands (see also Santarius 2012, pp. 13–14, 17). Sorrell (2010, p. 1785) summed up the implications of his findings: “The rebound effects from energy efficiency improvements are significant and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 146

01/06/2017 16:51

Climate change, growth, and sustainability  ­147 limit the potential for decoupling energy consumption from economic growth.” Although some uncertainty remains about the magnitude of rebound effects, they represent an important challenge to the idea that climate solutions can be found without addressing the overall expansionary dynamics of contemporary economies. The rebound effect highlights the idea that “the pursuit of improved efficiency needs to be complemented by an ethic of sufficiency” (Sorrell 2010, pp. 1784, 1792) and, for some observers, it is a key factor that “re-opens the debate about limits to growth” (Sorrell 2010, p. 1794; see also Santarius 2012). Other possible responses to rebound effects do exist, including: redoubling efforts to increase efficiency given that some gains will be lost on the rebound, complementary policies to dampen rebound effects (such as increased carbon/ energy prices or hard caps on energy use/emissions), and a major push to decarbonize energy supplies altogether so that GHGs fall regardless of the rebound effect. At a minimum, the “rebound effect is not very welcome to politicians because they have been thinking that energy efficiency programmes are the answer to climate change”, researcher Terry Barker said in the press. “It’s not nearly as good an answer as they thought” (Jansen 2009, p. 11). A Closer Look at IPCC Cost Estimates What about those cost estimates from the IPCC (2014) that suggest limit warming to no more than 2°C would cost only a 0.06 reduction in annual GDP growth? A look under the hood reveals that there is little reason to put much stock in these figures. The IPCC (2014, p. 478) emphasizes that “both the economic costs and the economic benefits of mitigation are uncertain”. Estimates of costs “vary widely and are highly sensitive to model design and assumptions” (IPCC 2014, p. 15). The integrated assessment models behind the 0.06 percent annual GDP loss figure are “based on the idealized assumptions that all countries of the world begin mitigation immediately, there is a single global carbon price applied to well-functioning markets, and key technologies are available” (IPCC 2014, p. 418). More realistic assumptions result in higher cost estimates. The IPCC notes that “the highest consumption and GDP losses in the scenario sample are from a model with an emphasis on market imperfections, infrastructure lock-ins, and myopia” (2014, p. 451; see also Waisman et al. 2012) – that is, from a model that sounds much more like the real world. Delays in action, which have characterized climate politics globally, require much higher rates of annual emissions reductions in the future, increase the eventual costs of meeting a 2°C goal, and risk putting that goal out of reach – while also

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 147

01/06/2017 16:51

148  Handbook on growth and sustainability increasing the need for questionable carbon dioxide removal technologies to produce “negative emissions” in the future (discussed in more detail below). Relaxing the unrealistic assumption of a single global carbon price means more output will have to be forgone since mitigation will not always take place where it is least expensive. Meanwhile, if key energy technologies – such as carbon capture and storage (CCS), nuclear, solar, wind, and bioenergy – are not available to the degree expected in the models, costs also rise significantly. The IPCC thus acknowledges that “real-world aggregate mitigation costs could be very different” from the estimates under idealized assumptions (2014, p. 455). Indeed, with “less ideal – but more realistic – assumptions [a 2°C] goal is much more difficult to reach, and many models find the goal infeasible or exceptionally ­expensive” (IPCC 2014, p. 136). The IPCC (2014, p. 15) also provides cost estimates from models that relax these idealized assumptions. Assuming CCS is not available – a reasonable assumption to date given CCS’s high costs and very limited use so far – increases the cost of a 450 ppm stabilization target by a central estimate of 138 percent (ranging from 29 to 297 percent) while limited bioenergy availability increases costs by an estimated 64 percent (ranging from 44 to 78 percent). Since the original estimate of a 0.06 percent reduction in annual GDP growth is so low, doubling or even quadrupling such costs produces figures that some observers still call “super cheap” relative to the overall growth rate,13 the size of the economy, and the immense benefits of reduced climate damages (Romm 2014). However, even these more realistic numbers do not represent the full picture. The “majority of scenarios” likely to limit warming to 2°C, that is, which keep atmospheric concentrations below 480 ppm by 2100, “rely on overshoot pathways”, that is, they assume that we can exceed such concentrations and then return to them later (IPCC 2014, p. 433). Overshoot requires carbon dioxide removal (CDR) technologies to produce negative global emissions in the second half of this century. In addition to afforestation (establishing forests on land that has not historically contained forest), overshoot scenarios typically depend on the combination of bioenergy and carbon capture and storage (BECCS), an unproven technology that can theoretically produce energy with negative net emissions. However, the IPCC warns that the availability and scale of CDR technologies “are uncertain and CDR technologies and methods are, to varying degrees, associated with challenges and risks” (2014, p. 12). It goes on to acknowledge that “CDR technologies have not been applied yet at large scale. The potential of afforestation is limited, and the use of BECCS is ultimately constrained by the potential for CCS and biomass supply” (IPCC 2014, p. 433). In addition to the fact that CCS technology

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 148

01/06/2017 16:51

Climate change, growth, and sustainability  ­149 has not progressed as rapidly as hoped, concerns have been raised about large-scale bioenergy and its massive land requirements,14 conflicts with food production, water demands, ecosystem destruction and related CO2 emissions (Fuss et al. 2014; Kato and Yamagata 2014; Geden 2015). Many models that do not assume BECCS availability simply cannot produce scenarios that keep GHG concentrations below 450 ppm (IPCC 2014, p. 451). This does not necessarily mean that such scenarios are ­infeasible – it may simply reflect limitations of the models – but it does bias the cost estimates for a 2°C objective since “only those models producing scenarios can provide estimated costs” (IPCC 2014, p. 424). The IPCC warns that its cost estimates “do not account for a potential model bias due to the fact that higher-cost models may have not been able to produce low-concentration scenarios and have therefore not reported results for these scenarios” (2014, p. 449). As Tavoni and Tol (2010, p. 769) explain, the magnitude and range of cost estimates to meet an ambitious 2°C objective are artificially reduced “because only the most optimistic results are reported for such targets”. One other implication of assuming that overshoot and large-scale BECCS will be possible also needs to be considered. It allows emissionreduction efforts and costs to be shifted to the future, a form of wishful thinking that significantly reduces current cost estimates since future costs are discounted at a rate near 5 percent in most models (IPCC 2014, p. 449; see also Tavoni and Tol 2010, p. 776; Azar et al. 2013, p. 4). Numerous other criticisms have been raised of the integrated assessment models behind the IPCC cost estimates (Pindyck 2013; Stern 2013; Rosen and Guenther 2015). Some of the problems could lead to overestimates of the cost of action, such as the unrealistic assumption in most models that economies start in a position of economic optimum and full employment (Rosen and Guenther 2015). The models also fail to fully include both the co-benefits and possible adverse side effects of climate action (IPCC 2014, p. 15). One main problem is the models’ inability to accurately assess the damages of climate change – and hence the benefits of action to stop it – particularly damages from catastrophic outcomes beyond 3°C warming. Nicholas Stern (2013, p. 845) argues that the models “grossly underestimate the risks of climate change” and “come close to assuming directly that the impacts and costs will be modest, and close to excluding the possibility of catastrophic outcomes” (see also Pindyck 2013). Another important limitation of these models is the crude way in which baseline economic growth (which provides the point of comparison to assess the costs of climate action) is determined. Models typically assume exogenous growth that continues at a steady underlying rate in line with current norms, thereby assuming that people in the future will be far richer

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 149

01/06/2017 16:51

150  Handbook on growth and sustainability than we are today. At a 2 percent annual growth rate, for example, the economy will be 7.2 times larger after 100 years. Stern (2013, p. 849) points out that the models ignore the likelihood that unmitigated climate change would create severe social disruption and significantly slow the rate of growth (thus underestimating the benefits of strong climate action). There is a related point to consider about the baseline for comparison. If steady GDP growth is assumed, then even very substantial mitigation costs will appear small compared to a massively increased GDP. However, if it turns out that some investments in mitigation and adaptation are economically unprofitable (albeit necessary), then the actual growth rate could be far lower than the assumed baseline trend, and a given cost of mitigation will appear proportionately much larger relative to the size of the economy. After reviewing the many limitations of integrated assessment models, and the “huge uncertainties that exist for each input parameter”, Rosen and Guenther (2015, pp. 93, 100) conclude that “the net economic results of mitigating climate change [are] unknowable over the long run,” although forceful climate mitigation should still be undertaken in light of the severity of the climate crisis. Similarly, Pindyck (2013, p. 860) concludes that we should move on without these models, which tell us “very little” and are “close to useless” for policy analysis, as the values of key inputs such as discount rates are “arbitrary” and can be chosen to achieve almost any result. Such models provide a “perception of knowledge and precision” that is “illusory and misleading” (Pindyck 2013, p. 860). Although in principle, they could be the basis for “evidence-based policymaking”, in practice, these models provide plenty of opportunity for what Geden calls “policy-based evidence-making” (Geden 2015, p. 28). For all the reasons mentioned above, there is little reason to believe the estimates that limiting warming to 2°C will require only a 0.06 reduction in the annual baseline growth rate. The cost of limiting warming to 2°C or less could require a much greater sacrifice of economic growth, but it would still be worth paying such costs to avoid the potentially catastrophic outcomes that the models do not incorporate adequately. Unprecedented and Unlikely Reductions in Carbon Intensity One key reason to doubt the potential for a “green growth” climate solution is the unprecedented and seemingly unlikely reductions in carbon intensity (emissions per unit of GDP) that it would require. Jackson (2009) estimated that, if trend levels of income growth continued, carbon intensity would have to fall at least 7 percent per year until 2050 – ten times faster than the average from 1990 to 2007 – to achieve climate stabilization at 450 ppm (consistent with keeping warming from exceeding 2°C). Even

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 150

01/06/2017 16:51

Climate change, growth, and sustainability  ­151 more rapid and unlikely decarbonization rates would be needed if incomes in the global South were to catch up to rich-world levels. Such calculations were one key factor leading him to conclude that there is a need to seek “prosperity without growth”, and others have reached similar conclusions (Li 2008; Sorrell 2010; Anderson and Bows 2011). Meanwhile, even proponents of growth have produced figures that provide little reason to believe growth can be reconciled with climate stabilization. The business consultancy PricewaterhouseCoopers (PwC 2014), in its annual Low Carbon Economy Index report, has documented the consistent failure to reduce the carbon intensity of the global economy at a rate anywhere near what is required to limit warming to 2°C, assuming GDP grows in line with long-term projections. From 2000 to 2013, global carbon intensity fell an average 0.9 percent per year, with a decline of 1.2 percent in 2013; these figures fall well short of PwC’s estimate of a necessary 6 percent per year, putting the world on track to 4°C of warming by the end of the century. Each year the world fails to decarbonize sufficiently adds to the challenge in the years ahead; PwC (2014, p. 2) estimates that carbon intensity must now decline 6.2 percent15 annually until 2100 – double the rate the UK achieved for territorially based emissions during its most rapid GHG reduction in the 1990s, owing to a shift from coal to gas-fired electricity (as well as the offshoring of manufacturing production). In other words, carbon intensity would have to decline five times faster than current global rates – and this never before achieved rate would have to be sustained year after year throughout the rest of the century – assuming continued steady economic growth. This inconvenient arithmetic of decarbonization led Anderson and Bows (2011, p. 41) to conclude that wealthy Annex-I nations need, at least temporarily over 10 to 20 years, to adopt a “period of planned austerity” or degrowth if the world is to have a reasonable probability (50 percent) of avoiding 2°C of warming (see also Anderson and Bows 2012; Anderson 2013). Their analysis assumes that developing, non-Annex-I nations see their emissions peak by 2025, leaving a very limited carbon budget for wealthy Annex-I nations, which would need to reduce emissions by 8–10 percent per year in the short to medium term. However, they note that it has been widely assumed – in the Stern Review, UK Committee on Climate Change analysis, and other models – that emissions reductions greater than 3–4 percent per year are not compatible with a growing economy. If so, then the rates of emission reduction needed in wealthy nations are not compatible with economic growth. Without a crystal ball, we cannot entirely rule out the possibility that humanity could find a way, with concerted effort on a level far exceeding what we have seen so far, to reduce emissions at rates previously believed

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 151

01/06/2017 16:51

152  Handbook on growth and sustainability to be incompatible with economic growth. Indeed, the assumption that it is infeasible, in a growing economy, to reduce emissions in excess of 3 percent per year (requiring annual carbon-intensity reductions greater than 5–6 percent, assuming 2–3 percent economic growth) has recently been disappearing from analyses of the pathways to a 2°C objective (Geden 2015). However, these shifting assumptions – like the assumption of widespread carbon dioxide removal to generate negative emissions – appear to be based on a drive to keep alive the idea that 2°C is still in reach without having to abandon the prioritization of economic growth, rather than on any evidence that such rates are possible on a sustained basis.

CONCLUSION In contemporary societies where economic growth is considered a political imperative, those advocating environmental action face great pressure to make the case that their proposals are compatible with steady GDP growth. Proponents of a “green growth” response to climate change have constructed just such a narrative. However, the case that continued prioritization of GDP growth and limiting warming to no more than 2°C can go hand in hand is not fully convincing. The seeming success of leading nations in decoupling GHGs and economic growth fails to acknowledge rising emissions linked to goods consumed in these countries. The one apparent exception, Germany, may offer some lessons in cutting consumption-side emissions, but it has had its own struggles staying on track to meet strong GHG-reduction commitments. Meanwhile, behind the green-growth messages of documents such as the Stern Review and the Better Growth, Better Climate report are limited ecological ambitions that fall short of a 2°C objective. Celebration of win-win eco-efficiency gains needs to be tempered by acknowledgement of rebound effects, which can undo much of the expected climate benefit. Claims that limiting warming to no more than 2°C would reduce future economic growth by only a small fraction depend on problematic assumptions and models (relying, for example, on unproven techno-fixes to achieve carbon dioxide removal on a grand scale in the future). A 2°C goal could conceivably still be possible without downplaying the pursuit of economic growth, but only if carbon-intensity is reduced at a pace several times greater than anything ever achieved, year after year, throughout the rest of the century. Given the apparent unlikelihood of that outcome, a pragmatic response ought to include the (admittedly extremely difficult) task of developing practices, policies, and institutions that can allow contemporary societies to move beyond their dependence

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 152

01/06/2017 16:51

Climate change, growth, and sustainability  ­153 on economic growth. At the very least, there is a need to “dethrone” the maximization of GDP growth as the core objective and “clinching argument” in policy debates (Turner 2008, pp. 93–4). In other words, we should get on with the job of deep and rapid emissions reductions to keep warming below 2°C, regardless of whether cost estimates suggest that it be positive, negative, or neutral for GDP growth. The importance of moving beyond the growth paradigm is even greater when we consider that climate change is not the only serious environmental challenge. Even if we find that it is possible to “solve” climate change within a growth-based economy, the expansionary dynamic of contemporary societies faces other limits; by some estimates, humanity has already surpassed the “safe operating space” not only with respect to climate, but also biosphere integrity (including biodiversity loss), land-system change (for example, deforestation), and biogeochemical flows (nitrogen and phosphorous cycles) (Steffen et al. 2015). Some proposed solutions to reconcile growth and climate stability could exacerbate these other problems, such as the potentially massive impacts on forests and biodiversity from greater use of bioenergy. Other limits to technological solutions also need to be considered, such as the dependence of renewable energy, energy storage, and other advanced technologies on rare earth minerals, whose supply is limited and extraction poses risks from toxic and radioactive wastes (Jones 2013). In the short term, there is enough common ground for proponents of green-growth and post-growth solutions to join forces in the political battles over issues such establishing strong carbon-reduction targets, avoiding further delays in ambitious GHG cuts, and stopping investments in carbon-intensive infrastructure that lock-in high levels of future emissions. The action plan of the Better Growth, Better Climate report provides a number of key items for a climate-action agenda, including: a strong and equitable international climate agreement; phasing out fossil-fuel subsidies; strong, predictable carbon prices; making compact cities the preferred form of urban development; stopping deforestation; and accelerating the shift away from coal-fired power generation, a task made easier by declining costs of renewables (Global Commission on the Economy and Climate 2014, pp. 9–10). Reducing the massive volumes of food waste globally – a significant source of unnecessary carbon and methane emissions – could be a shared objective, regardless of whether one sees it as a “win-win” improvement in resource efficiency contributing to green growth, or a move away from overconsumption and toward an ethic of sufficiency (Hayden 2014, pp. 332–5). Some common ground might also be found around calls for new measures of social and economic progress to complement or replace GDP – a long-standing demand of green critics

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 153

01/06/2017 16:51

154  Handbook on growth and sustainability of the growth economy (for example, Jackson 2009, p. 107) that has found backing among some green-growth supporters (for example, Global Commission on the Economy and Climate 2014, pp. 19–20). Advocates of sufficiency and a critical perspective on growth should not stop there. Other measures that break with the dominant expansionary ethos will likely be needed. Key elements of a post-growth agenda also include work-time reduction as an alternative to income growth, limits on advertising and a wider cultural challenge to consumerism, selective relocalization of production, renewed emphasis on equitable distribution, scaling back the most high-carbon economic sectors, and policies to ensure a just transition for workers displaced in the process (for example, D’Alisa et al. 2015; Klein 2014; Jackson 2009, pp. 103–7; Victor 2008, ch. 11). We ultimately (indeed, very soon) need to get to the point where the ecological imperative of addressing climate change and other environmental challenges is no longer held back by the perceived imperative of endless economic growth.

NOTES   1. Stern used a lower than conventional discount rate, which was controversial within the discipline of economics, but had the welcome implication of making the costs of climate change to future generations a prominent consideration.  2. The “nationally efficient” carbon price, which depends on the value of co-benefits and the degree to which existing taxes and subsidies internalize (or further exacerbate) non-CO2 external costs, varies considerably in the IMF study. For example, it is $11.5 per tonne in Australia, $36 in the United States, $63 in China, and $291 in Saudi Arabia. The high figure for Saudi Arabia is largely a function of the fact that fossil fuels are currently subsidized (that is, sold to consumers below world prices) in that country.   3. According to the IPCC (2014, p. 13), 430–480 ppm CO2e is “likely”, that is, with 66 percent or greater probability, to limit warming to no more than 2°C.   4. Defra (2015) concludes that UK consumption-based emissions rose 14 percent from 1997 to 2007, but fell sharply in the years since the economic crisis and, by 2012, were 19 percent below 1997 levels. In addition to the notable impact on these figures of a period of economic contraction, the time period chosen leaves out several years of rising consumption-based emissions prior to 1997. From 1990 to 1997, UK consumption-side CO2 emissions increased 7 percent, according to the Eora World MRIO (2015) database. Over a longer period, that database shows that UK consumption-side emissions had risen to 26 percent above 1990 levels by 2007, but by 2011, were 9 percent above 1990 levels.  5. Data from the OECD (2013) indicate that German consumption-based emissions declined 9.8 percent from 1995 to 2008. Eora MRIO (2015) data show that consumption-side emissions of CO2 in Germany fell 15 percent from 1990 to 2007 (before the recession), and 21 percent over the full period from 1990 to 2011. However, at least one study estimated that consumption-side emissions had increased in Germany – up 3.7 percent from 1995 to 2005, according to Bruckner et al. (2010, p. 10).   6. Owing to the size of the German economy, it has still been one of the five biggest net importers of CO2 emissions in recent years, according to some estimates (Davis and Caldeira 2010, p. 5; CCC 2013, p. 30).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 154

01/06/2017 16:51

Climate change, growth, and sustainability  ­155   7. Germany recently had to introduce new, multi-sector measures to try to stay on track with its climate commitments (EurActiv 2014). These include initiatives to boost energy efficiency (such as additional subsidies for home insulation), an enhanced “climatefriendly” building and housing strategy, transport measures such as incentives for electric cars, and a requirement that the electricity sector cut CO2 emissions by a further 22 million tonnes.  8. Victor (personal communication) calculates that to cut emissions 80 percent from 2015 to 2050 requires not just any degree of absolute decoupling of GDP and GHG emissions, but a large, average annual reduction in GHG emissions of 5 percent (or, an average reduction in GHG intensity, that is, GHG/$ of GDP, which is 5 percent greater than the rate of economic growth). Such reductions are far in excess of what these leading nations have been able to achieve on a sustained basis so far, even in terms of territorial emissions (let alone consumption-side emissions). The problem of the unprecedented rates of decarbonization needed to reconcile continued economic growth with climate stability is discussed in more detail below.   9. Stern did not flatly rule out a 450 ppm target. He referred to stabilization of atmospheric concentrations “in the range of 450–550ppm CO2e” (Stern 2006, pp. xi, 299). However, he made clear that he believed stabilization at 450 ppm was “already almost out of reach”, adding that: “Efforts to reduce emissions rapidly are likely to be very costly” (Stern 2006, p. xv). His cost estimate of 1 percent of global GDP by 2050 was based on stabilization at around 550 ppm CO2e (Stern 2006, p. xiv). 10. The plan could reduce emissions up to 24 gigatonnes, or 90 percent of the amount needed, but only with “early, broad and ambitious implementation”, which, in turn, would require “decisive policy change and leadership . . . combined with strong international cooperation” (Global Commission on the Economy and Climate 2014, p. 24). 11. Santarius (2012) outlines 13 different types of rebound effects, including, for example, the psychological rebound effect that leads people to feel they can use environmentallyfriendlier products, such as hybrid cars, more often. Meanwhile, Van den Bergh (2011) outlines 14 pathways through which rebound effects can occur. 12. Sorrell (2007, pp. viii, 89, 2010, p. 1788) notes that a backfire effect is more likely for eco-efficiency gains associated with “general-purpose technologies” that have wider transformational effects on the economy. Past examples include nineteenth-century steam engines and electric motors in the early twentieth century, while computers are a more contemporary example. 13. The baseline scenarios behind the IPCC (2014, p. 419) analysis assume annual growth of 1.6 to 3.0 percent globally over the remainder of this century, as noted above. 14. Two models examined by Tavoni and Socolow (2013, p. 6) have estimated land requirements for afforestation and BECCS of roughly 0.5 billion hectares, which compares with current global crop production area of some 1.5 billion hectares (FAO 2013, p. 10). 15. PwC’s (2009, p. 10) first estimate of the necessary annual rate of carbon intensity reduction was 3.5 percent, but years of steady emissions growth has, in a short time, significantly increased the level of the challenge in order to stay on track to avoid more than 2°C of warming.

REFERENCES Alcott, B. (2005), ‘Jevons’ paradox’, Ecological Economics, 54 (1), 9–21. Anderson, K. (2013), ‘Avoiding dangerous climate change demands de-growth strategies from wealthier nations’, kevinanderson.info, accessed 30 April 2015 at kevinanderson.info/blog/ avoiding-dangerous-climate-change-demands-de-growth-strategies-from-wealthier-nations/. Anderson, K. and A. Bows (2011), ‘Beyond “dangerous” climate change: emission scenarios for a new world’, Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, 369 (1934), 20–44.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 155

01/06/2017 16:51

156  Handbook on growth and sustainability Anderson, K. and A. Bows (2012), ‘A new paradigm for climate change’, Nature Climate Change, 2 (9), 639–40. Azar, C., D.J.A. Johansson and N. Mattsson (2013), ‘Meeting global temperature targets – the role of bioenergy with carbon capture and storage’, Environmental Research Letters, 8 (3), 034004. Baer, P. (2007), ‘The worth of an ice-sheet: a critique of the treatment of catastrophic impacts in the Stern Review’, EcoEquity, accessed 11 February 2009 at www.ecoequity.org/docs/ WorthOfAnIceSheet.pdf. Baiocchi, G. and J.C. Minx (2010), ‘Understanding changes in the UK’s CO2 emissions: a global perspective’, Environmental Science & Technology, 44 (4), 1177–84. Barker, T., A. Dagoumas and J. Rubin (2009), ‘The macroeconomic rebound effect and the world economy’, Energy Efficiency, 2 (4), 411–27. Barrett, J. (2015), ‘Consumption emissions over time’, Exploring the UK’s Carbon Footprint, accessed 18 May 2015 at www.emissions.leeds.ac.uk/chart1.html. Barrett, J., G. Peters, T. Wiedmann, K. Scott, M. Lenzen, K. Roelich and C. Le Quéré (2013), ‘Consumption-based GHG emission accounting: a UK case study’, Climate Policy, 13 (4), 451–70. Barroso, J.M. (2008), ‘Europe’s climate change opportunity’, speech, 21 January, accessed 15 May 2015 at europa.eu/rapid/press-release_SPEECH-08-26_en.htm. Bruckner, M., C. Polzin and S. Giljum (2010), Counting CO2 Emissions in a Globalised World: Producer versus Consumer-Oriented Methods for CO2 Accounting, Bonn: German Development Institute (DIE). Burck, J., C. Bals and K. Bohnenberger (2011), Climate Change Performance Index: Results 2012, Bonn and Brussels: Germanwatch and Climate Action Network Europe. Burck, J., F. Marten and C. Bals, C. (2014), Climate Change Performance Index: Results 2015, Bonn and Brussels: Germanwatch and Climate Action Network Europe. Carbon Trust (2011), International Carbon Flows – Global Flows, London: Carbon Trust. Clark, D. (2011), ‘New data on imports and exports turns map of carbon emission on its head’, Guardian, 3 May, accessed 15 May 2015 at www.guardian.co.uk/environment/ datablog/2011/apr/28/carbon-emissions-imports-exports-trade#data. Committee on Climate Change (CCC) (2013), Reducing the UK’s carbon footprint, London: Committee on Climate Change. D’Alisa, G., F. Demaria and G. Kallis (eds) (2015), Degrowth: A Vocabulary for a New Era, New York: Routledge. Davis, S.J. and K. Caldeira (2010), ‘Consumption-based accounting of CO2 emissions’, Proceedings of the National Academy of Sciences, 107 (12), 5687–92. Department of Environment, Food, and Rural Affairs (Defra) (2012), UK’s Carbon Footprint 1993–2010, London: Department of Environment, Food, and Rural Affairs. Department of Environment, Food, and Rural Affairs (Defra) (2015), UK’s Carbon Footprint 1997–2012, London: Department for Environment, Food and Rural Affairs. Deutsche Welle (2014), ‘Germany unlikely to meet carbon reduction targets for 2020’, Deutsche Welle, 23 July, accessed 19 May 2015 at www.dw.de/ germany-unlikely-to-meet-carbon-reduction-targets-for-2020/a-17802417. Dolter, B. and P.A. Victor (2016), ‘Casting a long shadow: Demand-based accounting of Canada’s greenhouse gas emissions responsibility’, Ecological Economics, 127, 156–64. Druckman, A., P. Bradley, E. Papathanasopoulou and T. Jackson (2008), ‘Measuring progress towards carbon reduction in the UK’, Ecological Economics, 66 (4), 594–604. Dryzek, J. S., D. Downes, C. Hunold, D. Schlosberg, D. and H.-K. Hernes (2003), Green States and Social Movements, Oxford: Oxford University Press. Eora MRIO (2015), ‘The Eora MRIO database’, accessed 18 May 2015 at worldmrio.com. EurActiv (2014), ‘German government approves €80 billion climate package’, EurActiv, 4 December, accessed 19 May 2015 at www.euractiv.com/sections/energy/ german-government-approves-eu80-billion-climate-package-310571. Food and Agricultural Organization (FAO) (2013), FAO Statistical Yearbook 2013: World food and agriculture, Rome: Food and Agricultural Organization.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 156

01/06/2017 16:51

Climate change, growth, and sustainability  ­157 Foster, J.B., B. Clark and R. York (2010), The Ecological Rift: Capitalism’s War on the Earth, New York: Monthly Review Press. Fuss, S., J.G. Canadell, G.P. Peters, M. Tavoni, R.M. Andrew, P. Ciais et al. (2014), ‘Betting on negative emissions’, Nature Climate Change, 4 (10), 850–53. Geden, O. (2015), ‘Climate advisers must maintain integrity’, Nature, 521 (7550), 27–8. Gillingham, K., M.J. Kotchen, D.S. Rapson and G. Wagner (2013), ‘Energy policy: the rebound effect is overplayed’, Nature, 493 (7433), 475–6. Global Commission on the Economy and Climate (2014), Better Growth, Better Climate: The New Climate Economy Report – Synthesis Report, Washington, DC: World Resources Institute. Hajer, M.A. (1995), The Politics of Environmental Discourse: Ecological Modernization and the Policy Process, Oxford: Oxford University Press. Hansen, J., P. Kharecha, M. Sato, V. Masson-Delmotte, F. Ackerman, D.J. Beerling et al. (2013), ‘Assessing “dangerous climate change”: required reduction of carbon emissions to protect young people, future generations and nature’, PLoS ONE, 8 (12), e81648. Hayden, A. (2014), When Green Growth is Not Enough: Climate Change, Ecological Modernization, and Sufficiency, Montreal: McGill-Queen’s University Press. House of Commons Energy and Climate Change Committee (HOCECCC) (2012), Consumption-Based Emissions Reporting, London: House of Commons Energy and Climate Change Committee. Intergovernmental Panel on Climate Change (IPCC) (2013), Climate Change 2013: The Physical Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Summary for Policymakers, Cambridge: Cambridge University Press. Intergovernmental Panel on Climate Change (IPCC) (2014), Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge: Cambridge University Press. Jackson, T. (2009), Prosperity without Growth? The Transition to a Sustainable Economy, London: Sustainable Development Commission. Jänicke, M. (2008), ‘Ecological modernisation: new perspectives’, Journal of Cleaner Production, 16 (5), 557–65. Jänicke, M. and K. Jacob (2004), ‘Lead markets for environmental innovations: a new role for the nation state’, Global Environmental Politics, 4 (1), 29–46. Jansen, M. (2009), ‘Rebound effect will raise fossil fuel use’, Sunday Times, 31 May, Business, 11. Jones, N. (2013), ‘A scarcity of rare metals is hindering green technologies’, Yale Environment 360, accessed 22 May 2015 at e360.yale.edu/feature/a_scarcity_of_rare_metals_is_hind​ ering_green_technologies/2711/. Kato, E. and Y. Yamagata (2014), ‘BECCS capability of dedicated bioenergy crops under a future land-use scenario targeting net negative carbon emissions’, Earth’s Future, 2 (9), p. 2014EF000249. Klein, N. (2014), This Changes Everything: Capitalism vs. the Climate, New York: Simon & Schuster. Krugman, P. (2014), ‘Salvation gets cheap’, New York Times, 18 April, A23. Lenzen, M., D. Moran, K. Kanemoto and A. Geschke (2013), ‘Building Eora: a global multiregion input-output database at high country and sector resolution’, Economic Systems Research, 25 (1), 20–49. Li, M. (2008), ‘Climate change, limits to growth, and the imperative for socialism’, Monthly Review, 60 (3), 51–67. Mol, A.P.J. (2011), ‘Ecological modernization as a social theory of environmental reform’, in M. Redclift and G. Woodgate (eds), The International Handbook of Environmental Sociology, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 63–76. Mol, A.P.J., D.A. Sonnenfeld and G. Spaargaren (eds) (2009), The Ecological Modernisation Reader: Environmental Reform in Theory and Practice, London: Routledge. National Aeronautics and Space Administration (NASA) (2015), ‘Arctic sea ice’, NASA

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 157

01/06/2017 16:51

158  Handbook on growth and sustainability Earth Observatory, accessed 16 May 2015 at earthobservatory.nasa.gov/Features/ WorldOfChange/sea_ice.php. Obama, B. (2014), ‘This study concludes . . .’, @BarackObama, 16 September, accessed 22 May 2015 at twitter.com/BarackObama/status/511890255348129792. Organisation for Economic Co-operation and Development (OECD) (2012), OECD Environmental Performance Reviews: Germany 2012, Paris: Organisation for Economic Co-operation and Development. Organisation for Economic Co-operation and Development (OECD) (2013), ‘Carbon dioxide emissions embodied in international trade: summary table’, Organisation for Economic Co-operation and Development, Paris, accessed 18 May 2015 at www.oecd.org/ sti/ind/co2_io_1995T2009.xlsx. Organisation for Economic Co-operation and Development (OECD) (2014), OECD Environmental Performance Reviews: Sweden 2014, Paris: Organisation for Economic Co-Operation and Development. Parry, I., C. Veung and D. Heine (2014), How Much Carbon Pricing is in Countries’ Own Interests? The Critical Role of Co-Benefits, Washington, DC: International Monetary Fund. Paterson, M. (2001), ‘Climate policy as accumulation strategy: the failure of COP6 and emerging trends in climate politics’, Global Environmental Politics, 10 (2), 10–17. Peters, G.P., J.C. Minx, C.L. Weber and O. Edenhofer (2011), ‘Growth in emission transfers via international trade from 1990 to 2008’, Proceedings of the National Academy of Sciences, 108 (21), 8903–8. Pindyck, R.S. (2013), ‘Climate change policy: what do the models tell us?’, Journal of Economic Literature, 51 (3), 860–72. PricewaterhouseCoopers (PwC) (2009), Low Carbon Economy Index, London: PricewaterhouseCoopers LLP. PricewaterhouseCoopers (PwC) (2014), Two Degrees of Separation: Ambition and Reality – Low Carbon Economy Index 2014, London: PricewaterhouseCoopers LLP. Rahmstorf, S. and D. Coumou (2011), ‘Increase of extreme events in a warming world’, Proceedings of the National Academy of Sciences, 108 (44), 17905–9. Romm, J. (2014), ‘Climate panel stunner: avoiding climate catastrophe is super cheap – but only if we act now’, ThinkProgress, 13 April, accessed 14 May 2015 at thinkprogress.org/ climate/2014/04/13/3426117/climate-panel-avoiding-catastrophe-cheap/. Rosen, R.A. and E. Guenther (2015), ‘The economics of mitigating climate change: what can we know?’, Technological Forecasting and Social Change, 91 (February), 93–106. Santarius, T. (2012), Green Growth Unravelled: How Rebound Effects Baffle Sustainability Targets When the Economy Keeps Growing, Berlin: Heinrich Böll Foundation. Sorrell, S. (2007), The Rebound Effect: An Assessment of the Evidence for Economy-Wide Energy Savings from Improved Energy Efficiency, London: UK Energy Research Centre. Sorrell, S. (2010), ‘Energy, economic growth and environmental sustainability: five propositions’, Sustainability, 2 (6), 1784–809. Steffen, W., K. Richardson, J. Rockström, S.E. Cornell, I. Fetzer, E.M. Bennett et al. (2015) ‘Planetary boundaries: guiding human development on a changing planet’, Science, 347 (6223), 1259855. Stern, N. (2006), Stern Review: The Economics of Climate Change, London: HM Treasury. Stern, N. (2013), ‘The structure of economic modeling of the potential impacts of climate change: grafting gross underestimation of risk onto already narrow science models’, Journal of Economic Literature, 51 (3), 838–59. Tavoni, M. and R. Socolow (2013), ‘Modeling meets science and technology: an introduction to a special issue on negative emissions’, Climatic Change, 118 (1), 1–14. Tavoni, M. and R.S.J. Tol (2010), ‘Counting only the hits? The risk of underestimating the costs of stringent climate policy’, Climatic Change, 100 (3–4), 769–78. Turner, A. (2008), ‘Dethroning growth’, in A. Simms and J. Smith (eds), Do Good Lives Have to Cost the Earth? London: Constable, pp. 91–7. United Nations Framework Convention on Climate Change Secretariat (UNFCCC) (2014),

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 158

01/06/2017 16:51

Climate change, growth, and sustainability  ­159 National Greenhouse Gas Inventory Data for the Period 1990–2012, Bonn: United Nations Framework Convention on Climate Change Secretariat. Van den Bergh, J.C.J.M. (2011), ‘Energy conservation more effective with rebound policy’, Environmental and Resource Economics, 48 (1), 43–58. Victor, P. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Waisman, H., C. Guivarch, F. Grazi and J.C. Hourcade (2012), ‘The Imaclim-R model: infrastructures, technical inertia and the costs of low carbon futures under imperfect foresight’, Climatic Change, 114 (1), 101–20. Williams, J. (2014), ‘Better growth, better climate – but not better enough’, Make Wealth History, 22 September, accessed 30 April 2015 at makewealthhistory.org/2014/09/22/ better-growth-better-climate-but-not-better-enough/.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 159

01/06/2017 16:51

8  Climate change, happiness and income from a degrowth perspective Filka Sekulova, Giorgos Kallis and François Schneider

I don’t understand why when we destroy something created by man we call it vandalism, but when we destroy something created by nature we call it progress. (Ed Begley Jr)

1 INTRODUCTION We can hardly find a domain of life not ridden by the growth imperative. An explicit requirement for ever-increasing and faster activity underpins all productive spheres, from the volume and speed of manufacturing, to consumer sales or the life of products. The logic of growth has been embedded in spheres of life which traditionally did not have much to do with productivity or efficiency, such as public health, care, education or the arts (Jackson 2009). Gross domestic product (GDP) growth is a common denominator for judging the success of public policies and the performance of governments. The idea of growth, as used throughout this chapter, goes beyond a mere representation of an increase of GDP. Growth takes place in terms of monetary flows, financial assets and transactions, capital accumulation; in terms of aggregate material throughput, infrastructure, desires, efficiency and productivity (Schneider 2010). Gross domestic product growth is just the skin of a broader socio-economic process of expansion, and of increasing control of humans over nature and one another. Growth is a culture that can be seen, touched and felt. It is reflected in modern iconic architecture (Kaika 2010), in the taste of industrially produced food, in the speed at which students must graduate university, in the closures needed for keeping privileges between and within countries. Growth is armed by (techno)-science and technology and fostered by labor markets and cheaply acquired natural resources, often based on histories of wars and colonization. This socio-cultural dimension of growth for too long was left without criticism. This is perhaps the reason that failures of growth were (and are still) expected to be cured with more growth. Be it in borrowing, natural 160 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 160

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­161 resource extraction or new infrastructure, growth has been the major tool to fight inequality and unemployment. It is equally promoted by those who call for austerity as well as those who advocate Keynesianism. The final result is, however, the same. Problems are shifted in space and time, while social conflicts and ecological crises deepen. Already in the seventies, André Gorz argued that the issue is not refraining from consuming more and more (that is, a ‘steady state’), but consuming less and less, because even zero growth which keeps current consumption levels fixed causes a fast pace of exhaustion of resources (Gorz 1980). This is the ‘stage’ on which the degrowth slogan acts. It was explicitly used as a slogan for the first time by activists in France and Southern Europe calling for downscaling of material throughput. One of its primary aims has been to expose and challenge the imperative of growth as a commonly accepted social objective. Ever since, degrowth has evolved into a research field and a frame embracing a wide vocabulary of meanings and significations (Demaria et al. 2013; D’Alisa et al. 2014). This chapter brings these further by applying the degrowth lens to climate change, its impacts and policy responses. It does so by first introducing the tapestry of degrowth. Consecutively we look at the implications of extreme climate events using empirical data on happiness from floods in Bulgaria, relating findings to the limits of the economic jargon, frequently addressed in the degrowth literature (section 3.1). Next we review and critically discuss some policy responses to climate change (section 3.2), drawing upon the idea of income decrease as a climate policy, using data from the economic crisis in Spain from 2011 (section 3.3). The key insights are then brought together in a proposal for embarking on a degrowth trajectory as a socially equitable way to address global warming (section 4). Placing the term in the context of this book, degrowth should be understood as a strategy for sustainability since economic growth is ecologically, socially and even economically unsustainable. However, the degrowth debates started precisely as a response to the dominant sustainability, or ‘sustainable development’ discourse. The idea of a virtuous, win-win triangle where the environment is protected, equity promoted, and growth continued, is utterly rejected by degrowth theory and research. The starting premise of degrowth is that growth-based development is unsustainable, and the question is how to make the necessary degrowth socially sustainable.

2  DEGROWTH: CONTEXTUALIZING THE TERM Degrowth, unlike what the term may suggest to the uninitiated, is not a technical economic term, meaning the opposite of growth, or setting

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 161

01/06/2017 16:51

162  Handbook on growth and sustainability prices right so that resource throughput declines. If in a ‘post-degrowth’ scenario, we go through the exercise of quantifying the changes in the obsolete GDP indicator, these would be negative. Yet, targeting and understanding degrowth at the GDP metrics only is clearly a misreading of the very nature of the term. While degrowth denounces GDP growth, its focus lies on changing the context and the units of measurement. Societies embarking on a degrowth track would need new metrics, more nuanced and diversified. This does not mean that the thorny goal of consumption reduction in the Global North is not there. It lies at its heart. It is however driven by principles of political organization in the spirit of caring for the commons, voluntary simplicity, and conviviality (rather than a top-down/ managed shrinking of GDP). Establishing and remaking the institutions that will allow societies to manage without growth (in a wider than GDP sense) is the core of pursuit of degrowth. Degrowth is the synthesis and new mental and political space that opens up when growth is confronted (Kallis and March 2015). It does not only mean just ‘less’ (D’Alisa et al. 2014), but a social metamorphosis (Morin 2007). It shifts attention from expansion to redistribution and equity in societies. This implies not only a reduction of society’s metabolism but a production of a new metabolism with different functions and modes of organization. Here the social limits to growth are crucial (Hirsch 1976). In a world of ‘Ferraris for all’, a Ferrari would no longer be a ‘Ferrari’, but a boring motor vehicle, desired by no one. Even if the biophysical resources were not a constraint, economic growth would never satisfy everyone’s strive for status. Positional goods are a function of growth and constantly change along with it (Kallis 2014). Degrowth confronts productivism both culturally and economically pointing out the shortsighted, normative and simplistic representation of humans as self-interested utility maximizers. More than anything, it punches at the theoretical heart of the models of economic representation, where utility is reduced to consumption, markets are perceived as the single best way to allocate resources, and efficiency (in production) is a goal in itself. Yet, a large volume of literature, not explicitly concerned with degrowth, demonstrates that human rationality is bounded and markets tend to crowd out friendship, gift and altruism (Meier 2007). Alternative modes of circulation, through which goods and services are reciprocally exchanged at the level of community or between communities, without markets, prices and the calculative logic of profit have been existing and are still present in some less visible parts of society (Mauss 1954). Unlike a market economy, participation in a gift economy develops a pride for, if not – a joy in giving, even when it implies entering into a chain of obligatory returns or collective dependence.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 162

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­163 Again, degrowth is a tapestry woven into a frame of multiple complementary threads, or ideas, which jointly converge into something larger than their sum. Conviviality lies at its heart. Based on the idea of friendly togetherness, it implies cherishing each other’s presence within an event, activity, work or place. Illich (1978) defines it as the ‘individual freedom realized in personal interdependence as an intrinsic ethical value’. Conviviality is neither efficient, nor time-saving. Technology-wise conviviality implies the use of tools which are easy to handle and repair, which are reliable, durable, open-access, multipurpose, recyclable, socially and environmentally friendly and most importantly entailing a ‘graceful playfulness’ in personal relations (Illich 1973). Democracy is another central concept in the degrowth tapestry. According to Illich (1978) equity and energy grow concurrently only up to a threshold (in per capita wattage, for example). Beyond this ­threshold, energy and (authoritarian) power increase at the expense of equity. The more centralized an energy system is, the more it needs experts and bureaucrats for its management; these would then appropriate an increasing portion of society’s surplus. Increasing energy affluence therefore translates into a less equal distribution of control over this energy and society’s surplus. A real, participatory democracy of true equals can only exist in a society of low and distributed energy use. This is also valid vice versa – participatory democracy creates the conditions for convivial technologies. Degrowth is thus conceived as a deeply democratic process, based on inclusivity and a search for solutions among various actors in the spirit of a society which continuously builds, evolves and revolves its owns institutions (Castoriadis 1987). Importantly, degrowth builds upon a critical reflection and historical load of the term ‘development’ (Escobar 2014). This idea of development places countries on a ladder, whereby the types of societies produced in the West are those on top, which others are bound to imitate (Rostow 1960). The ideology of development can best be visualized by the shifting of titles, where most colonizing countries are named ‘developed’, while colonized countries (or their native populations) – ‘developing’. As Latouche (2009) notes, the most lasting type of colonization has taken place in the minds and ‘imaginaries’. In the words of Harold Welzer (2011), a lifestyle based on ever-increasing levels of material consumption (or development) has been generalized and inserted as a common mental infrastructure. This infrastructure keeps reproducing itself even when its original trigger has been displaced. Based on these notions, degrowth is the gradual, public and participative deconstruction of ‘mental-infrastructure’ – terms like ‘development’ and ‘progress’. This does not however imply replacing them by new paradigms which cannot be questioned.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 163

01/06/2017 16:51

164  Handbook on growth and sustainability Thus degrowth in the North does not have to translate into more growth in the South. Growth leaves its footprint in the landscape of the Global South consisting of sweatshops and textile factories, deforestation and erosion, the open-cast mines, the landfills of electronics, chemicals and ships, or the mono-cultured fields of genetically modified organisms (GMOs) and global commodities. Degrowth is a call for an end to this environmental colonialism. As Martinez-Alier (2012) argues, the degrowth movement in the Global North is the natural ally of the environmental justice movement in the Global South. Indeed, degrowth calls for opening the space for the South to find its own paths to the good life or ‘buen vivir’. This certainly implies a flourishing of health care, of quality education, of access to land and food sovereignty, of democratic governance and participation, of self-sufficiency, and the protection ­ of the rights of humans and nature. While growth, is not a necessary ­condition for all of those, the deconstruction of developmental thinking might be. Pushing environmental frontiers further has led to a surge in environmental conflicts world-wide (Martinez-Alier 2002). Degrowth springs from the notion that environmental conflicts are visibly or invisibly embodied in most objects and spaces. People in the North are rarely keen on ‘toxic tours’, or spending a day at a landfill, at a mining site, nor walking along a highway for hours, and never get personally confronted with the uprooted communities or removed mountain tops that necessarily accompany growth. The distancing between impacts and goods purchased and utilized gave rise to the environmental justice movement. At the same time the information overkill on the environmental and social conflicts taking place worldwide has little impact on the individual lifestyles of those at the end of the commodity chain, until it is felt, gazed and experienced with the eyes, the hands and the skin (Armiero 2008). Degrowth implies living and feeling the ecological conflicts, be it on a neighborhood or international level. It is a call to relocalize our impacts and bring environmental and social conflicts (back) to our backyards, where these can be equitably resolved and democracy becomes possible.

3  CLIMATE CHANGE IMPACTS AND POLICIES The degrowth framework can serve as a theoretical base for analyzing environmental hazards and climate change in particular. As argued earlier, degrowth cannot be narrowed down into a single proposal or indicator. It is a mindset and a proposition that can generate a new set of research questions and political proposals. This is particularly useful when

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 164

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­165 talking about climate change. Our hypothesis is that the well-being1 losses of embarking on a degrowth trajectory (that is, diminished consumption) are smaller than the gains associated with it. In line with the critique on economism outlined above, this hypothesis stands best when counting losses and gains in terms of subjective well-being, rather than monetary metrics (Boyce and Wood 2010). One possible direction by which to examine this hypothesis is by studying the imprints of extreme weather events on well-being, or more ­generally – those aspects of the natural and social fabric that humans cannot forgo. Only when knowing these, can we properly understand and evaluate the consumption sacrifices needed for averting a climate disaster. In that way we can evaluate the assumption of tradability between money and various social, psychological and environmental determinants of wellbeing, commonly used in cost benefit analysis (Barbier and Hanley 2009). Another direction of research involves looking for experiences that help imagining a degrowth trajectory that equitably addresses climate change. For this purpose, episodes of widespread income decrease, such as the recent economic crisis in Southern Europe (and Spain in particular), can be explored. While these involuntary and painful reductions in consumption shall not be confused with degrowth, they offer some general idea on how consumption reduction (and consumption alteration) relate to well-being. 3.1  The Well-being Costs of Climate Change One economic assessment on the cost of climate change, which received substantial public attention in the US is the study of Nordhaus (2007). He calculates that a 3°C increase of global temperatures creates at 2.6 percent loss of world output, while – a 6°C increase – a loss of 10.2 percent. Health impacts of a 2.5°C warming in his (DICE) model are assumed to cost 0.8 percent of world GDP, while overall willingness to pay to avoid human settlements and ecosystem damage is estimated at 1 percent of world GDP. The approach has a number of assumptions, which are unwarranted, particularly the poor treatment of small probability catastrophic losses. Picking upon another, however, utility in DICE is expressed in terms of GDP. We can argue, however, that climate change will affect happiness in a way that cannot be repaired by the type of (monetary) expenditures included in GDP. As Geoffard (2008) puts it, climate change may make future generations poor in utility, even if they are rich in GDPmeasured income. Self-reported well-being can be quantitatively measured, as a response to a standard question asking individuals to rate their subjective ­well-being

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 165

01/06/2017 16:51

166  Handbook on growth and sustainability on a scale from zero to ten.2 We know that over time rates of happiness and growth neither rise, nor fall together, although at a given point in time richer nations and people might report higher life satisfaction. This trend, also known as the Easterlin paradox, has been observed for both Southern and Northern countries over the past 40 decades (Easterlin 2003). While a debate on the relation between income and happiness is still raging (Sacks et al. 2012), the evidence on the lack of a straightforward relation between the two is overwhelming (Easterlin 2013). In equation terms, if income and happiness rise and fall together only up to a certain income threshold, substitution between income (taken as a proxy of consumption) and the non-pecuniary determinants of happiness, such as health, social relations, free time and a stable climate would be limited. Indeed, a number of empirical studies point to the importance of a stable climate (that is, low frequency of natural disasters and a lack of floods, droughts and heat waves) for happiness (Carroll et al. 2009; Luechinger and Raschky 2009; Ferreira and Moro 2010). In economic terms, if W(y, z) is a well-being function of y (income), z a vector of all other observable and non-observable variables that determine well-being, and y* denotes the (income) level beyond which increases in income result in zero gains in happiness, which differs across countries, then the Easterlin paradox means that: ● for

y ≤ y*, a marginal increase in y could lead to an increase in W while, ● for y > y*, a marginal increase y would produce zero changes in W over time. Thus, for y > y* and W constant, an increase in income will not compensate for any negative changes in the non-pecuniary elements of vector z (such as extreme climatic events). The income–happiness disassociation challenges the standard assumption that trading-off an increase of income against non-material well-being determinants, such as health, stable climate, and mass migration, and conflicts over increasingly scarce resources such as water and land is possible, or straightforward. Most climate economic models are designed with the assumption that future generations will be in possession of sufficient income which will more than offset the negative impacts of global warming. The Fifth Intergovernmental Panel on Climate Change (IPCC) Assessment report for Working Group 3, for example, takes the rate of economic growth as exogenous, independent of the climate mitigation efforts (IPCC 2014). While estimating material losses in monetary terms might make sense, the disassociation between happiness and the increases of income over time

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 166

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­167 suggests that an assumed trade-off between the monetary domain and various psychological, social and environmental factors is a big methodological error. Alternatively, evaluating climate change through the lens of subjective well-being allows for a direct assessment of the intangible but key aspects of life (emotional, psychological, and social) which are virtually meaningless when represented in monetary terms or kilograms, for example. This does not mean that subjective well-being should be the single unit of measuring (climate change) impacts, either. To perform a mini-test of this hypothesis we can take an episode of flooding as a proxy for extreme climate change and study how it affected subjective well-being. A dataset fit for this purpose is available for Bulgaria, collected in 2011 among several villages and towns, some of which heavily affected by sudden floods (Sekulova and van den Bergh 2016). The dataset, consisting of 600 observations, is representative for the age and gender structure of the local municipalities where the survey was conducted. An ordinary least squares (OLS) regression is carried out, with life satisfaction as a dependent variable, explained by a list of standard demographic predictors and flood experiences of various intensities (Table 8.1). Findings with respect to the role of poor health, aging, (good) education, unemployment, income level and family status for life satisfaction comply with what is commonly found in happiness studies. Results with respect to the flood-related indicators, however, are notable. Experiencing a flood and living with the perception that such an event might reoccur (worry about flood) is associated with a considerable decrease in the subjective well-being of all income and age groups. Its effect is similar to the one of having poor health, for example. The impact of floods on wellbeing manifests itself more strongly for floods of higher intensity, visible by the signs of the severe damage (having an entire house destroyed) and heavy damages (suffering harms on the house interior) indicators. The negative role of floods is exceptionally large if psychological damages are reported. Most importantly perhaps, the effect of floods on life satisfaction does not completely disappear with time. Seven years after the disaster has taken place, the happiness of the people who experienced floods remains lower than the rest. As much as these results can be extrapolated to the context of climate change, findings imply that extreme weather events matter for well-being. Pushing this argument a bit further, the damage caused by surpassing biophysical thresholds can be considered irreversible not only bio-physically, but also in terms of human well-being. The Bulgarian floods example is just one illustration of the income–happiness disassociation explained previously. Yet many more can be found. The discomforts of living in a state of climatic instability cannot be simply offset by material growth. On the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 167

01/06/2017 16:51

168  Handbook on growth and sustainability Table 8.1  Changes in life satisfaction resulting from experiencing floods in Bulgaria (2011) Life satisfaction Age Aged above 65 Female Education Health problems Satisfaction with family life Unemployed Recent entry in unemployment Log income 2011 Flood Worry about flood Severe flood damage Heavy flood damage Medium flood damage Trust in others Living in a village _cons Adj R-squared

OLS 1 coef.

OLS 2 coef.

−0.03*** 0.93*** −0.17 0.23** −0.56*** 0.13*** −0.47** −0.58* 0.30** −0.86*** −0.58***

−0.04*** 0.90*** −0.2 0.22** −0.51*** 0.12*** −0.54** −0.56* 0.27**

0.49*** −0.09 4.54 0.28

−0.54*** −1.53*** −0.93*** −0.08 0.44*** −0.15 4.76 0.3

Notes: 1.  Number of observations 5600. 2.  * is significant at 10 percent level, ** at 5 percent, *** at 1 percent.

contrary, only dropping the growth fetish (now) can stabilize emissions and prevent extreme events from menacing livelihoods. 3.2  Policy Responses to Climate Change Carbon pricing seems to be the most popular mainstream policy proposal for dealing with greenhouse gas reduction. Owing to the amounts of fossil fuels directly or indirectly embedded in most goods and services, such a policy would affect the prices of most consumer goods. While a measure that penalizes carbon-intensive consumption is very much welcome, carbon pricing would lead to unequal decreases in purchasing power, penalizing disproportionately the poor if implemented without compensatory measures. It will, furthermore, generate substantial tax revenues, which need reinvestment or refunding (such as the carbon tax in British Columbia). Moreover, unless aggregate consumption goes

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 168

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­169 down, substitution towards alternative low-carbon goods shifts environmental burdens elsewhere (nuclear or photovoltaic energy production). That is, unless the total purchasing capacity decreases, rebound and substitution effects would offset any gains in reducing the consumption of particular energy-intensive goods (Schneider 2008). Unless this is designed in a way that a greater share of the burden is taken by the rich, then carbon pricing will increase inequalities and face popular opposition. A degrowth trajectory would involve a substantial challenge: a reduction in the average purchasing capacity and consumption (in energy/material terms) of a country. One hypothesis put forward in the degrowth literature is that such a reduction will be more easily acceptable, and in line with justice, if it comes together with a redistribution and a more equitable access to goods and services, i.e. a reduction of the positional inequalities that otherwise breed life dissatisfaction (Sekulova 2014). Another approach to climate policy is to treat regular income increases as negative environmental externalities (through the increased consumption they enable). Basic economic statistics for any country would demonstrate that when disposable income rises, consumption increases. Inversely, reduction in overall income directly translates in reductions in the consumption (of energy-intensive products and services such as electricity, secondary housing, electronic appliances, animal products and long-distance travel). The social or psychological costs, however, that accompany an overall consumption decrease, or more interestingly, the conditions under which a reduction in consumption might (or might not) have a negative impact on wellbeing, are far from straightforward, or wellresearched in the literature. Much has been written on income increase and happiness and little on income decrease and happiness. The explanation for the Easterlin paradox is worth mentioning here. First is habituation. In economic terms, lagged income has a negative effect on current happiness. The happiness boost produced by an income increase quickly wears off or drops, creating the need for increasing working efforts/earnings to regain the short moment of pleasure. The second reason is social comparison. Income and positional goods lift life satisfaction up, until the point that a person’s reference group catches up. The importance attached to the material wealth of relevant others depresses the positive effect of income increase on happiness. Carlsson et al. (2007), for example, estimate that between 50 and 75 percent of durable goods and real-estate consumption is done for status reasons and between 25 and 50 percent of income is earned for positional purposes. The happiness and respectively – social status gained by positional consumption can then only be maintained by continuous

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 169

01/06/2017 16:51

170  Handbook on growth and sustainability increases in income, or by keeping the circle of their owners small enough (exclusion). Layard (2005) defines the search for status through conspicuous consumption underpinned by comparison and rivalry as a negative externality for happiness. He proposes an income tax that corrects for this externality, reducing working effort to a level where the ‘fruitless and self-defeating’ incentive to raise your relative income is fully ‘offset’ and well-being is enhanced. While worth a discussion in the context of degrowth, the linear tax, proposed by Layard would be less equitable than a progressive income tax. Frank (2000) instead proposes removing taxes from savings, and taxing only the consumed part of the income. A concern here is that the poor would be affected more as they consume a much greater part of their income than the rich. Such a measure could furthermore concentrate ownership in the hands of ‘savers’. Whether habituation and social comparison externalities can be fully ‘offset’ through top-down policy instruments remains uncertain (Welzer 2011). Similarly, it is not evident that taxes would penalize conspicuous and rival consumption. Taxation will increase the cost of goods whose attractiveness is proportional to their cost. Taxation may make a Ferrari more expensive (and hence lead to fewer Ferraris sold than otherwise would be the case) but, in doing so, it will also increase the ‘positional value’ and the status signal of having a Ferrari. A problem with an economistic approach to the problem of positional consumption and climate change in general, is that it takes it as a ‘natural’ human given, and then searches for top-down ‘corrections’. A degrowth framework instead welcomes a rethinking of social comparison, distinguishing it from social recognition and social power. The need for social ­recognition may be entrenched in human beings, but the form it takes in terms of comparison of material possessions is very particular, linked to the norms of the current society. In principle, social prestige can be obtained in multiple ways. It can draw on developing personal skills, qualities and capabilities, which are socially appreciated (for example, making music, drawing, dancing, story-telling, writing, group facilitation, social mediation, healing and educating). Such a type of social recognition is expected to last longer since knowledge, skills and abilities do not tend to wear off as fast as new Ferraris. This said, even ‘less-material’ forms of social recognition can become problematic in so far as they translate into permanently uneven distribution of power within communities. Here we have a lot to learn from non-Western ‘egalitarian societies’ and the institutions they developed to diffuse power, and make sure that no individual, even those with the most scarce skills, or the skills most ­necessary and appreciated for the community, accumulate too much

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 170

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­171 power (Graeber 2004). These include norms of r­eprimanding those most successful, or institutions that alternate positions of power, so that ­recognition is temporary and never becomes a source of entrenched power. 3.3 One Episode of Income Decrease and Its Relevance for Climate Change Wide and well-structured empirical data on voluntary income reduction is virtually non-existent. One context to draw some evidence from is the widespread income loss resulting from the economic crises in Spain starting in 2008–09. Again, let us note, for the sake of avoiding any confusion, that we do not take this as an example of degrowth, but as a learning experience which might bring some relevant insights. In the words of Latouche (2009) there is nothing worse than a growth society that does not grow. Based on a sample of 850 individuals from all districts and age groups from Barcelona, we found that despite the crisis, income decrease dating from one to five years ago had no effect on life satisfaction (Sekulova and van den Bergh 2013). The relation between recent income loss and happiness was even positive. Notably, here we refer to income decreases, which do not push individuals below the threshold of covering their bare necessities or into unemployment. Various reasons for this finding can be put forward. The first reason was discussed earlier: the way material aspirations catch up with the income level (McBride 2007) and we habituate to higher standards of living, we habituate to lower levels of consumption. While individuals might not reduce their material desires as rapidly as they increase them (Diener and Biswas-Diener 2002), habituation might dissolve the negative impact of income decrease on happiness. Evidence on habituation to income decrease is, however, mixed in the literature. Boyce et al. (2013) find that income losses matter more than gains for well-being (known also as the prospect theory), though only for individuals ‘focusing on achievement’. The authors find that individuals with ‘openness-toexperience’ (defined as appreciation for arts, adventure, imagination, and variety of experiences) tend to maintain their life satisfaction unchanged even when experiencing lower levels of income. Ferrer-i-Carbonell and van Praag (2008), on the other hand, demonstrate that happiness adapts fully to income decreases. A second plausible explanation for the non-negative impact of income loss on happiness in Barcelona relates to social comparison. If everyone receives an equal percentage income raise, 79 percent of the associated

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 171

01/06/2017 16:51

172  Handbook on growth and sustainability increase in life satisfaction vanishes due to social comparison (Van Praag and Ferrer-i-Carbonell 2004). The decrease in life satisfaction following a widespread income decrease could follow a comparable track. Clark and Oswald (1994) and Eggers et al. (2007) find that reference standards go down when individuals observe their peers suffering from similar economic hardships. Likewise, in the context of Barcelona, reference standards of consumption might have (temporarily) fallen. A third and perhaps most probable reason is that there is a clear asymmetry between the way adaptation and social comparison affect happiness in the pecuniary and non-pecuniary domains. While we adapt to income changes and material losses when these are not extreme, adaptation to improvements in the non-pecuniary domains is incomplete (Easterlin 2003). That is, happiness increases lastingly (or does not drop) after improvements in the non-material conditions of human life such as health, the state of the environment, quality of free time, social interactions and equity. The crucial question therefore becomes whether a crisis affects only personal incomes and consumption, or whether it also affects public goods and general conditions of life. There are two plausible reasons why subjective well-being may have been affected less in Barcelona compared with other places, which have experienced economic crisis. First, unlike places such as Greece where there was a dramatic reduction in public expenditure, unemployment benefits in Spain provided a minimum income cushion for those left without work. This despite dramatic cuts in public services, such as health or education, which caused a wave of warranted public protests. It might be the case that a basic provision of public goods was nevertheless maintained in Barcelona, and served to decouple income decrease from well-being. The hypothesis here is that the effect of a crisis on well-being could be mediated by the provision of public goods; when this is already low, the result is much more likely to be negative. Second, in Barcelona, there are extended alternative networks of providing and satisfying basic needs (from alternative food networks and consumer cooperatives, to urban gardens and parents cooperatives), offering a wider range of opportunities for lifestyle adaptation. It is difficult to calculate what percentage of the respondents may have benefited from these networks, but as Castells et al. (2012) quantify with a general survey of the population of Barcelona, at least one in every four citizens of the city have experience with some ‘alternative’ economic practice. We also know from other studies that people who volunteer report better health and higher levels of well-being than those who do not (Borgonovi 2008). It is possible that in a city such as Barcelona, having a vibrant alternative economy and social organizing culture, the crisis led to more voluntary work. Recent studies find that work which makes a difference in the lives

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 172

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­173 of needful others, or in improving environmental conditions, is associated with a higher level of life-satisfaction even when it offers a lower (or no) pay (Jenkinson et al. 2013). ‘Money jobs’, on the other hand, demand longer working hours, lead to a constant focus on (financial) compensation and create more stress (Sheldon and Krieger 2014). The hypothesis that we suggest here, and which has to be tested with further empirical research, is that a reduction of income does not necessarily bring a reduction of subjective well-being. The effect of an income reduction depends on social comparison, on the one hand, and the provision of public goods and the opportunities for accessing alternative networks of provisioning and work, on the other. The combination of such conditions in turn, that is, a reduction of material consumption and energy purchasing power in a context of redistribution with an enhancement of public goods and alternative networks, is what the degrowth transition is all about (D’Alisa et al. 2014).

4 EMBARKING ON A DEGROWTH TRAJECTORY AS AN APPROACH TO CLIMATE CHANGE Previously we argued that a widespread decline in consumption or comfort levels which does not fall below basic necessities3 might not result in a loss of well-being if compensated by changes in reference consumption standards, income aspirations and intangible factors (such as conviviality, meaningfulness and social engagement). Any deterioration of these (intangible) factors, however, cannot be fully compensated by additional income. Embarking on a degrowth trajectory implies dealing with the core determinants of climate change: capitalist profit-seeking and non-convivial, centralized and growth-oriented technologies directed towards extraction and exploitation. Dealing with vested interests at play is therefore one step. Reviewing perceptions of what consists a good life is another. Here we focus more on the second of these, while not underplaying the importance of the first. Degrowth entails a change in reference consumption standards. This requires a reflection and work on the level of community where the socalled ‘reference norms’ and ‘reference groups’ form. Whereas voluntary simplicity has not been adopted as a social norm so far, its practitioners would often claim to live in abundance because sufficiency is a function of needs (Kallis and March 2015). Nevertheless reference criteria based on simplicity can neither be strictly individually conceived, nor vertically installed. Setting reference consumption criteria lower requires setting

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 173

01/06/2017 16:51

174  Handbook on growth and sustainability conviviality standards higher and a group effort. Income aspirations and consumption norms are influenced by the process of building communities of sharing, which jointly restore, revise and manage the commons (Bollier et al. 2012). In practical terms, this implies the rise of multiple ‘nowtopias’, identified as community-based projects for social and ecological sustainability (Carlson 2008). These share a contagion of work and task sharing and various forms of collaborations, such as workers’ health, food and parents’ cooperatives. Intentional turns away from materialism and consumption however have been rare throughout history and imply a sense of rigid selfconstraint, which might be moralizing and repelling. Many believe that environmental urgencies need to be addressed in a top-down manner only and people ‘nudged’ into ‘proper’ behavioral modes (Thaler and Sunstein 2008). This biopolitical logic viewing populations as systems that have to be governed and ‘improved’ is at the heart of the contemporary conundrum (based on growthism and developmentalism). When individuals (and communities) are locked into non-participative schemes of decision-making, this forecloses the space needed for taking responsibility and creating the initiatives that address grave social and environmental problems. There is growing realization that technological innovation and techno-policies alone are insufficient to address climate change (Geels et al. 2008; Bergman et al. 2010; Burch 2010). Even if benevolently green, top-down actions which have not been elaborated and appropriated by the community to which they apply are bound to generate resistance and conflict (Chappells et al. 2000). Bottom-up social innovations, on the other hand, often supply the transformative elements that mainstream technological innovation cannot (Henderson 1996). Places for sustainability experimentation and alternative practices are already gaining ground as points of transformation towards a different type of culture. The type of localism promoted by degrowth activists, however, need not be closed, but rather be open in relation to the intermediate environment and communities. Open localism cherishes diversity locally without creating frontiers, it reduces distances while promoting multiple and negotiable identities (Schneider and Sekulova 2014). Our conception of ‘simplicity’, like that of ‘nowtopias’, goes beyond merely the realm of individual consumption and envisions integrated production-consumption arrangements, where capitalistic production (production for profit) and wage labour decline and transform. An illustration in this respect is the self-managed worker factories, which, accidentally or not, emerged and flourished in countries seriously affected by the economic crisis, such as Argentina or, now, Greece. The VioMe

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 174

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­175 factory in Greece was a chemical plant whose owners went bankrupt and fled, leaving workers unpaid (Kokkinidis 2014). In response, they took over the factory and started managing it themselves on the basis of direct democracy, while redirecting production from chemical substances to ecological soaps, mostly distributed through alternative networks. The joint ownership and equal participation in decision-making resulted in a mutually agreed cap on individual earnings, and a sharing of the available work time, stimulating workers’ creativity and directing profits to the wider community. The activity of the factory was therefore reduced in terms of manufacturing polluting substances and hierarchical management, but it grew in terms of producing ecologically sustainable products, shared responsibility and decision-making. ‘Nowtopias’, have been emerging and replicating themselves resulting in particular external and internal conditions (Seyfang and Smith 2007). Nonetheless, actions at the level of the ‘nowtopias’ would not automatically create the awaited effects at the macro-level. These projects are generally for and by a minority, but even if they were not, macro-rebounds could counter their positive influences. To avoid macro-rebound effects, a series of adjustments (meaning the simultaneous and widespread decrease of energy/material purchasing power in line with equity) are needed (Schneider 2010). An example is limiting infrastructures that facilitate such energy/material consumption, or reducing car production together with speed limits and road widths. ‘Nowtopias’, or alternative sustainability projects, thus need to be accompanied by meso- and macro-level adjustments to be effective. Degrowth adjustments can be the act of putting several communities together in a way that these reinforce each other (Schneider 2010). For example, the Cooperativa Integral Catalana, comprising 2000 participants and various sectorial cooperatives and regional exchange networks in a structure whose ambition is to provide a system covering most of the basic needs of its members, and issues its own money (Carlson 2012). Another macro-level adjustment, which certainly needs coordination between countries, could be an international agreement to decrease resource extraction and leave fossil fuels, uranium and minerals underground. Macro-adjustments, such as a basic income (Alexander 2014), redistributive taxation, policies for unemployment or the provision of basic public goods, are also necessary. As we explained above, it is only under such conditions of economic security and sustainability of public goods, that a reduction in material consumption can be palatable and acceptable. The political demand for such macro-level adjustments will most probably come from collectives and individuals with alternative life projects who organize to this aim. Clearly, if the myriad of small projects fail to come

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 175

01/06/2017 16:51

176  Handbook on growth and sustainability together and cooperate for a joint political action or an international agreement, they are unlikely to change the status quo.

5 CONCLUSIONS A-growth, a term, coined by Latouche (2009) and discussed by van den Bergh in this handbook (Chapter 9), points to a critique of ‘economism’, monetary valuation and economic modeling, and a necessary rejection of the ideology of economic growth and its pursuit. Degrowth goes one step further, and while encompassing a-growth, it also points to the direction for a desired change: less and differently. The growth fetish will not go away by ignoring it, but by creating the necessary political, social and economic conditions for managing and living well without growth. Degrowth provides a path and a platform for solution-searching through a collective process of experimentation in living without growth. We showed above that certain changes in the psychological, social and environmental domains cannot be offset by reciprocal changes in monetary terms. Ecosystem and global climate services cannot be fully expressed or captured in financial terms. The same holds for degrowth. Degrowth cannot be measured in monetary units, not even in physical terms alone. The actors of degrowth are engaged in setting a diversity of narratives and pathways to achieving social and environmental sustainability, while stressing the importance of self-criticism, self-reflection and debate. Degrowth is not about diversity without interconnectedness, but a diversity of working together bottom-up to build new (diversal or pluriversal) narratives and pathways (Schneider 2015). Degrowth provides a frame and a number of conditions that help deconstruct the outgrown concepts and open spaces for creating different ‘imaginaries’ (Videira et al. 2014). Its multidisciplinary and multi-source approach comes from the realization that no practice or policy could come into being in an environmentally and socially just way without combining various concerns and theoretical perspectives. Our earlier examples illustrated that consumption decrease could bring improvements in the level of subjective well-being and environmental conditions only in a context of changing reference standards, provision of public goods and opportunities for accessing social economy networks. Working on preventing climate change, without considering democracy and justice would lead to exclusion and social conflicts. Defending democracy without considering justice and environmental limits can speed the rate of social and ecological disruptions. Resource efficiency without ­consideration for conviviality and justice can create unfriendly, alienating

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 176

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­177 and rigid spaces and relations. Degrowth is often too quickly placed in the box of the ‘utopisms’. The combination of its philosophical streams, proposals, actors and levels, however, clearly shows that it offers a doable track for humanity. This track is not only logical, but also realistic and fun.

NOTES 1. Many scholars agree that happiness goes beyond the mere pleasure obtained from the satisfaction of basic and artificially created needs. Rather, it is a side effect of a good or meaningful life, or integrating the capability theory of Amartya Sen (2004), an unintended result of living a life one has a reason to value (Frey 2008). This is the framing of well-being here. 2. Reliability of such framing has been extensively tested and seems relatively high (Ehrhardt et al. 2000; Eid and Diner 2003). 3. What basic necessities or minimum consumption standards consist of is certainly highly subjective or speculative and should be a subject of further deliberation.

REFERENCES Alexander, S. (2014), ‘Basic and maximum income’, in D’Alisa et al. (eds), Degrowth, a Vocabulary for a New Era, New York: Routledge, pp. 146–8. Armiero, M. (2008), ‘Seeing like a protester: nature, power, and environmental struggles’, Left History, 13 (1), 59–76. Barbier, E.B. and N. Hanley (2009), Pricing Nature: Cost-Benefit Analysis and Environmental Policy-Making, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Bergman, N., N. Markusson, P. Connor, L. Middlemiss and M. Ricci (2010), ‘Bottom-up, social innovation for addressing climate change’, paper presented at the Sussex Energy Group Conference ‘Energy transitions in an interdependent world: what and where are the future social science research agendas’, 25–26 February, University of Sussex, Brighton. Bollier, D., S. Helfrich and Heinrich Böll Foundation (eds) (2012), The Wealth of the Commons: A World Beyond Market and State, Amherst, MA: Levellers Press. Borgonovi, F. (2008), ‘Doing well by doing good. The relationship between formal volunteering and self-reported health and happiness’, Social Science & Medicine, 66 (11), 2321–34. Boyce, C.J. and A.M. Wood (2010), ‘Money or mental health: the cost of alleviating psychological distress with monetary compensation versus psychological therapy’, Health Economics, Policy and Law, 5 (4), 509–16. Boyce, C.J., A.M. Wood, J. Banks, A.E. Clark and G.D.A. Brown (2013), ‘Money, wellbeing, and loss aversion: does a loss in income have a greater effect on well-being than an equivalent income gain?’, Psychological Science, 24 (12), 2557–62. Burch S. (2010), ‘In pursuit of resilient, low carbon communities: an examination of barriers to action in three Canadian cities’, Energy Policy, 38 (12), 7575–85. Carlson, S. (2012), ‘Degrowth in action: how the Cooperativa Integral Catalana enacts a degrowth vision’, master’s thesis, Lund University, Lund. Carlsson, F., O. Johansson-Stenman and P. Martinsson (2007), ‘Do you enjoy having more than others? Survey evidence of positional goods’, Economica, 74 (296), 586–98. Carroll, N., P. Frijters and M.A. Shields (2009), ‘Quantifying the costs of drought: new evidence from life satisfaction data’, Journal of Population Economics, 22 (2), 445–61.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 177

01/06/2017 16:51

178  Handbook on growth and sustainability Castells, M., J. Conill, A. Cardenas and L. Servon (2012), ‘Beyond the crisis: the emergence of alternative economic practices’, in M. Castells, J. Caraca and G. Cardoso (eds), Aftermath: The Cultures of the Economic Crisis, Oxford: Oxford University Press, pp. 210–50. Castoriadis, C. (1987), The Imaginary Institution of Society, Cambridge, MA: Polity Press. Chappells, H. and E. Shove (2005), ‘Debating the future of comfort: environmental sustainability, energy consumption and the indoor environment’, Building Research and Information, 33 (1), 32–40. Clark, A.E. and A.J. Oswald (1994), ‘Unhappiness and unemployment’, Economic Journal, 104 (424), 648–59. D’Alisa, G., F. Demaria and G. Kallis (2014), Degrowth: A Vocabulary for a New Era, New York: Routledge. Demaria, F., F. Schneider, F. Sekulova and J. Martinez-Alier (2013), ‘What is degrowth? From an activist slogan to a social movement’, Environmental Values, 22 (2), 191–215. Diener, E. and R. Biswas-Diener (2002), ‘Will money increase subjective well-being? A literature review and guide to needed research’, Social Indicators Research, 57 (2), 119–69. Easterlin, R.A. (2003), ‘Building a better theory of well-being’, IZA Discussion Paper No. 742, Institute for the Study of Labor, Bonn. Easterlin, R.A. (2013), ‘Happiness and economic growth: the evidence’, in Global Handbook of Well-Being and Quality of Life, IZA Discussion Paper No. 7187, Institute for the Study of Labor, Bonn. Eggers, A., C.G. Gaddy and C. Graham (2007), ‘Well being and unemployment in Russia in the 1990s: can society’s suffering be individuals’ solace?’, Center on Social and Economic Dynamics Working Paper No. 35, Brookings Institution, Washington, DC. Ehrhardt, J.J., W.E. Saris and R. Veenhoven (2000), ‘Stability of life-satisfaction over time’, Journal of Happiness Studies, 1 (2), 177–205. Eid, M. and D. Diener (2003), ‘Global judgements of subjective well-being: situational variability and long-term stability’, Social Indicators Research, 65 (3), 245–77. Escobar, R. (2014), ‘Development, critiques of ’, in G. D’Alisa, F. Demaria and G. Kallis (eds), Degrowth: A Vocabulary for a New Era, New York: Routledge, pp. 29–32. Ferreira S. and M. Moro (2010), ‘On the use of subjective well-being data for environmental valuation’, Environmental and Resource Economics, 46 (3), 249–73. Ferrer-i-Carbonell, A. and B. van Praag (2008), ‘Do people adapt to changes in income and other circumstances? The discussion is not finished yet’, discussion paper, accessed 3 December 2008 at http://www.iae.csic.es/investigatorsMaterial/a1052160031archivoPdf​ 19627.pdf. Frank, R. (2000), Luxury Fever: Weighing the Cost of Excess, Princeton, NJ: Princeton University Press. Frey, B.S. (2008), Happiness: A Revolution in Economics, Cambridge, MA: MIT Press. Geels, F.W., M.P. Hekkert and S. Jacobsson (2008), ‘The dynamics of sustainable innovation journeys’, Technology Analysis & Strategic Management, 20 (5), 521–36. Geoffard, P. (2008), ‘Arguments for a small SDR’, in G. De Menil, R. Portes, H.-W. Sinn, G.  Bertola, T. Jappelli, P. Martin and J. Van Ours (eds), Economic Policy, Chichester: John Wiley and Sons. Gorz, A. (1980), Ecology as Politics, Montreal: Black Rosa Books. Graeber, D. (2004), Fragments of an Anarchist Anthropology, vol. 5, Chicago, IL: Prickly Paradigm Press. Henderson, H. (1996), ‘Social innovation and citizens’ movements’, in R.A. Slaughter (ed.), New Thinking for a New Millennium, London: Routledge, pp. 213–35. Hirsch, F. (1976), Social Limits to Growth, Boston, MA: Harvard University Press. Illich, I. (1973), Tools for Conviviality, New York: Harper & Row. Illich, I. (1978), Toward a History of Needs, New York: Pantheon. Intergovernmental Panel on Climate Change (IPCC) (2014), ‘Summary for policymakers’, in O.A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen et al. (eds), Climate Change 2014: Mitigation of Climate Change, Contribution of Working Group

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 178

01/06/2017 16:51

Climate change, happiness and income from a degrowth perspective  ­179 III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge and New York: Cambridge University Press. Jackson, T. (2009), Prosperity without Growth, London: Earthscan. Jenkinson, C.E., A.P. Dickens, K. Jones, J. Thompson-Coon, R.S. Taylor, M. Rogers et al. (2013), ‘Is volunteering a public health intervention? A systematic review and metaanalysis of the health and survival of volunteers’, BMC Public Health, 13 (773), 1–10. Kaika, M. (2010), ‘Architecture and crisis: re-inventing the icon, re-imag(in)ing London and re-branding the City’, Transactions of the Institute of British Geographers, 35 (4), 453–74. Kallis, G. (2014), ‘Social limits to growth’, in G. D’Alisa, F. Demaria and G. Kallis (eds), Degrowth: A Vocabulary for a New Era, New York: Routledge, pp. 137–40. Kallis, G. and H. March (2015), ‘Imaginaries of hope: the utopianism of degrowth’, Annals of the American Association of Geographers, 105 (2), 360–68. Kokkinidis, G. (2014), ‘Spaces of possibilities: workers’ self-management in Greece’, Organization, 22 (6), 847–71. Latouche, S. (2009), Farewell to Growth, Malden, MA: Polity Press. Layard, R. (2005), ‘Rethinking public economics: the implication of rivalry and habits’, in L. Bruni and P.L. Porta (eds), Economics and Happiness, Oxford: Oxford University Press, pp. 147–69. Luechinger, S. and P.A. Raschky (2009), ‘Valuing flood disasters using the life satisfaction approach’, Journal of Public Economics, 93 (3–4), 620–33. McBride, M. (2007), ‘Money, happiness, and aspirations: an experimental study’, Department of Economics Working Papers 060721, Irvine, CA: University of California-Irvine. Martinez-Alier, J. (2002), The Environmentalism of the Poor: A Study of Ecological Conflicts and Valuation, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Martinez-Alier, J. (2012), ‘Environmental justice and economic degrowth: an alliance between two movements’, Capitalism Nature Socialism, 23 (1), 51–73. Mauss, M. (1954), The Gift: Forms and Functions of Exchange in Archaic Societies, London: Cohen and West. Meier S. (2007), ‘A survey of economic theories and field evidence on pro-social behavior’, in B. Frey and A. Stutzer (eds), Economics and Psychology: A Promising New CrossDisciplinary Field, Boston, MA: MIT Press, pp. 51–88. Morin, E. (2007), Vers l’abîme?, Paris: L’Herne. Nordhaus, W.D. (2007), A Question of Balance: Economic Models of Climate Change, New Haven, CT: Yale University Press. Rostow, W.W. (1960), ‘The Five stages of growth – a summary’, in W.W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto, Cambridge: Cambridge University Press, pp. 4–16. Sacks, D.W., B. Stevenson and J. Wolfer (2012), ‘The new stylized facts about income and subjective well-being’, IZA Discussion Paper No. 7105, Institute for the Study of Labor, Bonn. Schneider, F. (2008), ‘Macroscopic rebound effects as argument for economic degrowth’, proceedings of First International Conference on Economic De-growth for Ecological Sustainability and Social Equity, 18–19 April, Paris, pp. 29–36. Schneider, F. (2010), ‘Degrowth of production and consumption for social justice, well-being and ecological sustainability’, Conference proceedings, Second Conference on Economic Degrowth for Ecological Sustainability and Social Equity, 26–29 March, Universitat Autonoma de Barcelona, Barcelona. Schneider, F. (2015), ‘Diversel’, in Degrowth Theory, online GROWL book, accessed 28 February 2017 at https://co-munity.net/node/2002491. Schneider, F. and F. Sekulova (2014), ‘Open-localism’, paper presented at the Fourth International Degrowth Conference for Ecological Sustainability and Social Equity, Leipzig, 2–6 September. Sekulova, F. (2014), ‘Happiness’, in G. D’Alisa, F. Demaria and G. Kallis (eds), Degrowth: A Vocabulary for a New Era, New York: Routledge, pp. 113–16. Sekulova, F. and J. van den Bergh (2013), ‘Climate change, income and happiness: an empirical study for Barcelona’, Global Environmental Change, 23 (6), 1467–75.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 179

01/06/2017 16:51

180  Handbook on growth and sustainability Sekulova, F. and J. van den Bergh (2016), ‘Floods and happiness: empirical evidence from Bulgaria’, Ecological Economics, 126 (June), 51–7. Sen, A. (2004), ‘Capability and well-being’, in M. Nussbaum and A. Sen, The Quality of Life, New York: Routledge, pp. 30–53. Seyfang, G. and A. Smith (2007), ‘Grassroots innovations for sustainable development: towards a new research and policy agenda’, Environmental Politics, 16 (4), 584–603. Sheldon, K. and L. Krieger (2014), ‘Service job lawyers are happier than money job lawyers, despite their lower income’, Journal of Positive Psychology, 9 (3), 219–26. Thaler, R. and C.R. Sunstein (2008), Nudge: Improving Decisions about Health, Wealth, and Happiness, New Haven, CT: Yale University Press. Van Praag, B.M.S. and A. Ferrer-i-Carbonell (2004), Happiness Quantified: A Satisfaction Calculus Approach, Oxford: Oxford University Press. Videira, N., F. Schneider, F. Sekulova and G. Kallis (2014), ‘Improving understanding on degrowth pathways: an exploratory study using collaborative causal models’, Futures, 55 (January), 58–77. Welzer, H. (2011), ‘Mental infrastructures: how growth entered the world and our souls’, Heinrich Böll Foundation (ed.), Publication Series on Ecology vol. 14, Berlin: Heinrich-Boll-Stiftung.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 180

01/06/2017 16:51

9 Green agrowth: removing the GDP-growth constraint on human progress Jeroen C.J.M. van den Bergh

1  THE ENDURING GROWTH DEBATE The debate on growth versus the environment has a long history. It is usually summarized as occurring mainly between optimists believing in limitless growth and pessimists seeing environmental and natural resource limits to growth. Although a more subtle classification of viewpoints is possible,1 this opposition best defines the main policies and strategies found: namely, striving for green growth by decoupling income and production from environmental pressure versus an anti-growth approach taking the form of stopping growth (zero growth) for the sake of the environment. Of course, this refers to a disagreement about economic growth, that is, growth in terms of gross domestic product (GDP) or GDP per capita. No serious contributor to the growth debate claims that our social or political aim should be for the economy to grow in physical terms.2 Recently, as another offshoot of the anti-growth approach, a so-called “degrowth” strategy was proposed. It suggests downscaling the economy to meet environmental goals (Schneider et al. 2010). The pro-growth and anti-growth positions represent the two polarized opinions about the growth strategy to be followed by modern society. In this chapter I argue that we should not feel obliged to choose between these two extremes, as there is in fact a third option, which I call the agrowth strategy (first proposed in van den Bergh 2011). It suggests a way out of the impasse that characterizes the growth-versus-environment debate. I define this agrowth strategy, motivate its rationality, and examine its premises, implications, advantages, political feasibility and practical steps.

2 GDP AS AN INFORMATION FAILURE FROM A SOCIAL-WELFARE ANGLE If we talk about economic growth, we effectively focus on changes in GDP, and implicitly or explicitly assume that GDP captures social welfare, and 181 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 181

01/06/2017 16:51

182  Handbook on growth and sustainability thus that GDP growth signals progress. The treatment of GDP information in both science and the public media is often muddled, in the sense that no clear distinction is made between GDP, GDP per capita, and GDP per hour worked (that is, labor productivity) but, whatever specific indicator is used, there is broad agreement that it must increase over time. The majority of journalists and politicians, regardless of their political affiliation, express themselves uncritically about GDP, and do not make a sharp distinction between “(social) welfare” and “GDP (growth)”. Nevertheless, a committed group of economists recognize the shortcomings of the GDP and use it with care: early contributions are Kuznets (1941), Galbraith (1958) and Samuelson (1961); influential criticisms are Mishan (1967), Nordhaus and Tobin (1972), Hueting (1974), Hirsch (1976), Sen (1976), Scitovsky (1976), Daly (1977), Tinbergen and Hueting (1992), and Arrow et al. (1995); and recent contributions are Frank (2004), Kahneman et al. (2004), Victor (2008), Jackson (2009), van den Bergh (2009), and Witt (2013). Note that the previous list includes seven Nobel laureates, which indicates that the criticism of GDP does not just come from marginalized or heterodox corners. Various shortcomings of GDP as a welfare proxy have been identified (Table 9.1). At the theoretical level, we have to recognize that both microeconomic and macroeconomic theories tend to explicitly formulate societal goals in terms of social welfare. In microeconomics, income codetermines (with prices) the budget constraint, rather than being identical to, or a proxy of, utility. In macroeconomics, optimal growth theory is dominated by models that employ notions of (intertemporal) social welfare rather than a GDP (or income) type of criterion. On the other hand, many applied macroeconomics (policy) studies focus on changes in GDP, implicitly assuming it is a good proxy of social welfare. In a famous article, Weitzman (1976) tried to formally demonstrate the latter. Ironically, he merely clarified the very strict and unrealistic conditions under which GDP is a good proxy of social welfare (for details, see appendix A2 in van den Bergh 2009). Empirical research on subjective well-being (happiness) suggests that in most OECD (Organisation for Economic Co-operation and Development) countries the increase in prosperity or happiness stagnated somewhere in the period between 1950 and 1970 or even reversed to negative trend, despite the steady growth in GDP (Layard 2005). This is supported by empirical studies of alternative indicators of social welfare, such as the Index of Sustainable Economic Welfare (ISEW) developed by Daly and Cobb (1989). These indicate that, in most OECD countries, welfare has stagnated even though GDP (per capita) has continued to rise. Furthermore, subjective well-being and psychological research studies

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 182

01/06/2017 16:51

Green agrowth  ­183 Table 9.1  Main shortcomings of GDP as a proxy of social welfare General

Specific

–  GDP does not distinguish clearly between costs and benefits –  It does not correct for changes in (economic and environment) stocks –  It does not account for external (or social 5 private + external) costs –  It is an estimate of the costs rather than benefits of market activities in a country –  Optimal growth theory employs social welfare rather Using GDP than GDP/income type of criteria  (growth) as a –  In microeconomics, income is part of the budget proxy of social constraint, not a proxy of utility welfare (progress) –  If income is not a robust measure of welfare at the is inconsistent individual or micro-level, then aggregation of individual with the general incomes into GDP cannot result in a robust indicator of welfare focus in social welfare microeconomics and macroeconomics –  Modern income growth increases material consumption GDP does not at the cost of basic needs like serenity, clean air, and  capture stylized direct access to nature; the latter are, however, not facts of empirical captured by GDP research on –  Somewhere between 1960 and the present, the increase subjective wellin welfare stagnated or even reversed into a negative being (happiness) trend in most Western countries, despite the steady pace of GDP growth –  Individuals may adapt or get used to changed circumstances, including a higher income; thus wellbeing may temporarily change in response but then return to its baseline level –  GDP per capita emphasizes average income, and GDP does not neglects the income distribution, even though this affects  capture income opportunities for personal development and well-being inequality, –  GDP does not capture that individuals or families with relative income, low incomes benefit relatively more from an income rise, and statusbecause of the diminishing marginal utility of income seeking in –  Welfare is relative or context-dependent, characterized consumption by comparing oneself with others, rivalry via “positional or status goods” –  As GDP omits relative income aspects of welfare, it tends to overestimate social welfare and progress

GDP use does  not satisfy basic principles of good bookkeeping

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 183

01/06/2017 16:51

184  Handbook on growth and sustainability Table 9.1  (continued) General

GDP neglects the  informal economy, its share in the whole economy, and its change

GDP does  not capture environmental externalities, damage to ecosystems, and depletion of renewable and non-renewable natural resources

Specific –  Rises in relative income and welfare come down to a zero-sum game: one individual loses what another one gains; GDP cannot account for this –  In general, GDP just covers activities and transactions that have a market price and neglects informal transactions between people that occur outside formal markets –  Actual GDP growth sometimes reflects a transfer of existing informal activities (unpaid labor) to the formal market; so the benefits were already enjoyed but the market costs were not yet part of GDP –  This holds for both developed and developing countries, and for such informal activities as subsistence agriculture, voluntary work, household work, and child care –  The GDP can, therefore, not serve as a measure to judge the welfare impact of fundamental changes that involve a transition from informal to a formal activities –  The presence of externalities means that market prices do not reflect total social (5 private + external) costs, making them unreliable signals. GDP is, however, calculated using these prices –  If air, water, or a natural area are being polluted, any damage does not enter GDP, but when pollution is being cleaned up this contributes to GDP –  Capital depreciation associated with environmental changes (fish stocks, forests, biodiversity) and depletion of resource supplies (fossil energy, metal ores) is missing from the GDP calculation. As a result, GDP suggests we are richer than we really are

Note:  This table is a summary of the survey in van den Bergh (2009).

have found that individuals quickly adapt or become accustomed to new conditions, including to income increases, and as a result do not see their welfare increase as much as they expected ex ante (Easterlin 1974). Gross domestic product includes only activities and transactions that have a price, but ignores most non-market activities or informal transactions between people. As a result, GDP growth sometimes reflects the transfer of existing informal activities to a formal market. This applies

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 184

01/06/2017 16:51

Green agrowth  ­185 to both poor countries (for example, food production shifting from selfsufficiency to commercial agriculture) and rich countries (for example, child care shifting from the family to commercial organizations in some countries). This means that (many of) the benefits were already enjoyed before the transfer took place, despite the fact that the associated activities were not included in the GDP calculation. This illustrates that GDP information is best interpreted as reflecting the market costs of our activities, not their welfare benefits. An important subcategory of unpriced effects relates to the use of natural resources and environmental services. The negative welfare effects of environmental pollution, terrestrial and marine ecosystem degradation, and depletion of fish stocks or non-renewable natural resources (fossil fuels, ores), all stay outside the GDP calculation. By only measuring direct income, while not accounting for changes in “natural capital”, we count ourselves richer than we actually are. A persistent and widespread criticism is that the GDP per capita indicator focuses on average income and ignores the distribution of income. This is a relevant criticism given that in many countries average income growth in past decades is largely due to the increasing incomes of the rich or extremely rich (Piketty 2014). Moreover, the GDP indicator not only neglects the inequity of this situation, but also the social welfare implications of the marginal utility of income (or money) being higher for poor than for rich people. There is another reason to consider distribution in social welfare assessment, namely because welfare depends on comparisons with others. This manifests itself in rivalry for status through the pursuit of consumption of conspicuous goods. Now, status is absolutely scarce: if someone has much status, then others must lack it. This is what economists call a “zero-sum game”. As a result, growth in average income beyond basic needs, serving especially status needs, is unlikely to contribute to a significant rise in social welfare.3 For those who still find it difficult to accept that GDP is not a good measure of social welfare, consider the following thought experiment (van den Bergh 2009). Extrapolating a rate of 2 percent average annual GDP growth into the long-run future means that after 1000 years the GDP will be (1.02)1000 ≈ 400 million times higher than currently. As an equivalent increase of welfare is clearly impossible, sooner or later a decoupling of GDP and social welfare must occur. But as Victor (2008, p. 125) notes “Americans have been more successful in decoupling GDP from happiness than in decoupling it from materials and energy”, and the same holds for other OECD countries. All the foregoing arguments together, and additional arguments in Table 9.1, imply that the GDP indicator cannot be relied upon to capture

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 185

01/06/2017 16:51

186  Handbook on growth and sustainability Table 9.2 Implicit weights of social welfare components if priority is given to GDP per capita growth Implicit weight of social welfare component Average income

Employment

Health

Equity

Leisure

Natural environment

Very high

Medium to high

Medium

Low

Extremely low

Extremely low

social welfare in general, that is, under all circumstances, in all countries, and in all periods of time. The use of GDP as a progress indicator therefore represents a serious form of “information failure”, which is likely to steer the economy in the wrong direction from a social-welfare angle. If we use GDP per capita growth as the main gauge of economic development and associated policies, we will use an implicit social welfare function with very odd weights. To see this, it should be realized that GDP per capita is perfectly correlated with average income, positively with employment, less clearly correlated (and possibly negatively) with equity, and negatively correlated with most environmental pressure (currently, without strict environmental and climate policies), as well as with leisure time. In view of this, a focus on GDP growth will imply a weight function as shown in Table 9.2. Effectively, the set of weights in Table 9.2 means that income has p ­ riority over the other four components, and employment over all components except income. In other words, we are sacrificing equity, environment/ climate and leisure in favor of employment and especially average income.

3  THE GDP PARADOX Many people with political influence unconsciously see the GDP as a good welfare measure. Politicians, journalists and economists get nervous when the GDP grows less than last month or last year. Information about GDP growth further has a large influence on the economy through choices made by consumers, companies and financial institutions being affected by expectations about, and prediction of, the GDP. This can be regarded as paradoxical (van den Bergh 2009) in view of the widely accepted critique of GDP as a welfare or progress indicator, as summarized in the previous section. One possible response to resolve this paradox is suggesting that the magnitude of the impact of GDP information on the economy is modest to negligible.4 But then, why do national and international statistical

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 186

01/06/2017 16:51

Green agrowth  ­187 organizations spend so much time and money on calculating and predicting the GDP, and how does this view match with banks and financial markets responding so strongly to any information about the GDP? The confidence and behavior (investments, spending) of companies and consumers is also affected by expectations about GDP movements. Politicians panic when GDP growth is low. In this context, we should not underestimate the impact of a high GDP per capita on the international status of a country and its politicians. This is reinforced by international organizations such as the OECD, the World Bank, and the International Monetary Fund (IMF), all of which attach huge importance to GDP growth. It is clear that we should not underestimate the impact of GDP information on the economy. An important factor behind striving for growth is that it is widely thought that GDP growth is a necessary condition for full or maximum employment (for example, defined as full employment – structural ­unemployment). However, empirical evidence for this view is not strong, and indicates that the relationship between GDP and employment is not constant (Saget 2000). Broadly accepted insights about long-run equilibrium employment suggest that it depends more on search time (jobs and employees); structural mismatches between education and work; the difference between gross and net income; and the gap between income and unemployment benefits (Pissarides 2000). Moreover, GDP growth does not necessarily reduce domestic unemployment if it involves considerable outsourcing (moving jobs elsewhere) or creative destruction in the form of the disruption of old economic activities (resulting in unemployment in specific sectors or job types). Finally, as the causality of growth and employment is easily confused (more employment can increase the GDP rather than the reverse), the correlation between them is easily misinterpreted. The relationship is even more complex, because as a result of technical progress continuous improvements in labor productivity occur, which potentially cause structural unemployment. Growth means a scale effect in terms of a higher volume of production, which compensates for the potential unemployment. This is made possible as a higher labor productivity translates into (not necessarily proportional) higher incomes, which in turn allow for more purchasing power that balances the larger production capacity associated with productivity increases. This is, in a nutshell, the fundamental mechanism behind modern economic growth. Jackson and Victor (2011) have called it the productivity trap. Now, by shifting taxes from income to environmental externalities (materials use, CO2 emissions), we will redirect technological change from improving the productivity of labor to that of energy and materials. As

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 187

01/06/2017 16:51

188  Handbook on growth and sustainability a result, it would be easier to realize full employment and environmental goals, which would contribute to improving social welfare in two ways. That is, the seemingly fundamental relationships between growth, employment and productivity can change over time through policies. Finally, many economists worry that a lack of growth will lead to macroeconomic instability. However, when we consider the causes of historical crises, it appears that especially excessive growth – allowed or stimulated by certain institutions (for example, money creation by private banks) – implies a high risk of instability and crisis. So, if we really would attach a high priority to economic stability and aim to minimize the likelihood of financial and economic crises, which undo a lot of the gains of earlier growth, then a logical structural strategy would be to weaken positive feedbacks in the economy rather than strive for the recovery of growth. We will discuss this idea further in section 6.

4  AGROWTH TO SOLVE THE INFORMATION FAILURE AND RESOLVE THE PARADOX The various shortcomings of GDP as a welfare or progress indicator documented in section 2 suggest that we should ignore the GDP (per capita) indicator in public debates and policymaking, and focus instead on more direct indicators of employment, equity, and the environment. Ignoring the GDP indicator means that we will be indifferent (neutral or “agnostic”) about the desirability or undesirability of GDP growth. This is expressed by the term agrowth. This idea was first proposed in van den Bergh (2011). Victor (2008, p. 2) suggests a closely related idea, writing: This is not to say that we should adopt zero growth as an alternative, over arching policy objective. Rather that we should not bother with growth as a policy objective at all or only as a subsidiary to more specific objectives that have a clearer and more substantive relation to well being.

Agrowth reflects indifference in the sense that we realize GDP growth is perhaps good in some periods or for some countries in a certain development stage, but that “growth no matter what” is not a wise aim. Such unconditional growth means an unnecessary and avoidable constraint on our search for human welfare and progress. This constraint will hinder good public decision making on climate, health, labor, and redistribution policies. Being against GDP or against “unconditional GDP growth”, as under the agrowth view, does not mean being against growth per se but being against growth fetishism.5

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 188

01/06/2017 16:51

Green agrowth  ­189 The aim of agrowth, letting go of economic growth as a sufficient and even necessary condition for realizing welfare (and welfare growth), reflects a rational approach to public decision making. It does not mean being against growth or in favor of zero growth. It just eliminates the unnecessary constraint of unconditional GDP growth. The social or public policy goal is progress in terms of social welfare (however measured). We should realize that unconditional GDP growth (growth f­etishism) is a constraint, and in our search for human progress we would arrive at better welfare outcomes without this constraint. Anyone with a basic training in optimization theory – part of the educational baggage of economists – will see that adding a constraint to an optimization problem results in the objective function (in our case: social welfare) reaching a lower, or at best, equal (optimal) value, but never a higher one.6 So adding a constraint that economic growth must always be positive or at least 2 percent cannot contribute to a higher level of social welfare, and in the worst case will result in reducing social welfare. This counterintuitive effect on welfare is, of course, not the intention of economists and politicians who believe that striving for GDP growth is a useful social aim. But it indicates that they have not well understood the welfare consequences of focusing on growth per se. What does an agrowth strategy exactly imply for growth? Following this strategy, we could have periods of high growth followed by periods with low growth, or even a decline, in GDP terms, while maintaining progress in welfare terms. We would in some periods be willing – without even realizing, as we would ignore GDP information – to give up some (potential) GDP growth for a better environment, less unemployment, more income equality, more leisure, better health care, and more public services; namely, if this would work out well in terms of net individual well-being and social welfare. No longer would we give priority to average income over welfare, or assume growth would be necessary or sufficient for progress. In other periods, desirable economic change might well be consistent with growth, but nobody should really care or know, as GDP would be disregarded. Agrowth is the most desirable strategy for realizing progress as it can attain the highest social welfare. An agrowth view will enhance the social-political acceptability of key public policies focusing on solving urgent and socially important problems that are likely to reduce social welfare. This is consistent with the suggestion by Kahneman et al. (2004) to focus the attention of public policy on minimizing unhappiness. Clear examples are avoiding dangerous climate change, minimizing structurally high unemployment, and reducing extreme inequality and poverty (including increasing GDP if it is clearly insufficient to meet basic human needs). Associated policies would be

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 189

01/06/2017 16:51

190  Handbook on growth and sustainability judged on concrete indicator targets for each of these problems. Whether they would work out well in terms of growth would no longer matter. By not observing GDP movements, we would become truly indifferent about the GDP performance, as a good social welfare analyst should be. As a consequence, welfare-enhancing policy is given priority and not GDP growth-enhancing policy. Unlike the unconditional (dogmatic) positive, zero, or negative growth required under growth and anti-growth strategies, agrowth allows for selective decline and selective growth of different sectors over time that is needed to enhance welfare, regardless of whether the sum of their changes amounts to growth or not.

5 A GRAPHICAL ILLUSTRATION OF AGROWTH: REMOVING UNNECESSARY CONSTRAINTS ON OUR SEARCH FOR PROGRESS Figure 9.1 conceptualizes our search for human progress as choosing combinations of GDP and other dimensions of social welfare O. Preoccupation with growth implies an ex ante constraint on our search for progress, visualized in the figure as curve g, associated with a particular desired minimum GDP growth rate annually (for example, 2 percent). This constraint limits search for desirable developments and policies to area C; growth in area B is considered too low (that is, lower than 2 percent). Now desirable social choices on environmental protection, health, leisure, h

O

B

g

A

OS

S

C

D

GDPs

GDP

Figure 9.1  An agrowth strategy searches for human progress

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 190

01/06/2017 16:51

Green agrowth  ­191 labor, equity, and so on (captured by O) are not feasible if they fall outside the area C. We may then end up with a relatively high GDP at the cost of such other welfare components. Raising the desired minimum growth rate will make g rotate around point S to the right, shrinking the search space C. A similar story can be told for anti-growth strategies. A “degrowth” strategy implies a constraint h that demarcates the search space A. This may likewise result in an unbalanced outcome, namely with a too low GDP. A zero-growth strategy would search the smallest space, namely the line h, and thus be extremely restrictive. An agrowth position removes any ex ante GDP-growth or anti-growth constraints on human progress. It thus allows for unconstrained search of the space A + B + C, as opposed to the smaller areas C under a progrowth strategy and A under an anti-growth strategy. Such an agrowth strategy does not exclude beforehand any option, whether it is negative growth (area A), zero-growth (line h), low growth (area B) or high growth (area C). It thus offers more freedom and opportunities to realize a good balance between GDP and other factors O contributing to social welfare.

6  AGROWTH, POSITIVE MACROECONOMIC FEEDBACK AND CRISES Here another important advantage of an agrowth strategy is discussed. It is argued that an agrowth strategy increases economic stability and reduces the likelihood of economic crises. The reason is that it weakens positive feedback in the economy that overheats it and contributes to damaging cycles and crises. As argued in Antal and van den Bergh (2013), the current economic system is self-amplifying because a majority of the connections between important economic system variables take the form of positive feedbacks, while a minority of such connections takes the form of negative feedbacks. Here positive feedback means that (part of) an output of a system enters the same system as an input, which then reinforces the actual trend in the output. This is irrespective of whether the trend is a decline or a growth pattern. That is, positive feedback can generate negative and positive spirals, leading directly to, respectively, a crisis or an overheating of the economy (and then possibly indirectly to a crisis). As argued in section 3, GDP information greatly influences decisions by consumers, producers and governments. Expectation about, and predictions of, GDP growth affect consumer expenditures and savings, and firm expenditures and investments in capital and innovation (R&D). The

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 191

01/06/2017 16:51

192  Handbook on growth and sustainability effects of GDP information can be characterized as being “pro-cyclical”, meaning that, if it is widely believed that such information has a significant and positive influence on reality, then, through pessimistic (or optimistic) reactions to negative (positive) growth expectations, these beliefs become self-fulfilling. Expectations, predictions, and realizations of GDP thus set in motion positive feedback that is the cause of economic instability (see also Jackson 2009, ch. 4). Positive feedback assures that, as long as we are on the upward trend, there is optimism about GDP growth, investments and consumer behavior to assure rising activity and jobs, and, hence, average income increases. If, however, because of some exogenous or external factor, or a synergy of factors, growth temporarily falters, then expectations are not met and pessimism about GDP growth starts to thrive. Such a pattern may also start with growth initially being too fast because of positive feedback, causing the economy to “overheat”, leading to bubbles in the housing and stock markets, high inflation, and subsequent economic instability. In both cases, the economy enters into a spiral of negative expectations, and decreasing investments and consumption. If the resulting stagnation is strong or continues for a while, a recession may result. The two polar responses to this problem are Keynesian and new classical or monetarist. The first proposes to stimulate aggregate demand in recessions by increasing public spending or lowering taxes, even at the cost of increasing the public debt. However, the effectiveness of this strategy is uncertain, as individuals and firms may show precautionary behavior in the form of saving on outlays so as to be more resilient in future times, resulting in a second-order effect of decreasing aggregate demand. The alternative response prefers austerity and debt reduction to restore confidence and ultimately re-establish pre-crisis investment and consumption trends. The effectiveness (and welfare implications) of this strategy are also uncertain, given that it starts off with destroying much business activity and employment, and increasing income inequality, both of which tend to negatively affect expectations and welfare. The two strategies share the goal of restoring the upward economic spiral driven by positive feedback. Instead, the agrowth strategy is able to deal more fundamentally with the problem of economic instability and cycles, by tackling one root factor;7 namely, the role of the GDP indicator in positive feedback mechanisms. By ignoring or removing the GDP, several positive feedbacks in the economy will be weakened or removed, resulting in a more stable economy. As a result, under an agrowth strategy the bandwidth of ­economic growth rates will be smaller. That is, the best way to reach a stable rate of economic growth is to pay no attention to it. An agrowth

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 192

01/06/2017 16:51

Green agrowth  ­193 strategy will thus discourage extremely high growth rates while also reducing the likelihood of entering a trajectory of stagnation and recession. In environmental terms all traditional macroeconomic strategies – whether Keynesian, new classical or monetarist – come down to hoping for green growth. Nevertheless, they differ in particular environmental features. The Keynesian public investment approach may increase environmental pressure if it is focused on non-environmental issues (for example, road infrastructure), while reducing it if it involves a “green stimulus package”. Keynesian reduction of taxes will stimulate private consumption, with environmental impacts depending on whether the tax relief is adapted to better tackle environmentally damaging consumption. In addition, the austerity strategy will work out well environmentally if it reduces funding for traditional investments, but negatively if it cuts public environmental research or subsidy support of private environmental investments. Antal and van den Bergh (2013) discuss a longer list of options to weaken positive and strengthen negative feedbacks so as to avoid crises and reduce the instability of the economy. Changing indicators is one option, in particular replacing the GDP by another indicator, such as the Human Development Index, an income inequality measure (Gini index or median income), or even an ISEW-type of proxy of social welfare (see section 10 on this). Finally, the interaction of financial and housing markets (including mortgage funding) with construction activities plays an important role in both fostering growth and destabilizing the economy. In a situation of boom, house prices rise rapidly, generating windfall profits for house sellers. This is all made possible as buyers can relatively easily obtain mortgage loans based on overvalued house prices. The importance of this phenomenon for economic instability is clearly illustrated by the 2008 financial crisis, as it was (co-)triggered by speculation surrounding subprime mortgages in the USA. Stabilizing the economy will require controlling banks, notably in terms of mortgage rules and loan-based money creation (through higher required lending/reserve ratios). This, in turn, would reduce price fluctuations in the housing markets and likely lower the average rate of growth. The previous arguments indicate that lower growth rates may follow from weakening positive feedback and having a more stable economy. This means an agrowth strategy makes sense – by ignoring growth effects it will make acceptance of such stabilizing strategies easier.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 193

01/06/2017 16:51

194  Handbook on growth and sustainability

7 CLIMATE POLICY OPPORTUNITIES UNDER AN AGROWTH STRATEGY Climate change is arguably the most challenging environmental problem we face. To formulate it differently, its solution possibly presents the severest limitation to growth. Antal and van den Bergh (2016) calculate that, if per capita GDP increases by 1.5 percent annually, to realize the (IPCC) 2°C goal, emissions per unit of GDP (that is, carbon intensity) have to decrease by 81 percent by 2050, which comes down to a 4.4 percent average annual improvement. Under zero per capita economic growth, still an impressive 67 percent intensity reduction – implying 2.9 percent on average per year – will be required. Note that these reduction rates should be net of all energy rebound (Sorrell 2007) and carbon leakage effects (Felder and Rutherford 1993), which implies a serious role for carbon pricing in any effective climate policy package (whether achieved through carbon taxes or emissions trading). In both long-term and recent historical perspectives, these goals must be judged as unprecedented and extremely ambitious. They will require very strong policies, notably involving carbon pricing, in order to induce behavior, production and technology (investments) away from high to low carbon options. If a carbon price is realized by implementing a carbon tax, this would generate so much tax revenue that a shift of taxes from labor to carbon would be almost inevitable (that is, the carbon tax revenues would be used to reduce the labor taxes). It would in turn reduce labor productivity growth and thus income growth, while the impact on unemployment would be more moderate. In line with this, we would need to revise, notably lower, our expectations about income growth (for more discussion, see van den Bergh 2010). A climate strategy will further involve a large-scale transition from fossil fuels to renewable energy, which means a shift to resources with a lower energy concentration and productivity. This will very likely translate into a reduced productivity of the economy as a whole. These are two important reasons to believe that under serious climate policy the rate of economic growth will fall. By ignoring growth effects, an agrowth strategy will facilitate the acceptance of such, urgently needed, climate policy. Note that agrowth, no longer worrying about GDP changes, will not itself be the solution to climate change, but will help to improve the social and political feasibility of solutions (namely, national strategies and policies, and an international climate agreement). It will remove false tradeoffs between GDP growth and other goals by removing the constraint of (priority for) GDP growth. For more discussion and a complementary graphical illustration to Figure 9.1, see van den Bergh (2017).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 194

01/06/2017 16:51

Green agrowth  ­195

8 HOW ABOUT GREEN GROWTH AND ANTI-GROWTH OR DEGROWTH? In short, they both lack credible empirical support and make debatable assumptions, as I clarify below. These limitations make either of them risky strategies in solving environmental and climate change problems, as well as more generally in realizing progress in terms of social welfare. The Green Growth Strategy In line with the widespread belief that GDP growth is a sensible, even inevitable, goal, the notion of green growth is being strongly promoted (OECD 2011; World Bank 2012). Its promise of “win-win” is hard to resist. Green growth requires a decoupling of environmental pressures from aggregate output at a sufficiently rapid pace. The optimistic belief in green growth goes back many decades (Beckerman 1976; Simon 1981), as does the critique on it (Meadows et al. 1972). There is a huge literature on exogenous and endogenous growth models with environmental or natural resource factors which show that, under certain conditions, green growth (or sustainable growth, the more common term in the 1990s) is possible. A recent study by Acemoglu et al. (2012) revisited this issue with a theoretical model. It concludes that, if dirty and clean goods are complementary to some extent, rather than perfect substitutes, long-run growth needs to come to a halt in order to avoid environmental catastrophe. Now this may be the reality, as cleaner services tend to add to rather than substitute for dirtier goods, and as supposedly cleaner activities often depend through the web of intermediate deliveries on many other, dirtier activities. The authors find that technological innovation is in this case insufficiently rapid to overcome the environmental damage of scale increases associated with income growth. Generally, the results obtained with theoretical growth-cum-­ environment model exercises are cast in such abstract terms that there is no way of providing a definite empirical test to check whether they are satisfied in reality. Moreover, extreme uncertainty about the success and speed of innovation adds to the results being of little use. So, we cannot expect this theoretical literature to offer a final answer to the question “Is green growth a realistic option”? Empirical support for absolute decoupling and green growth has been studied in the literature on the environmental Kuznets curve (EKC). This captures the idea that environmental pressure increases up to a threshold value of average income (GDP per capita), and then decreases with further growth, resulting in an inverted U-shaped curve. Suggested explanations

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 195

01/06/2017 16:51

196  Handbook on growth and sustainability for this pattern are that consumers purchase cleaner products and services at higher incomes, and that voters then tend to give more support to strict environmental regulation, reflecting that environmental concern is a sort of luxury good (see also Chapter 6, by Ekins, in this volume). The EKC has, however, only been confirmed for a subset of environmental problems, notably short term rather than long term, local rather than global, and partial rather than system-wide issues, while often there is a clear connection of the environmental issue with human health (Stern 2004). These stylized facts are not surprising, and suggest that absolute decoupling consistent with an EKC pattern is difficult to realize for carbon dioxide emissions. We might think that a shift to services will lead to decoupling, but these services themselves need support from a complex production economy in the form of intermediate deliveries originating from material- and energy-intensive activities (Hueting 2010). Illustrative of this is that Internet and other information and communication technology (ICT)-related activities, what we tend to call “services”, are steadily increasing their absolute demand for electricity (Coroama and Hilty 2014). In addition, in emerging economies, growth generally has been much faster than carbon intensity reduction. On the other hand, in high-income countries, carbon intensity improvements have generally been too slow to produce significant absolute emission reductions during periods of economic growth. Moreover, any improvements have often gone along with considerable carbon leakage through the relocation of pollutive industries and changes in trade patterns, predominantly involving shifts to emerging economies (Peters et al. 2011). Looking towards the future with serious policies, we can imagine that an important role is played by shifting taxes from labor to carbon/energy. This will be good for employment and the environment, as innovation will then shift from labor productivity to carbon productivity growth. However, the resulting slowdown of labor productivity growth will mean that income (and GDP) growth will slow down as well. In view of the foregoing arguments, it is difficult to avoid the cynical conclusion that talking about green growth is merely populist, effectively coming down to giving little weight to environmental and climate risks. This does not deny that many writings on green growth are subtle or even sophisticated, richly garmented with theoretical notions, mathematics and empirical considerations (see, for example, Hallegatte et al. 2012), but they do not convince in terms of overall empirical evidence, which should come as no surprise as the history of growth is very far removed from being green. This, of course, does not mean that green growth is impossible, but any claims that green growth is a real option need to build in provisions and uncertainty to reflect a careful and honest scientific approach.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 196

01/06/2017 16:51

Green agrowth  ­197 Table 9.3  Four options regarding green growth Green growth feasible?

GDP good Policy implication (best indicator of strategy to follow) social welfare?

Risk of green growth strategy

1 2

Yes Yes

Yes No

None Social risks

3

No

Yes

4

No

No

Go for green growth Focus on important social goals Focus on avoiding environmental risks Double reason to not focus on green growth

Environmental risk, and derived social risks Environmental and more severe social risks

Surprisingly, writings on green growth, whether by organizations like the OECD or individual academic researchers, tend to express unconditional bold optimism and virtual certainty that green growth is feasible. Moreover, effectively we already have zero growth. We are currently reaching perhaps 1 percent average growth, but with 1 percent inflation and most of the growth going to the richer part of the population, most citizens actually face something very close to zero growth.8 Table 9.3 shows the possible combinations of conditions, policy and risks associated with a green growth strategy, resulting in four options regarding green growth and the best strategy to follow. Only under one of these (namely, number 1) is green growth a riskless, advisable strategy. Another way to approach it is to recognize that realizing green and growth each separately is difficult, so realizing their combination is bound to be very difficult. Finally, it should be noted that, whereas many economists and international organizations express a strong belief (a kind of “stated ­preference”) in green growth, few politicians show through their actual behavior (a kind of “revealed preference”) that they share this belief. Otherwise, they would already have signed an international post-Kyoto agreement. Instead, politicians seem afraid that such an agreement will reduce the rate of economic growth. This might be taken as an indication that economists have not yet delivered sufficiently convincing evidence and arguments for the feasibility green growth. Anti-growth and Degrowth Strategies What about anti-growth including degrowth then? By focusing on the antipode of economic or GDP growth, anti-growth believers, including

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 197

01/06/2017 16:51

198  Handbook on growth and sustainability the most recent degrowth proponents, just give as much importance to the GDP indicator as do the growth adepts – as if GDP decline by itself is good and desirable, or a guarantee for environmental sustainability. How effective is degrowth in realizing environmental goals? If degrowth results from concrete policies, then is it not very clear what precisely these degrowth-specific policies are. It is fair to say that degrowth proponents do not clearly and systematically argue in favor of strict, top-down environmental policies, as if they do not appreciate their importance.9 This suggests that degrowth is focused on spontaneous, bottom-up change through local experiments that diffuse or are upscaled without top-down regulation. This would require that the ideas of “less income”, ­“simplicity” and “altruism” have enough attraction to spread widely and become the dominant mode, and, moreover, to do so quickly in order to be able to solve urgent (global) environmental problems.10 It is not difficult to see why such spontaneous diffusion has not yet occurred. Moreover, as this did not occur in the past, an obvious question is: What is different this time – in human behavior and society – that can make us optimistic?11 If degrowth denotes a radical anti-capitalistic view to solve environmental issues, in the spirit of Klein (2014), then it easily falls into the trap of being communism in disguise.12 Humanity has experimented with this, but without great success. So, if we really believe that “degrowth communism” has a future, it should be well argued why this time we can avoid the perils of free riding, misplanning, lack of incentives (without profits and market prices), misuse of power and corruption, huge inefficiencies, and the associated extreme environmental pollution and nature degradation. This is not to say that capitalism is without its own shortcomings – ­certainly not. However, we are not observing any pure form of capitalism in any country. Instead, we see a mixture of social democracy and market economy. Moreover, we find a diversity of hybrid forms of regulation and free market in the world today. So anti-capitalism really is a straw man. It would also be better to reflect this in the name given: something like “semi-capitalism” would be more appropriate. I would further say that many of the barriers to change that we face have to do more with the limits of democracy and politics, as well as with citizens giving little weight to environmental and climate in their voting decisions, than with the semicapitalistic nature of the economy – think of the influence of lobbying companies and climate-skeptical voters, notably in the USA. It has been suggested that unconditional growth is inherent to capitalism, so therefore degrowth will require overturning capitalism, but this is not so clear, for two reasons. First, growth of the market share of one firm, one of the central dynamic forces of the current economy, is often complemented by a decline of the market shares of other firms. This is simply

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 198

01/06/2017 16:51

Green agrowth  ­199 part of the creative destruction that characterizes the economy over time. Second, income growth in a system with an income ladder linked to education, experience, initiative, creativity, and responsibility allows individual income growth without the need for this translating into aggregate income (GDP) growth (as continuously individuals at the top of the income ladder disappear, notably through retirement). These two arguments mean that we can in principle have zero growth (constant GDP) without undercutting these two fundamentals of capitalism. In addition, we should recognize that unconditional growth is not untypical of non-capitalist, such as communist or centrally planned, economies either. Degrowth further reflects an ambiguous term that is interpreted uniquely by almost every author. This is not helping a clear communication about it. Earlier, I identified five different interpretations of degrowth: namely, related to GDP decline, less consumption, a shorter working week, a smaller physical size of the economy, and a radical move away from “capitalism” and markets (van den Bergh 2011). Ambiguity may not seem an attractive property of a concept that is supposed to foster societal or scientific change. On the other hand, it can be an advantage in the sense that one can avoid criticism of it by arguing it was misinterpreted. More importantly, it is doubtful that degrowth will ever be able to count on broad public support, or even a constructive debate with mainstream thinkers, given its rather explicit suggestion that our incomes have to go down to save the environment (despite the fact that this interpretation will be denied by some degrowth adepts). For alternative views on these arguments, see Kallis (2011). Degrowth as a decline in economic activity to reach environmental goals is not very credible either. Take the ambition of realizing a more than 80 percent reduction of carbon dioxide emissions by 2050, as discussed in the previous section. Surely, degrowth proponents do not want to suggest that we have to degrow by 80 percent to meet this goal; but with how much then – 10, 20 or 50 percent? Any of these numbers is arbitrary and, ­moreover, non-contrivable, that is, not amenable to planning. Thinking in terms of a decline of GDP to solve environmental problems just does not make very much sense. It turns the causality and basic logic around. We need to apply convincing cause–effect reasoning, associated with the straightforward questions: which policies can realize the environmental goals, and what will be their socioeconomic implications? A decline in gross domestic product may be the outcome of applying effective, necessary environmental policies, but the causality should not be turned around by requiring a GDP (or market) decline ex ante. This further neglects the complexity that results from the many factors which contribute to a r­ eduction in environmental impacts: input mix, sector structure, ­geographical location

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 199

01/06/2017 16:51

200  Handbook on growth and sustainability of activities and transport distances, technologies, and the composition of consumption. Policies will stimulate changes in each of these factors, which will then have implications for scale, that is, the volumes of activities and consumption. To say beforehand that scale has to go down or that scale is a more important element lacks any logical, scientific basis. Finally, a forgotten implication of degrowth, through its aim of a smaller market economy and a larger informal economy, is that the tax revenues of market activities supporting many public services and social welfare programs will then be at stake. That is, if the degrowth ideal is a society dominated by local, informal activities that do not pay taxes, then the basis of our current welfare state becomes feeble. The financial basis of many public goods (for example, pensions) will then be eroded or become more local, which is risky from an insurance angle. Additional Arguments in Favor of a “Green Agrowth” Strategy Several detailed arguments for “green agrowth” have already been mentioned in sections 4 to 7. In addition to these, we may recognize that capitalism is not a fixed state, and is unlikely to remain the same if we were to implement stringent environmental and climate policies. An agrowth strategy would make it possible to restructure demand and supply, and stimulate energy conservation and renewable energy, fairly quickly through effective top-down regulation, supported by international agreements – consistent with the basic idea that global problems require global ­governance. Taking the case of climate change, such regulation would likely limit the growth of carbon-intensive activities which tend to be relatively productive. As a result, growth will be lower and possibly close to zero, certainly during a transition period. The fact that (semi-)capitalism might change its character along the way would not be seen as a problem at all, meaning that the agrowth strategy is neutral about growth as well as about (semi-)capitalism – that is, neither for nor against them. In other words, we do not need to plan or strive for an explicitly new economic system, as the economy will automatically adapt in response to the environmental and other policies we will submit it to. However, stringent regulation of this kind is only acceptable if we are relaxed about growth. If we strongly aim at realizing green growth, then we are likely to feel (and create) disappointment and frustration. We will then not implement the needed top-down regulation (which is the status quo), or we will withdraw it as soon as we discover that it goes at the cost of the highly desired growth. Agrowth instead puts policy first and just waits for it to take effect, but does not care what happens with growth. If the economy declines, or even if the economy becomes less capitalistic in

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 200

01/06/2017 16:51

Green agrowth  ­201 nature, this is not a reason to be satisfied nor dissatisfied, as long as it is the result of welfare-enhancing (or unhappiness-reducing) policies. Finally, note that an agrowth strategy offers no guarantee for a green and sustainable economy. My claim is simply that by adopting such a strategy, it will be easier to get public and political support for required environmental and climate policies than when hindered by pro-growth or degrowth constraints.

9 POLITICAL FEASIBILITY AND PRACTICAL STEPS OF AN AGROWTH STRATEGY Without any doubt it will be difficult to resist green growth optimism and win-win thinking. Human psychology seems to be focused on always having more, while modern consumer culture reinforces this possible intrinsic bias. Others claim that humans seek innovation and new experiences, rather than always wanting more, although it is easy to see how the first leads to the second. Again, others argue that the fact that past and current hunter-gatherer societies did/do not seek growth indicates that it is not intrinsic to human nature (Gowdy 1998). If this is true, our society has a chance to become more relaxed about growth. Notwithstanding these considerations, an agrowth strategy is likely to be judged as odd in the current political setting, where growth is the predominant goal, as witnessed again by the majority of responses to the recent economic crisis. Agrowth nevertheless has a chance to become a serious line of thought, as there is a slowly but steadily increasing recognition among politicians and economists of the shortcomings of the GDP indicator. We can further see increasing support for a more critical treatment of GDP information by international organizations such as the OECD and the World Bank. They frequently organize meetings and publish reports on “Beyond GDP” and alternative indicators (although at the same time they foster “green growth”). In 2009 a famous critical report about the GDP indicator was presented to the then President Sarkozy of France by Nobel laureates Stiglitz and Sen, along with many other reputed economists (Stiglitz et al. 2009). Another indication of potential support for agrowth is that several influential economists have stated in public that the times of high growth are over for several reasons, and that future growth may not be as high as it was in the past (for example, Gordon 201213). To avoid disappointment about not reaching goals, therefore, a shift to other (welfare) goals is logical. In this respect, note that Sarkozy was, arguably, open to the “beyond GDP” message, as the predictions of growth under his

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 201

01/06/2017 16:51

202  Handbook on growth and sustainability g­ overnment at the time were unfavorable (that is, “beyond GDP” as a political cover-up). Nevertheless, we cannot be too optimistic as the beliefs in GDP and growth are dogmatic in nature. They are fueled by the persistent repetition of (mis)information through economics education and the public media. Many economists agree that GDP per capita is not a good measure of social welfare, but are then still unwilling to set it aside, which I have called the GDP paradox (section 3). My personal experience is that particularly many macroeconomists show an almost instinctive, unconditional loyalty to the GDP, and tend to dislike criticism of it. Perhaps GDP information is so central to their education and empirical studies that it is emotionally difficult for them to distance themselves from it. This would suggest that growth economics is not free from ideology, and that unprejudiced analysis is very difficult. This is supported by the fact that most other economists (and non-economists) seem to be less upset about GDP criticism or proposals to be more relaxed about growth. So, perhaps such economists should play a more important role in relevant public decision making and debates on growth, which are currently dominated by growth-­ indoctrinated economists.

10 COMPLEMENTARY OR ALTERNATIVE INDICATORS TO THE GDP? One potential practical step in an agrowth strategy that deserves separate attention relates to the use of indicators. The core question here is: if the basic problem is GDP information, will replacing or complementing it by another indicator offer a solution? Many observers think that we should not get rid of the GDP indicator until a good alternative measure of social welfare is available. But, despite decades of research, no alternative has threatened the position of the GDP. One reason is that all alternatives have their shortcomings, or are very difficult to implement consistently for all countries at regular times (for example, the ISEW and associated genuine progress indicator). We would probably need decades, or longer, to agree on an alternative indicator. What is feasible at short notice is replacing the GDP per capita (a measure of average income) by the “median income” (the middle of all incomes ranked from low to high). According to Stiglitz et al. (2009), the median income is more representative, that is, captures better what is happening to most households than the average income (per capita GDP). Of course, this would only improve the treatment of the distributional aspects of growth. Nevertheless, it would be a clear improvement.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 202

01/06/2017 16:51

Green agrowth  ­203 However, a median income has two main disadvantages. First, its focus on the position where 50 percent of the people are is arbitrary – why not 30 percent or another position? In addition, it does not take the poorest individuals into account. To account for these, we could without much difficulty construct an operational indicator like (Minimum income + Median income)/2 (or with unequal weights for each component). If one were to focus here on net income (after income taxes), we might also include a measure of expenditures on public services resulting in (Net minimum income + Net median income + Expenditures on public services)/3. The advantage of both indicators (for example, over a Gini index) is that they are expressed in monetary terms, so preserve the “feeling” of a monetary income measure like the GDP per capita, and in this respect could serve as a substitute for the latter. Another option would be to replace the GDP by the Human Development Indicator, which arguably better captures social welfare14 even though it is imperfect. For example, lack of an environmental component and some other shortcomings, as summarized in section 2 (Table 9.1), would still apply to these alternatives. Complementing the GDP indicator by adding separate indicators for environmental, distributional, and possibly other issues will not help either. In fact, we have them already (think of the set of macroeconomic indicators), but they have not reduced the weight and attention given in public decision making to GDP. Besides trying to promote one of the foregoing options, a deliberate strategy of removing/ignoring GDP information from/in public debate and public decision making seems warranted. This could eliminate the obsession of our society and politicians with GDP growth, and create more room for other thoughts and indicators. If the GDP indicator is around (in public debates and the media), we will remain tempted to observe it and worry about its rate of change, and thus effectively assign inappropriate weights to relevant components of social welfare (see section 2, Table 9.2).

11 CONCLUSIONS Perhaps the notion of agrowth was already somewhere in the air, or implicit in the work of others, but I have tried to put its feet on the ground. It represents a third strategy in addition to polarized views of unconditional growth and anti-growth. Agrowth is the logical consequence of GDP criticism. It is aimed to solve the information failure associated with using GDP as an indicator of social welfare and progress; namely, by no longer assuming that the GDP is necessary or sufficient for progress. Such an agrowth strategy will resolve the GDP paradox, that is, we recognize

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 203

01/06/2017 16:51

204  Handbook on growth and sustainability that GDP (per capita) does not capture all aspects of human welfare, yet concerns about growth (in economics, politics and society) do not diminish. An agrowth strategy involves stressing the irrelevance of GDP information, and shifting the focus to issues and problems that really matter the most for human (un)happiness, including environmental problems such as climate change. An agrowth strategy has the potential to connect to those currently supporting unconditional pro- and anti-growth views. The reason is that an agrowth approach does not preclude growth when it goes along with improving human welfare. As a special case of this, an agrowth strategy does not disqualify growth in developing countries if this clearly improves the social welfare of their citizens. On the other hand, agrowth allows for GDP decline if this is a necessary, inevitable outcome of policies that balance specific human welfare goals, such as employment, income equality and avoiding dangerous climate change.15 In fact, agrowth will make it easier to accept such goals and the implementation of related policies, since we will no longer be obsessed with their impacts on growth but instead focus on the relevant components of human welfare and the concrete threats to them. That is, agrowth is perfectly in line with theoretical welfare economics and empirical happiness (subjective well-being) research: it reflects a real welfare approach. Rather than prescribing a fixed growth path, agrowth makes us relax about growth, allowing us to give priority to urgent problems, the solution of which would considerably improve social welfare. Another advantage in terms of welfare and progress is that agrowth can contribute to improving economic stability and reducing the likelihood of economic crises; namely, by tempering positive feedback in the economy that involves GDP or growth expectations. Such positive feedback does a lot of damage to human welfare, through creating crises that increase inequality and cause extended periods of high unemployment. No single macroeconomic school adhering to the pro-growth view has offered a structural solution for this problem. Instead, they all propose the same strategy, which is trying to get back onto the positive spiral. We should have learned better after so many crises. However, economics as a discipline has proven to be a slow learner, which is due to having employed a narrow-minded, unscientific pro-growth dogma. Like all dogmas, this one has precluded adequate learning, in this case about policies that offer a better guarantee to avoid economic crises; namely, by weakening positive feedback in the economy. The mainstream solution to environmental and climate challenges is green growth. Unfortunately, history provides no evidence that green growth is a likely option. This does not mean it is impossible. We can

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 204

01/06/2017 16:51

Green agrowth  ­205 argue that we have not tried out very serious, stringent climate policies, notably creating a correct price for carbon. These would make a huge difference, and set in motion major changes in economic structure, technology and consumer behavior. However, saying that green growth might be possible is one thing, trying to impose it as a safe and sure strategy is something else. It is easy to talk about green growth if we think about environmental challenges only superficially and optimistically. We should recognize the huge, unprecedented ambitions needed to avoid dangerous climate change: namely, reducing the average carbon intensity of output (GDP) by more than 80 percent, net of all energy rebound and carbon leakage effects, by mid-century. We should further realize it is very likely that stringent climate policies associated with this ambition would severely limit the growth of carbon-intensive, technology-intensive sectors, which tend to be relatively productive. This could then easily translate into a reduction of the growth rate of the economy as a whole. At worst, a green growth view reflects that biodiversity loss, dangerous climate change, and a range of other environmental challenges are simply not taken seriously. In this case green growth is merely paying lip-service to the environment. I wish it were not true, but I fear this is exactly what is behind many declarations in favor of green growth. An unconditional anti-growth view – reflected in recent degrowth ­thinking – asks for radical changes, such as a smaller market economy or even a move away from (semi-)capitalism. I have argued that this does not guarantee solutions to important environmental problems. Hence, its radicalism is not well motivated; it may, in fact, do more damage than good. My biggest concern about degrowth, however, is that it is simply unrealistic as an effective solution that can become large and have a major impact fairly quickly – say in a few decades. “Small-is-beautiful”, informal activities, cooperatives, sharing, localism and voluntary restraint have existed for many decades, but have remained a very small part of the economy. It is unclear why we should expect them to suddenly increase their share considerably in the near future. Perhaps some people could become a little more altruistic through education, or new low-carbon lifestyles could diffuse in certain marginal sub-populations, but before becoming an influential factor, several generations would have passed, too slow for addressing the urgent global problems we are facing. The question then follows: what real credible alternative do we have to just tinker with the economy, through the public regulation of markets, firms, banks and consumers, so as to guide its development in a more desirable direction? In my view, the best we can hope for is the implementation of a well-balanced set of policies (van den Bergh 2013). Most carbon

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 205

01/06/2017 16:51

206  Handbook on growth and sustainability dioxide emissions have come, and continue to come, from decisions by consumers and producers in markets, guided by prices. This strongly suggests that an effective reduction of such emissions has to involve marketdirected policies, including carbon pricing. Yet, I do not hear degrowth (unlike green growth) advocates talking about them at all. Do they imagine we can solve climate change without such policies? Because of their dependence on hope and optimism, and lack of empirical evidence, both green growth and degrowth may be seen as risky strategies that can do more harm than good. By contrast, an agrowth strategy is much more modest and assumes nothing. It does not presume the need for big radical, fundamental changes away from capitalism or the market economy. Nor does it assume that continuing growth as in the past is possible or a necessary response to the environmental challenges we face. It simply reflects that we need to be agnostic about growth, focusing on a simple logic of implementing policies that effectively solve urgent problems, without concern for their growth impact, or for the way it will change the economy in structure and nature. Of course, the change in mindset underlying an agrowth strategy, that is, removing the GDP growth constraint from our search for a better future, may be seen as a radical, even revolutionary, change. The motivation for it is, however, simple and strong: deliberate agnosticism about growth is a rational response to the GDP information failure. Agrowth provides a third option in addition to unconditional pro-growth and anti-growth strategies. Agrowth deserves to be further explored.

ACKNOWLEDGMENTS I am grateful for comments to Karl Aiginger, Arild Angelsen, Wouter Botzen, Stefan Drews, Luís Rodrigues, Thomas Sauer, and the editors of this volume. The chapter has also benefitted from feedback by participants, including many OECD ambassadors, during a presentation at the Joint OECD-WWWforEurope workshop on 10 December 2014 at the OECD in Paris. To my surprise the idea of agrowth was positively received there.

NOTES   1. For example, van den Bergh and de Mooij (1999) identify five perspectives: a moralist, denying the relevance of further growth for social welfare, notably in rich countries; a pessimist, seeing natural resource and environmental limits to growth; a technocrat,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 206

01/06/2017 16:51

Green agrowth  ­207

  2.

  3.

  4.   5.   6.   7.   8.   9.

10.

11.

12.

13.

believing in markets, prices and technological progress to relieve any limits; a skeptic, judging growth and environmental destruction as both being inevitable; and an optimist, considering growth as a necessary condition for solving environmental problems. It is often suggested that mainstream economists hardly talk about the physical size or scale of the economy, as opposed to those who have argued in favor of directly controlling it (Daly 1977, 1992). In defense of mainstream economics, though, a core advice of its sub-discipline environmental economics is to implement policies that control environmental externalities, which in effect is a plea for indirectly limiting the physical size of the economy, namely, in those dimensions that relate to regulated environmental pressures. Some argue that GDP growth leads to, or goes along with, more equality in income distribution. This is also reflected by the old Kuznets curve hypothesis. But the literature does not reveal such an unequivocal pattern (Ravallion 2001). It reports both good and bad growth from a distributional point of view, which partly depends on initial conditions and prevailing policies. If this is true, then one can hardly object to disregarding or ignoring the GDP indicator. Nobel laureate Stiglitz (2009) has used similar wording; namely, “GDP fetishism”. This is graphically illustrated by figure 1 in van den Bergh (2014). It compares various degrowth and pro-growth strategies with an agrowth strategy, using a standard diagram combining social welfare and production possibilities frontiers. Another important factor would be laissez-faire of the financial system. This was noted by a high-ranking European Union official during a meeting at the OECD where this chapter was discussed (see the acknowledgments for more details). Kallis (2011) expresses support for such policies, but only after degrowth was criticized, to which he responded. We cannot, however, observe a clear, strong and structural commitment to effective, top-down policies. In debates with degrowth supporters I further often sense disdain for pricing policies (notably carbon prices), without a credible alternative being offered. Even if the large majority of people were very altruistic with regard to other people in their generation, which is not the case, then solving a public-good type of problem like climate change would still be very difficult, as it requires an unusual degree of intergenerational altruism to forego free riding. On a more practical note, it is very unlikely that many people would adopt a low-carbon lifestyle if this were not coordinated and regulated top down, since most individuals would not be willing to unilaterally, that is, independently from others, sacrifice the luxuries of modern life or their social status, in exchange for an unnoticeable reduction in total emissions. This is not to downplay the importance of bottom-up change or local initiative, but it is unlikely to lead quickly to a sustainable economy without top-down regulation. By definition, sustainability of the economy requires a complete, system-wide sustainability check and control of impacts. Without top-down regulation this is not guaranteed: well-intended local solutions are then certain to rebound or generate carbon leakage outside the local or national boundaries (van den Bergh 2011). Note that rebound should not be misunderstood as an argument against striving for energy conservation (or efficiency), but as an argument in favor of policies that effectively stimulate such conservation: namely, by adequately controlling rebound. I am not saying that such a communist interpretation applies to all varieties of degrowth thinking; note also that this statement is deliberately carefully formulated, beginning with “If . . .”. Of course, the communist view on solving environmental problems has a history in eco-socialism or so-called “red green” thinking (for example, Kovel 2002). Gordon’s thesis in essence is that technological innovation is subject to decreasing returns in the long run. In addition, he argues that factors like education, inequality, globalization, energy/environment, and the overhang of consumer and government debt will hamper US economic growth (several of these factors apply to all OECD countries). He concludes that “future growth in consumption per capita for the bottom

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 207

01/06/2017 16:51

208  Handbook on growth and sustainability 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades”. 14. The HDI includes a broader set of components of social welfare than GDP; namely, income, life expectancy, and education. Furthermore, it nonlinearly transforms income which can be seen as consistent with diminishing marginal utility. 15. Combining these goals is already difficult enough (Antal 2014). There is no need to add an explicit GDP-growth goal (which would effectively act as a constraint on combining the other goals – as argued in section 9.4).

REFERENCES Acemoglu, D., P. Aghion, L. Bursztyn and D. Hemous (2012), ‘The environment and directed technical change’, American Economic Review, 102 (1), 131–66. Antal, M. (2014), ‘Green goals and full employment: are they compatible?’, Ecological Economics, 107 (4), 276–86. Antal, M. and J.C.J.M. van den Bergh (2013), ‘Macroeconomics, financial crisis and the environment: strategies for a sustainability transition’, Environmental Innovation and Societal Transitions, 6, 47–66. Antal, M. and J.C.J.M. van den Bergh (2016), ‘Green growth and climate change: conceptual and empirical considerations’, Climate Policy, 16 (2), 165–77. Arrow, K.J., B. Bolin, R. Costanza, P. Dasgupta, C. Folke, C.S. Holling et al. (1995), ‘Economic growth, carrying capacity, and the environment’, Science, 268 (5210), 520–21. Beckerman, W. (1976), In Defence of Economic Growth, London: Jonathan Cape. Coroama, V.C. and L.M. Hilty (2014), ‘Assessing Internet energy intensity: a review of methods and results’, Environmental Impact Assessment Review, 45 (1), 63–8. Daly, H.E. (1977), Steady-State Economics, San Francisco, CA: W.H. Freeman. Daly, H.E. (1992), ‘Allocation, distribution, and scale: towards an economics that is efficient, just and sustainable’, Ecological Economics, 6 (3), 185–93. Daly, H.E. and W. Cobb (1989), For the Common Good: Redirecting the Economy toward Community, the Environment and a Sustainable Future, Boston, MA: Beacon Press. Easterlin, R.A. (1974), ‘Does economic growth improve the human lot? Some empirical evidence’, in P.A. David and M.W. Reder (eds), Nations and Households in Economic Growth: Essays in Honour of Moses Abramowitz, New York: Academic Press, pp. 89–125. Felder, S. and T.F. Rutherford (1993), ‘Unilateral CO2 reductions and carbon leakage: the consequences of international trade in oil and basic materials’, Journal of Environmental Economics and Management, 25 (2), 162–76. Frank, R.H. (2004), ‘Positional externalities cause large and preventable welfare losses’, American Economic Review, 95 (2), 137–41. Galbraith, J.K. (1958), The Affluent Society, Boston, MA: Houghton Mifflin. Gordon, R.J. (2012), ‘Is U.S. economic growth over? Faltering innovation confronts the six headwinds’, NBER Working Paper No. 18315, National Bureau of Economic Research, Cambridge, MA, accessed 28 February 2017 at http://www.nber.org/papers/w18315. Gowdy, J.M. (ed.) (1998), Limited Wants, Unlimited Means: A Reader on Hunter-Gatherer Economics and the Environment, Washington, DC: Island Press. Hallegatte, S., G. Heal, M. Fay and D. Treguer (2012), ‘From growth to green growth – a framework’, NBER Working Paper 17841, National Bureau of Economic Research, Cambridge, MA, accessed at http://www.nber.org/papers/w17841. Hirsch, F. (1976), Social Limits to Growth, Cambridge, MA: Harvard University Press. Hueting, R. (1974), Nieuwe Schaarste and Economische Groei, Amsterdam: Agon Elsevier; English translation 1980, New Scarcity and Economic Growth, Amsterdam and New York: North-Holland. Hueting, R. (2010), ‘Why environmental sustainability can most probably not be attained with growing production’, Journal of Cleaner Production, 18 (6), 525–30.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 208

01/06/2017 16:51

Green agrowth  ­209 Jackson, T. (2009), Prosperity without Growth – Economics for a Finite Planet, London: Earthscan. Jackson, T. and P. Victor (2011), ‘Productivity and work in the “green economy”: some theoretical reflections and empirical tests’, Environmental Innovation and Societal Transitions, 1 (1), 101–8. Kahneman, D., A. Krueger, D. Schkade, N. Schwarz and A. Stone (2004), ‘Toward national well-being accounts’, American Economic Review, 94 (2), 429–34. Kallis, G. (2011), ‘In defence of degrowth’, Ecological Economics, 70 (5), 873–80. Klein, N. (2014), This Changes Everything: Capitalism versus the Climate, London: Penguin Books. Kovel, J. (2002), The Enemy of Nature. The End of Capitalism or the End of the World? London: Zed Books. Kuznets, S. (1941), National Income and its Composition 1919–1938, New York: National Bureau of Economic Research. Layard, R. (2005), Happiness: Lessons from A New Science, London: Penguin. Meadows, D., D. Meadows and J. Randers (1972), The Limits to Growth: A Report to the Club of Rome, New York: Universe Books. Mishan, E.J. (1967), The Cost of Economic Growth, London: Staples Press. Nordhaus, W.D. and J. Tobin (1972), ‘Is growth obsolete?’, in Economic Growth, vol. 5, New York: National Bureau of Economic Research, General Series No. 96, pp. 1–80. Organisation for Economic Co-operation and Growth (OECD) (2011), Towards Green Growth, Paris: OECD. Peters, G.P., J.C. Minx, C.L. Weber and O. Edenhofer (2011), ‘Growth in emission transfers via international trade from 1990 to 2008’, Proceedings of the National Academy of Sciences, 108 (21), 8903–8. Piketty, T. (2014), Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press. Pissarides, C.A. (2000), Equilibrium Unemployment Theory, 2nd edn, Cambridge, MA: MIT Press. Ravallion, M. (2001), ‘Growth, inequality and poverty: looking beyond averages’, Policy Research Working Paper 2558, World Bank, Washington, DC, accessed 16 February 2017 at https://ideas.repec.org/p/wbk/wbrwps/2558.html. Saget, C. (2000), ‘Can the level of employment be explained by GDP growth in transition countries? Theory versus the quality of data’, Labour, 14 (4), 623–43. Samuelson, P.A. (1961), ‘The evaluation of social income: capital formation and wealth’, in F. Lutz and D. Hague (eds), The Theory of Capital, New York: St Martin’s Press. Schneider, F., G. Kallis and J. Martinez-Alier (2010), ‘Crisis or opportunity? Economic degrowth for social equity and ecological sustainability’, Journal of Cleaner Production, 18 (6), 511–18. Scitovsky, T. (1976), The Joyless Economy, New York: Oxford University Press. Sen, A. (1976), ‘Real national income’, Review of Economic Studies, 43 (1), 19–39. Simon, J. (1981), The Ultimate Resource, Princeton, NJ: Princeton University Press. Sorrell, S. (2007), ‘The rebound effect: an assessment of the evidence for economy-wide energy savings from improved energy efficiency’, UK Energy Research Centre, London. Stern, D.I. (2004), ‘The rise and fall of the environmental Kuznets curve’, World Development, 32 (8), 1419–39. Stiglitz, J.E. (2009), ‘GDP fetishism’, The Economists’ Voice, 6 (8), Article 5, accessed 16 February 2017 at https://doi.org/10.2202/1553-3832.1651. Stiglitz., J.E., A. Sen and J.-P. Fitoussi (eds) (2009), ‘Report by the Commission on the Measurement of Economic Performance and Social Progress’, accessed 16 February 2017 at https://www.insee.fr/fr/information/2550927. Tinbergen, J. and R. Hueting (1992), ‘GNP and market prices: wrong signals for sustainable economic success that mask environmental destruction’, in R. Goodland, H. Daly and S. El Serafy (eds), Population, Technology and Lifestyle: The Transition to Sustainability, Washington, DC: Island Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 209

01/06/2017 16:51

210  Handbook on growth and sustainability Van den Bergh, J.C.J.M. (2009), ‘The GDP paradox’, Journal of Economic Psychology, 30 (2), 117–35. Van den Bergh, J.C.J.M. (2010), ‘Relax about GDP growth: implications for climate and crisis policies’, Journal of Cleaner Production, 18 (6), 540–43. Van den Bergh, J.C.J.M. (2011), ‘Environment versus growth – a criticism of “degrowth” and a plea for “a-growth”?’, Ecological Economics, 70 (5), 881–90. Van den Bergh, J.C.J.M. (2013), ‘Policies to enhance economic feasibility of a sustainable energy transition’, Proceedings of the National Academy of Sciences, 110 (7), 2436–7. Van den Bergh, J.C.J.M. (2014), ‘Green agrowth as a third option’, Policy Paper No. 19, Welfare, Wealth and Work (WWW) for Europe project, accessed 14 February 2017 at http://www.foreurope.eu/fileadmin/documents/pdf/PolicyPapers/WWWforEurope_Policy_ Paper_019.pdf. Van den Bergh, J.C.J.M. (2017), ‘A third option for climate policy within potential limits to growth’, Nature Climate Change, 7 (February), 107–12. Van den Bergh, J.C.J.M. and R.A. de Mooij (1999), ‘An assessment of the growth debate’, in J.C.J.M. van den Bergh (ed.), Handbook of Environmental and Resource Economics, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 643–55. Victor, P.A. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Weitzman, M.L. (1976), ‘On the welfare significance of national product in a dynamic economy’, Quarterly Journal of Economics, 90 (1), 156–62. Witt, U. (2013), ‘The crisis behind the crisis’, Environmental Innovation and Societal Transitions, 6, 120–22. World Bank (2012), Inclusive Green Growth – the Pathway to Sustainable Development, Washington, DC: World Bank.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 210

01/06/2017 16:51

PART III IS THE END OF GROWTH NIGH? SUSTAINABILITY CONSTRAINTS ON GROWTH

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 211

01/06/2017 16:51

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 212

01/06/2017 16:51

10  Innovation, technology, and economic growth Matthias Ruth

1 INTRODUCTION Human history is characterized by continual changes in environmental conditions, many of which are the outcome of human resource use and the generation and release of waste products. Deforestation and depletion of peat bogs in seventeenth- and eighteenth-century England, for example, prompted a shift towards coal, whose accelerated extraction required ever more extensive processes to handle water intrusion into the shafts and tunnels of mines. The advent of the steam engine considerably facilitated water pumping and ore removal, but the operation of steam engines also stimulated further the extraction of coal to build and run these engines, and of iron ores to provide the steel needed for their construction as well as the movement of coal and iron on rails. The proliferation of steam power across manufacturing businesses and of steel in construction for transport and the building of factories and warehouses allowed for unprecedented rates of urbanization, and the agglomeration economies that urbanization affords. A self-reinforcing process of resource extraction, technology development and deployment, structural changes in society, growth in scope and scale of the economy, and accelerated resource use and emissions was put in place. This process, first, fundamentally changed local environments and local economies, but soon it began to shape the future of all of humanity through the changes in demographics that resulted, in part, from growing affluence and from the changing roles and expectations of individuals in the expanding economies of the eighteenth to twentieth centuries. Long-distance transport soon connected extraction, production, and consumption processes ever more tightly across the globe. Land conversion accelerated to accommodate growing populations and their needs for food, fuel, materials and living space. Traditional institutions declined and new ones emerged. Life expectancies rose and rapid improvements in quality of life were experienced across large portions of the population. Technology, defined as the methods by which materials and energy are converted from one form to another or information is stored and 213 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 213

01/06/2017 16:51

214  Handbook on growth and sustainability c­ommunicated, has been central to these improvements. Innovation, understood as putting into action new knowledge about ways to convert materials and energy or storing and communicating information, has been essential in keeping or accelerating the pace of economic, social and environmental changes. As the foundation was laid during the Industrial Revolution for fundamental changes to the interactions among sectors of the economy and society, new opportunities arose to explore and harness new resources. Rapid electrification, for example, was possible because the demand for high-quality energy sources in the centers of industry and population was rising quickly, considerable financial capital was available for investment in emerging technologies and markets, advances in fundamental science and engineering knowledge were encouraged and rewarded by the expanding research and educational institutions of the nineteenth and twentieth centuries, new models for industry–government relations emerged, and incentive structures were put in place that fostered rent seeking through further development and deployment of technologies. These incentive structures included, among others, new tax codes and firm ownership structures, property rights, and intellectual property laws. Many of these incentive structures – and the social and political processes that maintained or improved upon them – continue today to stimulate subsequent technological and economic changes, such as the proliferation of information and telecommunication technologies that are beginning to fundamentally reshape production, consumption and social dynamics. With industrialization, ever more materials – in quantity and kind  – were churned through factories and cities, leaving virtually no biogeochemical cycle untouched (Vitousek et al. 1997). Depletion of some of the resources, such as whales for their oils, was followed by the development of new ones, such as kerosene and others that offered expanded opportunities to provide light and fuel to industrializing nations. However, with depletion came also an accumulation of new stocks of materials, such as lead, mercury and arsenic in soils and drinking water, carbon dioxide and other greenhouse gases in the atmosphere, and fundamentally new substances, such as endocrine disruptors in water and food. While the countries and populations of industrialized nations largely enjoyed the fruits of their growing economies, conditions in the Global South either did not keep pace with the rising living standards of the North, or even declined. The sectoral transition from agriculture, resource extraction and manufacturing to services that occurred in industrialized countries over the past century did not result in a reduction of material and energy use and emissions. Rather, some of the service sector activities, although less material and energy intensive than manufacturing, emerged explicitly to make the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 214

01/06/2017 16:51

Innovation, technology, and economic growth  ­215 economy more effective in drawing global resources into the production process and to rapidly raise profits. A prime example of such developments is the proliferation of logistics businesses with their worldwide networks of suppliers and shippers. Other services activities affect resource use and emissions less directly, such as the growing health-care sector. Yet, with rising living standards and life expectancies, not only does consumption increase, but entirely new substances – from dietary supplements to pharmaceuticals and personal care products – are produced and consumed in ever larger quantities. Their excretion from the economy results in a host of contaminants of emerging concern that pose formidable challenges to water treatment and environmental protection, and that begin to come back to afflict the human population with new health impacts. Because of fundamental physical principles, most notably the second law of thermodynamics, extraction, conversion and use of resources – be those materials or energy – unavoidably result in irreversible changes in the environment. Also, because of the path-dependency of biological and socioeconomic processes, past actions can rarely be undone at the scales that are relevant for development. What, then, are the prospects for technology and innovation to help bring about interactions between humans and their biophysical environment that actually can be sustained in the long run? What opportunities and challenges lie ahead for investment and policy making to promote technology and innovation that foster sustainability? The following sections of this chapter address these questions in two parts. The first expands on the notion that the biogeosphere, of which human societies and economies are a part, is a complex system, and derives from this basic observation a series of constraints that impact the successes of technology, and the investment and management strategies that promote development and deployment of technologies to solve environmental problems. The subsequent section broadens the concept of innovation to emphasize the roles and responsibilities of institutions in humanity’s quest for sustainability. Key insights from these sections are illustrated with a case example on energy system transition research presented in section 4. The chapter then closes by taking the long view on socioeconomic development, and what must be done now to secure it.

2 COMPLEXITY, AND THE FUTILITY OF MANAGEMENT Herman Daly (2005, 2009) speaks of an empty world in which human use of resources and the release of waste products once were small enough to be accommodated by the local ecosystems in which production and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 215

01/06/2017 16:51

216  Handbook on growth and sustainability c­ onsumption took place. With increases in population, production, consumption and pollution, the abilities of ecosystems to provide environmental goods and services became increasingly compromised. Yet, the behaviors and incentives to further grow the human enterprise in this full world are hardly changed as the world became fuller, and are in principle no different from those during early exploration and expansion – economic growth is widely regarded as the primary mechanism to increase standards of living and to solve the social and environmental problems created by growth. Another perspective on the world as being “empty” or “full” is conceptual in nature. During periods in which humanity had only limited impact – in space and scope – on the environment, the relations between people’s actions and the associated outcomes would likely have been directly proportional to each other. A doubling in the number of individuals of a small community may have roughly doubled the community’s environmental footprint, and the footprint would have been primarily local (Figure 10.1). For changes in production and consumption close to the original state, linear approximations between stimulus (for example, consumption) and response (for example, environmental harm) would have been sufficiently accurate. For such cases, it will be just fine to speak of marginal changes when trying to explore potential impacts of system interventions. Interpolation among observational data and extrapolation A Response

C “Full World”

“Empty World”

Z

B

Stimulus

Figure 10.1  Interpretation of cause–effect relationships

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 216

01/06/2017 16:51

Innovation, technology, and economic growth  ­217 of trends would suffice in efforts to project system behavior for previously unobserved changes (for example, Z in Figure 10.1). Uncertainties would be low and surprises would largely come from the dynamics that reside outside the influence of the community, such as climatic disruptions from ice ages or impacts of meteors. With further movement from the original position, nonlinear relationships are likely to become the rule, rather than the norm. The linear extrapolation of historical experiences into the future is then often replaced with trend lines along A and B in Figure 10.1, with population and economic output, for example, mimicking A, and environmental impact complying with a presumed, standard Kuznets-type pattern along B (Dasgupta et al. 2002; Franklin and Ruth 2011). Only rarely do analyses acknowledge more intricate behaviors, such as along C, and where those are hypothesized, such as for rebound effects associated with the deployment of more efficient technology (Ghosh and Blackhurst 2014), they are portrayed either as anomalies or assumed to ultimately subside, making way, in the long run, for “normal” behavior. A full world is characterized by ever more intense and global connections among producers, consumers and the environment, and pushes the envelope of sustainable resource use and waste generation practices. In such a world, ever more processes are linked with each other, and there is no reason to believe that any and all of these linkages are well behaved. Instead, the feedback processes that connect human actions and environmental performance will change in strength and direction, resulting in oscillations, meeting thresholds and bifurcation points, or expressing themselves in myriad other ways. Well-intended actions to control socioeconomic or environmental changes may have unintended consequences that will likely give rise to further interventions, with their own side effects, many of which may be discovered well after the fact. The pervasiveness of nonlinearities is one source and expression of the complexity of socioeconomic and environmental system behaviors. A second source lies in the fact that the results of interventions into these behaviors are rarely felt immediately. Rather, long time lags between actions and results may persist. For example, even if greenhouse gas emissions from fossil fuel use and land conversion could be cut to zero within the near future, their atmospheric concentrations would continue to rise for at least another 100 years, in part because of the long residence time of these gases in the atmosphere, and temperatures would continue to rise for several centuries because of the ways biota, land and oceans interact with each other and the atmosphere (IPCC 2013). Besides these temporal lags there are also considerable spatial lags that shape system behavior. Changes in one place affect other places in

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 217

01/06/2017 16:51

218  Handbook on growth and sustainability

a)

b)

Figure 10.2  Nested hierarchy select ways, with nearby locations often, though not always, more tightly coupled than far-away ones. Recent disruptions of global supply chains in the aftermath of extreme weather events, for example, have highlighted just how complex these spatial dynamics may be. A third expression of complexity – besides the nonlinearities and lags discussed above – is manifest in the fact that human–environment interactions occur in a nested system with interactions across its various hierarchies. The socioeconomic system may be described by the interactions that occur among consumers and producers, for example, mediated through markets for labor and capital and a wide range of goods and services, and constrained or fostered by customs and laws, for example (Figure 10.2(a)). However, social and economic processes are also driven by the underlying motivations and interactions of people, their abilities to absorb and act on information, their needs and aspirations, and all these are embedded in the larger ecosystem from which they derive wealth and enjoyment, and their geographic, historical and cultural context (Figure 10.2(b)). Without recognition of what happens at lower and upper levels of the system hierarchy, the long-term performance of the “middle layer” of interest may be misconceived, and influences on it may be misguided. To be fair to those developing and promoting adoption of technology in order to address the needs and wants of their fellow humans, or simply to make a profit – a focus on impacts at one level of the system hierarchy may dominate, and immediate pressures to solve problems and opportunities

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 218

01/06/2017 16:51

Innovation, technology, and economic growth  ­219 to reap benefits may stand in the way of a broader assessment of impacts. Human cognition, largely developed through evolutionary processes that occurred in an empty world, is limited in its ability to perceive the many intricate ways in which actions will affect outcomes. Institutions that evolved to guide actions are similarly limited by the resources available to them, and have historically been set up on the basis of a mechanistic cause–effect world view. To the extent that institutions are a product of collective experiences and rules that accumulated over time, they may transcend the interests of any given individual and help identify solutions that are more in tune with collective and long-term interests. Yet, to the extent that these institutions also lock in rules and procedures that benefit their own purposes and have their origins within the growth paradigm, they may perpetuate the challenges they are designed to address. For example, a transportation agency charged with providing adequate and reliable movement of people and goods may perpetuate the growth of roads and road networks, as well as the rule for operating and expanding them. Economic growth my result, which further stimulates shipments of goods and services, and possibly leads to the fragmentation of the economic landscape as has been the case in the US and many other industrialized nations. Along the way, the powers of the agency are bolstered and the expansion of roads is perceived as a seemingly logical solution to the problems generated by the expansion of roads. Tackling transportation challenges through improvements, for example, in local housing, schools, and businesses, so that people can live, get educated, work and shop with limited needs for cars, is outside the immediate interest of any transportation agency. The adoption of “smart growth” strategies that promote compact development and that advance the use of local resources over sprawl and long-distance transport of goods and people has proven to be difficult to pursue in settings where the interests for example of the agency, construction companies and automotive industry are closely intertwined. Given the complexity of human–environment interactions, it should not come as a surprise that there are clear limits to the ability to “engineer ­ourselves” out of many of the problems that were generated by shortsighted deployment of technology. For instance, where floods persist, levies and dikes are put in place, and insurance schemes are devised to compensate for residual risk. The consequence of such actions often is a continued accumulation of people and assets in flood-prone areas. As extreme weather events become increasingly frequent and severe, and as sea levels rise as a result of climatic change, expected future damages increase, rather than decline, with the traditional engineering

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 219

01/06/2017 16:51

220  Handbook on growth and sustainability and institutional approaches of coastal protection doomed to ultimately fail.

3  INNOVATION BEYOND TECHNOLOGY A hallmark of traditional economics lies in the recognition that human behavior is guided by incentives and that proper design of incentive systems can guide behaviors towards desirable outcomes. Well-functioning markets may give the signals on which to act – rising prices would suggest that scarcity of a resource is increasing and thus stimulate a decline in demand and a search for alternatives. Where unintended consequences of production and consumption are encountered, externalities may be internalized to adjust prices and the signals they give to change behaviors and technologies. But what if the world is more complex than presumed here? What if prices are not only the product of rational economic decision-­making and instead reflect deep-seated social tensions and long-overlooked environmental constraints? For example, in societies in which women and children hold limited rights for self-expression and self-determination, the wages paid to them for their labor will be depressed. In places where environmental standards are low, resource extraction and environmental pollution may cause harms that remain unaccounted for in economic decision-making. The prices of goods and services in conditions of social and environmental exploitation are then not worth much with respect to their ability to guide economic decisions towards optimal outcomes (Røpke 1999). More likely, they will entrench unsustainable practices. Even the concept of optimality, as normally conceived in economic analysis, makes little sense from a complex systems perspective (van den Bergh and Stagl 2003). Humans, characterized by emotions and limited cognitive abilities, faced with decisions in a world of nonlinear and lagged relationships between actions and outcomes, and operating within a set of nested hierarchies, have a hard time making decisions that are optimal at any given point in time, let alone optimal across long time horizons or broad geographies. (Of course, we could always re-interpret their decisions as “optimal” within the confines of the informational and computational constraints they face, but then what is the point of the analysis of such decisions and resultant actions?) If decisions need to be made by a community of humans with conflicting interests and aspirations – whether to preserve a wetland nearby, grant permission for a social housing project, finance the expansion of a road, allow the closure of a hospital, and so on – then the traditional notion of optimality is even less useful as a guiding principle or yardstick for the assessment of their actions.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 220

01/06/2017 16:51

Innovation, technology, and economic growth  ­221 If optimality is passé as a guiding principle in such settings, then what may take its place? At a minimum, decision-making will need to recognize that there are always multiple criteria by which performance must be assessed, and multiple objectives must be pursued at any given point in time to meet the different objectives of members in the community. Multi-criteria, multi-objective decision-making is far from new, and has gradually made inroads into debates about, for example, choices of technologies, developments of infrastructures, and social and environmental policies (see, for example, Eiselt and Laporte 1992; Cho 2003; Trikaus and Hanne 2005). A range of tools is available to help visualize trade-offs that exist among options, such as when the fortification of coastal zones to hold rising tides at bay provides temporary relief from flooding but also undermines the functioning of near-shore ecosystems, impairs scenic beauty and thus limits the appeal of the coastal zone for recreation and tourism, affects property values and diverts financial resources to a solution that may not be adequate anymore, once environmental conditions have changed. Differences in performance of alternative coastal flood control approaches can be readily depicted and trade-offs among them carefully discussed and weighted (Figure 10.3). Some of the performance criteria by which alternative system interventions are judged may be Criterion 1 (e.g. Construction Cost)

Criterion 2 (e.g. Maintenance Cost)

Option 1 Criterion 6 (e.g. Aesthetics)

Criterion 3 (e.g. Social Impact) Option 2

Criterion 5 (e.g. Resilience) Criterion 4 (e.g. Environmental Impact)

Figure 10.3  Possible dimensions for a multi-criteria assessment

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 221

01/06/2017 16:51

222  Handbook on growth and sustainability readily measured in commonly agreed upon units, such as construction and maintenance costs. Others may be expressed as high, medium or low, such as system resilience or aesthetic impact. Yet others may themselves require multiple dimensions. Environmental impact, for example, may be measured in terms of changes in nutrient loading or toxic release, possible reductions in species diversity and richness, or aggregate measures, such as ecosystem health. Similarly, effects of a system intervention on society may be reflected by changes in social capital or individual aspects that affect social capital, such as changes in community size and interaction. Uncertainties and surprises always lurk in the background of any decision, making it important to project out into the future, under a wide range of assumptions, the way in which the world may unfold. The relationships portrayed in Figure 10.3 may, as a consequence of uncertainties and surprises, involve for each of the assessment criteria a range of possible values. Therefore, alternative options may not be as easily separable, rendering the selection among options more ambiguous than Figure 10.3 suggests. An added complication arises when it is unclear who may actually have a stake in the assessment itself. The stakeholders may be those individuals who are directly affected but in principle may also include those who are more removed geographically or belong to future generations. Science may place bounds on some of the uncertainties, and thereby also limit the set of affected stakeholders and provide them with information with which to estimate the technology’s broad benefits and costs (Ruth and Bullard 1993). Good decisions are then those that hold up against whatever may come. A growing cottage industry of decision support tools has sprung up to provide policy and investment decision makers with numeric and graphical information to judge the ramifications of their choices. Some of these are built on standard assumptions of a predictable, linear world, simply feed the product of database inquiries or optimization algorithms to decision makers, and thus are of only limited value. Others, in contrast, are much more organic in their treatment of system interrelationships and the way in which alternative futures unfold. Among these are the classes of computer-mediated games that have been rolled out in recent years for a host of “management challenges” to allow groups of decision makers to repeatedly decide on preferred courses of action in an ever-changing world, and single player and distributed simulations that separate actors and show the collective outcomes of their individual decisions (Eisenack and Reckien 2013; Harteveld and Drachen 2015). Novel insights on how to best respond in complex settings can result from these games in multiple ways. The social discourse of the groups involved can generate those ah-ha

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 222

01/06/2017 16:51

Innovation, technology, and economic growth  ­223 moments that happen when individuals lay open their reasons for actions, see through the eyes of others how a problem is perceived or a solution is found, and new compromises are forged in the light of informational and resource constraints. Outside this realm of social interactions, the participants in the game may encounter constellations of interventions and system responses that could not have been conceived without a tool that synthesizes disparate pieces of information. For decisions to be viable, they must be acceptable under a wide range of assumptions about present and future system behavior. Using simulations or games to explore what such viable decisions may look like – when they need to be made and how they need to be adjusted – is a relatively cost-effective way of preparing real-world action, and, because the course of events unfolds as decisions are made, knowledge is gained about some unknown parameters or relationships that affect the efficacy of system interventions, and new surprises may be encountered, gaming approaches to handling complexity can enhance learning and enable calibration of actions against novel conditions that emerge with system change. To date, many of these simulations and games are still rather limited in their scope and often do function more like an entertainment game than a slice of reality. However, because they do go well beyond the notion that technological solutions to environmental problems will ultimately save the day, and instead are cognizant of a wide range of evolving boundary constraints for action, simulations and games can help foster the social innovation that is needed to address problems sustainably. The ability to identify robust strategies – those that make good sense under a wide range of conditions, that do justice to multiple objectives, and that perform well under a variety of evaluation criteria – combined with an adaptive management approach that draws on the collective knowledge of experts and ­stakeholders  – those building the tools and playing with them – will ultimately determine how sustainable the resource extraction, production, consumption and waste generation of society will be. Technology and innovation are then put in their proper place as subsets of tools available for problem solving.

4  ENERGY SECTOR TRANSITIONS The adverse economic, social and environmental impacts of a continued reliance on nonrenewable energy sources and accumulation of greenhouse gases and other unwanted by-products of energy conversion have prompted decision makers in many parts of the world to explore alternative development strategies. While some of these strategies are articulated at global levels, such as the United Nations Framework Convention on

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 223

01/06/2017 16:51

224  Handbook on growth and sustainability Climate Change, or in the context of transnational jurisdictions, such as the European Climate Change Program, they have been most intricate in regional settings where unique geographic, institutional, historical, technological and socioeconomic conditions constrain the activity space for investment and policy making. Examples of regional strategies to foster energy sector transitions include the development of the Regional Greenhouse Gas Initiative (RGGI) that establishes a cap-and-trade scheme for carbon emissions from power generation among generators in the northeastern part of the USA (see, for example, Ruth et al. 2008), using receipts from sales of emission allowances to stimulate a transition towards renewable energy sources, as well as energy efficiency improvements not only in the electricity sector but across a wide range of energy-intensive activities of industry and households as well. Rules by which emissions allowances are allocated to generators and how revenues are distributed, for example, are specific to each of the states participating in RGGI, with markets serving as key institutions to reconcile decisions made within states, across states, and across time. Similar programs have been rolled out elsewhere, and have often been supported by economic analysis of the optimal emissions pricing, supported by general equilibrium models and related tools, but also have always been subject to the vagaries of the political climate, as developments in Australia during the first two decades of the twenty-first century amply illustrate. Australia, one of the world’s largest emitters of carbon per capita, once was at the forefront of taxing carbon and of establishing a carbon emissions trading scheme. Development of these carbon management policies was years in the making but was reversed within just a few days of changes in the country’s ruling party, largely because of fears about impacts on the economy. Subsequent assessments of the country’s prospects for economic growth, while also managing its carbon budgets, show considerable room for emissions reductions while generating economic benefit (ANO 2015). A decidedly different approach to regional energy sector transition management can be found, for example, in efforts of the Bremen/Oldenburg Metropolitan Region located in Northwest Germany that explores options for regional development of the energy and agriculture sectors such that the region’s capabilities to maintain services (for example, agriculture and food production, energy provision, regional governance) continue to improve even as socioeconomic and environmental conditions become more turbulent. A specific focus of the region is on climate events that affect the region’s agricultural and energy sectors, or major demographic or technological changes that alter demand for goods and services in the region (Ruth et al. 2015). This project serves as an illustration of several

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 224

01/06/2017 16:51

Innovation, technology, and economic growth  ­225 issues raised in the preceding sections of this chapter, namely, the need for policy interventions and investment decisions to be: ●

cognizant of the temporal and spatial lags among decisions and outcomes; ● operating within constraints imposed by processes at higher and lower levels of the system hierarchy; ● based on the understanding of the motivations and goals of a diverse group of decision makers pursuing potentially conflicting goals and using different performance criteria to judge success of their actions; and ● evaluated and adjusted recursively so that past experiences modify expectations of future system behavior and discrepancies between expectations and observations shape an adaptive learning process that promotes resilience. In support of decision-making in the region, a wide range of stakeholders from the public, private and non-profit sectors in the Bremen/Oldenburg Metropolitan Region have collaborated with researchers, among others, to identify key elements of the regional economy and society whose behavior must be understood in order to guide land use planning, investments and policy. One of the products of these exercises is a computer-based, interactive, dynamic simulation tool that captures, in monthly increments from 2010 until 2050, the interdependencies of decisions within the agricultural sector, within the energy sector, between the two, and among the 11 counties of the region and its five core cities. The purpose of that model lies in connecting, at high resolution, information and decisions that pertain to one aspect of the region to other aspects so that: ●

decision makers operating at one level (for example, county-level land use planners) appreciate the ramifications of their actions for others operating at lower levels of the system hierarchy (farmers or power plant managers) or at higher levels (for example, the regional planning agency or bureau of commerce); ● stakeholders from across the region are empowered to explore how different policy and investment strategies shape sectoral and regional performance in the long run; ● rapid feedback can be provided to decision makers on the way in which their choices may improve or undermine regional resilience; and ● a set of robust strategies can be identified to help the region increase its resilience so that service provision can be maintained or improved

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 225

01/06/2017 16:51

226  Handbook on growth and sustainability as unforeseen, and potentially unforeseeable, events affect regional and sectoral dynamics. For the agricultural sector, the model captures decisions on (1) land use, including pasture, cropland for food and energy-devoted crops, as well as land for wheat, rye, corn and root vegetables grown in each county; (2) livestock and food production disaggregated by the number of cattle, pigs, and poultry, and the production of pork, beef, dairy, poultry and fish; (3) energy and water use; (4) biomass of energy crops; (5) quantities of manure from each livestock category; and (6) biogas production from energy crops and manure. For the energy sector, the model focuses on the dynamics of electricity and district heating, from both supply and demand sides. On the supply side, 11 types of power plants and their capital vintage structures are modeled: hard coal, natural gas, combined cycle, conventional biogas, rumen-based biogas, nuclear, wind, solar, solar thermal, oil, and household waste. Energy generation is spatially disaggregated for the region’s 11 counties and five core cities. The demand side distinguishes between cooling and non-cooling electricity demand, as well as heating demand for urban and rural areas. The balance between electricity supply and demand defines net electricity imports to the region. The model is also capable of capturing changes in capacity factors of power plants, keeps track of outcomes such as carbon dioxide (CO2) emissions, costs of electricity and heat generation, nitrogen release from agricultural processes to the environment, and the generation of nuclear waste, and it calculates a diversity index of electricity supply in terms of supply sources and their location. These aggregate measures of system performance provide important guides for interactive decision-making in the modeled environment and are also key in understanding and determining real-world policy choices. While the use of models as decision support tools is far from new, most prior efforts attempted to identify regional resilience by simulating a system under different conditions and then identifying what the stability thresholds are. However, system behavior is a result of policies and decision-making by human actors, and this decision-making process is too often discounted or ignored by simulation models (Duke and Geurts 2004; Mayer 2009). An alternative is to engage stakeholders in devising policies. However this can result in “negotiated nonsense” if there is no validation using real-world data and system behavior. In contrast, the model described here has been embedded in a game environment for actual stakeholders to make choices in a validated environment. Involving regional stakeholders can have immediate impact on investment and policy making because they learn from interacting with the simulation model and other actors (Conde et al. 2005; Reed 2008; Voinov and Bousquet 2010).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 226

01/06/2017 16:51

Innovation, technology, and economic growth  ­227 This observation leads to the second distinction that makes the region’s approach to identifying energy sector transitions and the associated regional resilience unique; it deploys a participatory multi-actor approach because decision-making does not happen unilaterally and in a social vacuum. At the beginning of each month of simulated time, the model can be paused, output observed and discussed, pros and cons of alternative interventions in the agriculture and energy sectors of counties and cities debated and weighted, and alliances forged in support of specific decisions. As a consequence, there are behavioral dynamics arising from different actors interacting with each other. This multi-actor decisionmaking process is incorporated as part of the system modeling by making sure the players in the game represent the various actors of the real world process. By doing so, the tensions, trade-offs, and compromises between actors become apparent in the face of climate change and other socioeconomic and technological drivers, which will help in determining the necessary policies and process management designs (de Bruijnet al. 2010). The dynamics of the region are shaped not only by region-internal decisions but also by conditions that unfold external to it. To avoid modeling explicitly, for example, how the socioeconomic environment of the region unfolds over time, stakeholders have created in a series of workshops three distinct, “plausible” story lines – one in which the world evolves towards further globalization, with increasing regional competition; one in which globalization proceeds, but high environmental standards are upheld; and one in which the world is increasingly regionalized, with local resources being largely dedicated to local problem solving, and interregional exchanges of energy, for example, being limited. These story lines include internally consistent assumptions about operations of financial markets, demographic changes, proliferation of energy conservation and conversion technologies, the extent to which climate change unfolds, and many more features that are translated into parameter settings for the model. As the model runs, users discover a world to which they must respond through decisions in the agricultural and energy sectors. From run to run, new constellations of parameters, corresponding to different manifestations of story line conditions and different stakeholder responses, will be encountered. Running the model repeatedly then affords users the opportunities to hone in on sets of strategies that are robust, that is, strategies that are similarly able in promoting resilience for a wide range of futures. Through these exercises, the region – rich in potentials to expand its use of renewable fuels, most notably biomass-based energy and wind – has been able to learn that expanding renewables without investing in energy efficiency cannot provide ideal conditions for reliable power supply and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 227

01/06/2017 16:51

228  Handbook on growth and sustainability emission reduction in the region. An expansion of renewables not only undermines the reliability of energy supply, particularly under changing climate conditions when cooling water availability to power plants is undermined, when biomass production is hampered, or when power lines are downed during extreme weather events, for example. Rapid expansion of renewables also drives up the cost of electricity generation ­considerably. Furthermore, without concomitant investment in energy efficiency, any gains in CO2 emissions reductions will be compromised by continued strong demand for energy. Pursuing strategies that minimize economic cost, such as the cost of power supply, results in the least diverse electricity system – both in terms of geographic diversity and in diversity of fuels used to generate electricity. The quantitative output from the model on generation capacities, fuel demands, biomass production, CO2 emissions and nitrogen input into the environment, and many other variables of direct interest to stakeholder groups, provides a scientific basis for selection among and fine-tuning of alternative investment and policy choices. The evolving portfolio of these choices are shaping the region’s “roadmap of change”, which is intended to serve as a guiding document for action over the course of several decades. While the insights generated in the development and deployment of this multi-actor integrative assessment model for the Bremen/Oldenburg Metropolitan Region may be specific to the region, the experiences gained from highly interactive approaches to policy and investment-making, under a wide range of potential futures, can transfer to a wide range of settings in which communities and their decision makers are concerned about resilience and sustainability. Experiences from the region show that in order to identify robust strategies it is important that: ●

multiple objectives can be pursued, and be assessed on the basis of diverse criteria; ● contributions of specific actions to outcomes can be readily assessed by stakeholders; ● opportunities for learning are created as regional dynamics unfold; and ● ramifications of decisions at one level of system hierarchy or in one geography for another can be pinpointed. Whether decisions made in the simulated world can be adapted in the real world, however, remains to be seen in the region, as in other cases. To know how effective the approach actually has been will require continued monitoring, development of incentives to translate the lessons into action,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 228

01/06/2017 16:51

Innovation, technology, and economic growth  ­229 and to maintain flexibilities of stakeholders and institutions to revisit, and as needed revise, previous decisions. With the example of energy sector transition management discussed here, and mounting evidence from analysis and modeling conducted elsewhere (Fouquet and Pearson 2012), a new paradigm is evolving in which the science–society gap can be closed. Stakeholders help shape research questions as well as the development and deployment of decision support tools. The scientific community engages in use-inspired research that improves practice and helps refine theory. Investment and policy communities engage in anticipatory management, and the institutions that monitor and govern regional development perceive of alternative futures for which regions must be prepared. Technological innovation, such as in the energy and agricultural sectors to facilitate a phase-out of nuclear power and fossil-based energy carriers, combined with behavioral innovation, such as the proliferation of energy-conservation strategies, facilitated by decentralized use of renewables, and fostered through institutional innovation, such as through new governance structures that combine science and stakeholder communities, can help regions to engage in sustainable development practices.

5  TAKING THE LONG VIEW The recognition that the world is increasingly interconnected and rapidly changing is far from new. The notion that the adverse effects of human action are irreversible, however, only slowly hits home as land conversion, climate change, species diversity loss, resource depletion and social tensions show their ripple effects across the globe. Undoing the damages requires additional materials and energy, which further creates adverse effects, unless, of course, those materials and energy are used to change the fundamental motivations and structures by which society operates. That those fundamental motivations and structures cannot be changed quickly is eminently obvious. The notion that personal aspirations and actions to improve our own life collectively contribute to the betterment of one’s community has long guided western thinking towards profit maximization, however short-term that profit may have been. Deep-seated belief in the power of technology as a means to overcome environmental constraints, geographic distance, and as a mechanism to speed up the delivery of goods and services for human satisfaction will be hard to overcome after centuries of rising life expectancies and quality of life in the “developed world” – despite the fact that empirical evidence keeps mounting that high rates of development

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 229

01/06/2017 16:51

230  Handbook on growth and sustainability are possible at low rates of energy use (Steinberger and Roberts 2010). Also, the roles of traditional institutions – be those the markets on which goods and services are traded and their prices are established, or the social institutions through which non-market goods and services are valued and allocated – all have their own deficiencies and inertia (Walker et al. 2009). However, even if the motivations and structures by which society ­operates could be readily changed, it remains unclear, a priori, what form such change should assume because the future is fundamentally open and potentially rich in uncertainties and surprises. Identifying those actions that undermine sustainability remains much easier than describing behaviors to take their place. At a minimum, however, the challenge is for innovation to occur faster than biophysical constraints on human welfare are approached. Since fundamental physical laws prevent technological innovation from overcoming those limits, the only long-term viable strategy is for sufficiently rapid social innovation. Given the complexity of human-environment interactions, this will mean a need for considerable openness towards trial and error even though – or because – the stakes are high. It will also require long-term visioning and simulation in anticipation of alternative futures, and broad engagement of stakeholders with diverse perspectives and goals. In short, a wide range of experiments need to be carried out at local and regional scales, and the lessons from these experiments need to be continuously assessed and shared, then aggregated to establish and revise the rules by which society engages in changes of its environment. Such a perspective on the role of technology and innovation for sustainable development markedly contrasts with the nature of existing laws, market incentives and social reward systems that are less open to community engagement, experimentation, and adaptation.

REFERENCES Australian National Outlook (ANO) (2015), Australian National Outlook 2015: Economic Activity, Resource Use, Environmental Performance and Living Standards 1970–2050, Canberra: Commonwealth Scientific and Industrial Research Organisation (CSIRO), in press. Cho, K.T. (2003), ‘Multicriteria decision methods: an attempt to evaluate and unify’, Mathematical and Computer Modelling, 37 (9–10), 1099–119. Conde, C., K. Lonsdale, A. Nyong and I. Aguilar (2005), ‘Engaging stakeholders in the adaptation process’, in B. Lim and E. Spanger-Siegfried (eds), Adaptation Policy Frameworks for Climate Change: Developing Strategies, Policies and Measures, Cambridge: Cambridge University Press, pp. 47–66. Daly, H.E. (2005), ‘Economics in a full world’, Scientific American, 293 (3), 100–107. Daly, H.E. (2009), ‘Incorporating values in a bottom-line ecological economy’, Bulletin of Science Technology and Society, 29 (5), 349–57.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 230

01/06/2017 16:51

Innovation, technology, and economic growth  ­231 Dasgupta, S., B. Laplante, H. Wang and D. Wheeler (2002), ‘Confronting the environmental Kuznets curve’, Journal of Economic Perspectives, 16 (1), 147–68. De Bruijn, H., E. ten Heuvelhof and R.J. in’t Veld (2010), Process Management: Why Project Management Fails in Complex Decision Making Processes, New York: Springer. Duke, R.D. and J. Geurts (2004), Policy Games for Strategic Management: Pathways into the Unknown, Amsterdam: Dutch University Press. Eiselt, H.A. and G. Laporte (1992), ‘The use of domains in multicriteria decision making’, European Journal of Operational Research, 61 (3), 292–8. Eisenack, K. and D. Reckien (2013), ‘Climate change and simulation/gaming’, Simulation and Gaming, 44 (2–3), 245–52. Fouquet, R. and P.J.G. Pearson (2012), ‘Past and prospective energy transitions: insights from history’, Energy Policy, 50 (special issue), 1–7. Franklin, R.S. and M. Ruth (2011), ‘Growing up and cleaning up: the environmental Kuznets curve redux’, Applied Geography, 32 (1), 29–39. Ghosh, N.K. and M.F. Blackhurst (2014), ‘Energy savings and the rebound effect with multiple energy services and efficiency correlation’, Ecological Economics, 105 (1), 55–66. Hartevelt, C. and A. Drachen (2015), ‘Gaming on environmental issues’, in M. Ruth (ed.), Handbook of Methods and Applications in Environmental Studies, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Intergovernmental Panel on Climate Change (IPCC) (2013), ‘Fifth assessment report’, World Meteorological Organization, Intergovernmental Panel on Climate Change Secretariat, United Nations, Geneva. Mayer, I.S. (2009), ‘The gaming of policy and the politics of gaming: a review’, Simulation & Gaming, 40 (6), 825–62. Reed, M.S. (2008), ‘Stakeholder participation for environmental management: a literature review’, Biological Conservation, 141 (10), 2417–31. Røpke, I. (1999), ‘Prices are not worth much’, Ecological Economics, 29 (1), 45–6. Ruth, M. and C.W. Bullard (1993), ‘Information, production, and utility’, Energy Policy, 21 (10), 1059–66. Ruth, M., S. Gabriel, K. Palmer, D. Burtraw, A Paul, Y. Chen et al. (2008), ‘Economic and energy impacts from participation in the regional greenhouse gas initiative: a case study of the state of Maryland’, Energy Policy, 36 (6), 2279–89. Ruth, M., O. Özgün, S. Gößling-Reisemann and J. Wachsmuth (2015), ‘Dynamics of energy transitions under changing socioeconomic, technological and climate conditions in Northwest Germany’, Ecological Economics, 111 (1), 29–47. Steinberger, J.K. and J.T. Roberts (2010), ‘From constraint to sufficiency: the decoupling of energy and carbon from human needs, 1975–2005’, Ecological Economics, 70 (2), 425–33. Trikaus, H.L. and T. Hanne (2005), ‘knowCube: a visual and interactive support for ­multicriteria decision making’, Computers and Operations Research, 32 (5), 1289–309. Van den Bergh, J.J.C. and S. Stagl (2003), ‘Coevolution of economic behaviour and institutions: towards a theory of institutional change’, Journal of Evolutionary Economics, 13 (3), 289–317. Vitousek, P.M., H.A. Mooney, J. Lubchenco and J.M. Melillo (1997), ‘Human domination of Earth’s ecosystems’, Science, 277 (5325), 494–9. Voinov, A. and F. Bousquet (2010), ‘Modelling with stakeholders’, Environmental Modeling and Software, 25 (11), 1268–81. Walker, B., S. Barrett, S. Polasky, V. Galaz, C. Folke, G. Engström et al. (2009), ‘Looming global-scale failures and missing institutions’, Science, 325 (5946), 1345–6.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 231

01/06/2017 16:51

11  Energy, economic growth and sustainability: an energy primer for the twenty-first century* Charles A.S. Hall

1 INTRODUCTION: WHAT IS ENERGY AND WHY IS IT IMPORTANT? Although energy is in our news media nearly every day, it is usually discussed peripherally with respect to economic or environmental issues, and rarely in relation to itself. This is not surprising, because the concept of energy is an abstract entity. Only rarely does energy itself receive our full attention, generally in those times when there are particular shortages or sharp price increases (or decreases) in electricity or gasoline. From January 2016, the price of oil and gas (collectively petroleum) has been declining for a year and a half, and public and media interest, usually low, is even lower except as related to climate change or in oil-producing countries and regions. Yet for many of us, energy remains a critically important issue to our economy and society, and the purpose of this chapter is to explain why. Thus in this chapter I review the essential features of energy that make it so important, review key quantitative information about energy, and offer some educated guesses about the future, especially in the USA but with implications for the world at large. Energy and its effects are pervasive, relentless, all-encompassing and responsible for not only each process and entity in nature and our own economic life, but also for life itself. Many aspects of the basic nature of our psyches and many of the ways that world history has unfolded come down to energy. Few understand this because the pervasive operation and impact of energy does not usually enter into our training and education. Even when we speak of energy in everyday life we are usually talking about fuels or energy carriers, entities such as gasoline, electricity or food that contain or carry energy, not energy itself. Why is this so? If energy is so important then why is that not more generally known, taught and appreciated? The answers are complex. One important reason is that there tends to be a proclivity to give people far more credit for controlling events in their lives than a careful examination of the facts warrants. That is, humans tend to give explanations based on human actions or will when 232 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 232

01/06/2017 16:51

Energy, economic growth and sustainability  ­233 in fact there are better energy-based explanations. For example, the credit for winning the Second World War is normally given to Allied military and political leaders rather than to the (arguably greater) importance of the industrial capacity of the USA. A second reason is that the energy used to support ourselves, our families and our economic activity generally, is used at some other location and by other people, or by quiet, automatic machines whose fuel tends to be relatively cheap and invisible. After all, coal, oil and gas, our principal sources of energy, are basically messy, smelly, dangerous and unpleasant materials. The electrons in the wires we plug into the wall, derived far away from the combustion of these fuels, are invisible and noiseless as they go about their prescribed work. The food energy that we need to fuel ourselves surrounds most of us abundantly, is relatively cheap and the chemical and embodied energy within it is disguised by our attention given to flavors and preparation or viewed negatively as calories as our collective waistlines expand. Society has gone to great lengths to isolate most of us physically and intellectually from the energy sources upon which our food, our comfort, our transportation and our economy depend. It is convenient to ignore energy, in part because many facts about it are uncomfortable to know. What is Energy? Defining energy turns out to be more difficult than one might think. The high school physics definition “the ability to do work” seems vague and inadequate, for what is work? Most simply, work occurs when “something is moved”. Thus energy is that which causes motion to occur. Energy is experienced by humans most often as photons (energy packets) flowing from the sun, or byproducts of those photons. Some small part of this photon flux is captured by plants through photosynthesis and stored as reduced chemical bonds. Then that energy is passed through food chains to an electron acceptor such as oxygen. Thus we are able to use the energy in a hamburger by oxidizing the reduced matter of the plant and animal tissue. This energy initially was obtained by grass (such as wheat) that captured and stored that energy from the photons, and then passed it as chemical bonds to the cow and then to us. Likewise when we drive an automobile we are oxidizing oil that is constructed of high-energy chemical bonds originally made with energy captured from the sun by algae but then processed over some 100 million years of geological pressure cooking. The biological process is analogous to that of energy-rich electrons passing though wires in an electric circuit to an electron acceptor (called a ground) doing work, such as running a motor, in the process. The main difference is that the biotic process is slower and highly controlled by many

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 233

01/06/2017 16:51

234  Handbook on growth and sustainability ­ iochemical microcircuits. Energy is measured in very many units, but b they are all interchangeable, and “boil down” to the ability to heat water. In general “reduced” means hydrogen and energy rich and oxygen poor, so that a fuel is generally a hydrocarbon such as oil or occasionally a carbohydrate such as alcohol (the “ate” on the end refers to the presence of some oxygen, so that a carbohydrate will have less energy than a hydrocarbon per gram, but still enough to be used as a fuel). When a reduced fuel is oxidized, that is, exposed to oxygen, energy is released, and the hydrogen released as water (H2O) and the carbon as carbon dioxide (CO2), with oxygen accepted by each. The process of photosynthesis is the same but runs in reverse. Energy from photons knocks an electron in the middle of a chlorophyll molecule into a higher, more energy-intense state. (Think of an ice skater spinning with her arms extended. When her partner gives her a well-aimed push her spinning is accelerated into a more energy-intense state.) Then the electron drops back into lower orbits and the energy in that electron is captured by various biochemical pathways, and ultimately as reduced carbohydrates or hydrocarbons. Power refers to the rate at which energy is generated or used. For example, a light bulb is rated in kilowatts, a unit of power, so that a 100watt light bulb uses 360 kilojoules (kJ) in an hour, or 8640 kilojoules per day – equivalent to the energy in about one-quarter of a liter of oil. If we want to know the total energy used we multiply a measure of power (for example, 100 watts) times the time of use (say 10 hours) to get the total energy use, in this case 1000 watt hours or 1 kilowatt hour. Advances in technology in the past 300 years or so, have dramatically increased the capacity of humans to do work through increasingly powerful machines (Table 11.1), facilitating unprecedented economic growth in many parts of the world. Quality of Energy When considering energy there are several critical things to think about. First, there is the quantity of it, how much is either being used or is available to the species or human society using it. Second is the quality of that energy, that is, the form that it is in, which has a great deal to do with the energy’s utility. So even though there is more coal than oil in the world there are many aspects of that coal that make it less desirable as a source of energy. For one thing most coal is in thin or deep seams that are very hard to exploit. Second, coal has far fewer uses than oil so that oil can do most things coal does, such as generate heat or electricity, but coal (mostly) cannot be used in transport. Third, oil is more energy dense, that is, a kilogram of oil has nearly twice the energy of a kilogram of coal. Fourth, oil can be transported much more easily and cheaply than coal.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 234

01/06/2017 16:51

Energy, economic growth and sustainability  ­235 Table 11.1  Evolution of power outputs of machines available to humans Machine

Horsepower

Man pushing a lever Ox pulling a load Water wheels Versailles water works (1600) Newcomen steam engine Watt’s steam engine Marine steam engine (1850) Marine steam engine (1900) Steam turbine (1940s) Coal or nuclear power plant (1970s)

0.05 0.5 0.5–5 75 5.5 40 1 000 8 000 300 000 1 500 000

Kilowatt 0.04 0.4 0.4–3.7 56 4.1 30 746 6 000 224 000 1 120 000

Source:  Derived from Cook (1976).

The most obvious example of energy quality is food. The energy in corn has obvious utility to us as food where the energy in wood or coal does not. There are many other aspects of food quality. Corn, a grass, is a very productive crop so in poorer rural communities people often eat mostly corn (or other grasses such as wheat or rice) because it allows the most food production per hectare. However, conventional corn is very low in a critical factor absolutely required for humans: the amino acid lysine. If the corn is fed to a cow then the energy bonds in the corn are transferred to energy bonds in the flesh of the cow. Cows can make lysine from their food, so protein from a cow has a full complement of amino acids and hence is a higher quality food for humans, at least from that perspective. Many relatively poor people in Latin America (and elsewhere) eat mostly rice and beans. This is actually a very good diet because the rice and beans are cheap and they complement each other: the amino acid lysine is missing in rice but found abundantly in beans, while rice is basically carbohydrates, a good energy source, and beans are protein rich. Thus rice and beans provides an excellent diet for humans, although it is still missing one critical ingredient: vitamin C. Fortunately, vitamin C is abundant in chili peppers, which are often used as a condiment by people who have a rice and bean diet. So cultural selection in humans appears to be often associated with real dietary needs, all of which insures that generally the energy that fuels humans has the required quality. Just as people may feed rice or another grain to a cow to get a smaller quantity of higher quality energy, coal or oil can be burned to generate a smaller quantity (as measured by heating ability) of electricity. This

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 235

01/06/2017 16:51

236  Handbook on growth and sustainability e­ lectricity has a higher quality than the heat available from direct combustion of the fossil fuel, in that it can be used to do things such as light a light bulb or run a computer that we cannot do with oil or coal. We are willing to take roughly three heat units of coal or oil and turn it into one heat unit of electricity because it is more useful to us, and hence is more economic, in that form. We say the quality of the electricity is higher than the energy directly available from coal or oil. The terms exergy and emergy have been introduced by physicists and ecologists to represent the quality of energy. Exergy specifies the ability of various energies to do work. Emergy is a less precise but more comprehensive term that includes all of the various energy inputs to make something, weighed by how many steps each is from the original solar source. Types of Energy Energy comes in many forms or states. First, there are two major categories or classes depending upon whether or not that energy is actually being used (that is, there is motion associated with it and some of it is being turned into heat) versus energy associated with position, that is, being stored. “Kinetic” is the term we use for energy actually being used at a given moment, and “potential” for stored energy, which might be water at an elevation, electrons in an unconnected battery, gasoline in a tank, and so on. Energy is usually associated with a “gradient” between higher energy and lower energy, as seen most clearly with elevated water. Potential energy can be transformed into kinetic energy and the converse, although there is always some loss of exergy, the ability of energy to do work, required for any transformation. This is an implication of the second law of thermodynamics, the entropy law as explained later. Energy also occurs in many different forms: as gravitational, geothermal, heat, mechanical, chemical, light and nuclear and the energy in one form can be converted into another (with an inevitable reduction in exergy). The most important energy source for most things going on at the surface of the Earth is the solar energy from the sun which runs many complex natural processes including life itself. For example, it evaporates and lifts water from the sea to provide rains and rivers that flow from mountains, drives winds that move atmospheric water from the ocean to the land and cleanses the local skies of pollutants, generates soils through complex processes of forest and grassland growth, and concentrates lowenergy carbon dioxide from the atmosphere into higher-energy tissues of a plant through photosynthesis.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 236

01/06/2017 16:51

Energy, economic growth and sustainability  ­237 Laws of Thermodynamics and their Significance The use and conversion of energy among different forms, every place and time it happens, are governed by the laws of thermodynamics. Thermo means heat (or energy) and dynamics means changes. Thermodynamics is the study of the transformations that take place as energy is used to do work. There are two principle laws of thermodynamics, called the first and second laws of thermodynamics. The first law says that energy (or energymatter for some particular considerations involving nuclear reactions) can never be created nor destroyed, but only changed in form. Thus the potential energy found in a gallon of gasoline but then used to drive a car, say, 20 miles up a hill, is still found somewhere, as the momentum of the car, as heat dissipated by the radiator or where the tires meet the road, or in the increased potential energy of the car at the top of the hill. Most of the original energy will be found as heat dissipated into the environment. The second law says whenever energy is converted from one form to another some of that original energy is converted to waste heat that cannot do work. At every energy transformation some of the initial high-grade energy (that is, energy that has potential to do work) will be changed into low-grade heat barely above the temperature of the surrounding environment. That is, the first law says that the quantity of energy always remains constant, but the second law says that the quality is degraded with use. The practical meaning of the second law is that, with the exception of the reliable (but ultimately limited) energy input from the sun, it is always necessary to find new energy resources to construct and maintain whatever structures we have, including plant and animal bodies, ecosystems, houses, cars, civilizations, and ourselves (Hall et al. 1986). The implications of this physical law has overwhelming impacts upon all human enterprises and histories, as will be explored further. Energy Density The energy density of a material refers to the concentration of energy, that is, the ability of a unit of mass or volume to undertake work. Different fuels have different densities that make them able to carry more or less energy in a given unit of mass or volume. For example the following fuels have approximately the following energy densities (MJ/Kg): diesel (48), liquid petroleum gas (46.4), gasoline (44.4), coal (24), ethanol (26), animal fat (37), sugar (17), gunpowder (3), lithium batteries (0.5), and lead acid batteries (0.2). Energy density is especially important with respect to storage; that is, the quantity of energy that can be stored per unit of volume or mass (EIA 2013). The difference between the energy density of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 237

01/06/2017 16:51

238  Handbook on growth and sustainability gasoline and batteries helps explain why it is so difficult to construct inexpensive battery-driven automobiles.

2  ENERGY IN HUMAN ECONOMIES Humans are different from other species in that we have the ability to evolve culturally at very rapid rates, much more rapidly than conventional organic evolution. As a consequence of this cultural evolution, human populations have increased dramatically since humans emerged as a species in Africa half a million years ago, and especially in the past several hundred years. The most important aspects of this evolution have been energy-based or at least are associated with energy. A key event in the cultural evolution of early human society was the development of spearheads and knife blades, which are energy- or force-concentrating devices that allowed humans to exploit a much broader and larger animal-resource base for food and skins. Another important event was the harnessing of the energy in the chemical bonds of wood, using fire, which allowed humans to exploit even more food resources by breaking down plant cell walls through cooking, and to smelt metals, kiln cement, and bake ceramics. All these developments assisted humans in their exploitation of colder, more northerly ecosystems. Subsequently new energy-based technologies were developed, the most important of these being (1) agriculture and animal husbandry, which redirected an area’s photosynthetic energy from natural to human food chains and (2) learning over the past two centuries how to exploit the enormous quantity of concentrated energy in the chemical bonds of fossil fuels, principally coal, oil and natural gas. It is unlikely that human societies were ever truly sustainable. Preindustrial humans appear to have caused the extinction of many large animals, and agriculture almost necessarily leads to the slow depletion and eventual exhaustion of soils used as well as many other types of environmental degradation (for example, Redman 1999). However, fossil fuels have also generated an enormous increase in the ability of humans to do all kinds of work, greatly enhancing what they once did with their own muscles or those of work animals. This work includes the production of food, and the increase in food has contributed to the enormous increase in the number of humans. Two and a half centuries ago the use of coal to power the Industrial Revolution gained considerable momentum with the invention of the Watt steam engine. In 1865 Stanley Jevons was able to say that there was hardly any economic activity in England that did not lead back to coal. Today the global use of hydrocarbons for fuel has increased nearly eight hundred-fold since 1750 and about twelve-fold in the twenti-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 238

01/06/2017 16:51

Energy, economic growth and sustainability  ­239 eth century. Over the past century, humanity overwhelmingly entered the age of oil, or if we include natural gas, the age of petroleum. It has been said that we now live in an information age, or even a post-industrial age. Instead we live overwhelmingly in a petroleum age. All transportation, all food production, our warm houses, all plastics, most of our jobs and leisure, much of our electricity and all of our electronic devices are dependent upon gaseous and especially liquid petroleum (and also coal). This has been, and is, and will be for some time to come, the age of fossil fuels and especially liquid and gaseous petroleum. Thus beyond sunshine, clean water and air, soil, and biomass, petroleum is contemporary humanity’s most important resource. For example, where we live relative to where we work, what we do for our work, how much leisure time we have and how we spend it, the price of our food, how we meet our lovers and spouses and visit our families, most of our purchases, and how much education we can afford are largely dependent on adequate supplies of cheap oil. In North America it takes the energy of about a gallon (3.8 liters) of oil each day to feed each of us, the energy equivalent of about seven gallons (64 liters) per day to keep us supplied with all the goods and services that we demand through our economic activity, and about 80 barrels of oil in total to provide an undergraduate education at one of our colleges (Cleveland et al. 1984; Dukes 2003; Hall and Klitgaard 2012). A century or more ago only a tiny elite of society enjoyed the level of affluence the average person in the industrial world enjoys today, in terms of abundant and varied food, mobility, climate control and leisure, which was usually provided less well by slave labor or indentured servitude. The economies of the world rely heavily on fossil fuels, which means oil, gas, and coal. Liquid and gaseous petroleum supply about 50 to 60 percent of the commercial energy that does economic work. Coal provides another 30 or so percent, and nuclear, wood and hydropower provide 5, 10 and 2 percent respectively (IEA 2014). For both the USA and the world “new solar”, meaning modern wind turbines and photovoltaics, provide 1 or 2 percent of total energy supply, although their output is increasing rapidly. All of these proportions have not changed very much since the 1970s, except that photovoltaic plus wind have gone from nothing to perhaps 2 percent of the total energy used. (In a few countries such as Denmark and Germany, where governments have made a deliberate effort to promote these new technologies, the percentage contribution to total energy has been higher; Smith 2015.) Globally, the annual absolute increase in either oil, gas, or coal use during the last decade is much greater than the new quantities coming from new solar, at least until the most recent years, so that new solar are not displacing any fossil fuels but only adding to the mix (IEA 2014; EIA various years). Whatever a sustainable future means we

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 239

01/06/2017 16:51

240  Handbook on growth and sustainability are not approaching it very rapidly but remain almost completely dependent on fossil fuels. Even the generation of alternative fuels is very fossilfuel intensive and will remain that way until such time as energy from alternative sources contributes a much greater proportion of the total. But new solar (wind and PV) may become much more important in the future due to concerns about potential climate change and as their prices decline.

3  FOSSIL FUELS The Formation of Fossil Fuels It is important to consider in some detail the very special circumstances that were required for the formation of oil and gas because they are so important to our economic life and because there is so much controversy about how much is left to exploit. Oil and gas are organic materials, that is, they are plant and animal remains composed of mostly carbon (and also hydrogen), as is all life. As plant life evolved some 3 billion years ago a great deal of organic material was formed, most of which was oxidized relatively soon and turned back to carbon dioxide in the atmosphere, becoming available for new plant growth but not as an energy source. Some very small part of this organic material found its way to anaerobic (meaning without oxygen) basins, such as deep lakes or marine areas for oil and gas, and hence accumulated as various deposits. Coal was formed in great freshwater swamps. Chemically, natural gas (methane) has four molecules of hydrogen per molecule of carbon, oil has about equal amounts and coal is mostly carbon, although with small amounts of hydrogen and sulfur and trace amounts of many elements, including troublesome mercury and uranium. Thus there is a progressive increase in CO2 per unit of energy delivered from natural gas to oil to coal, with coal burning releasing almost double the CO2 per heat unit relative to gas. The creation of exploitable oil and gas fields has been quite rare in the geologic past, occurring mostly some 90 and 150 million years ago in very special and limited environments. The time required to turn the organic source material into oil and gas is extremely long. As a consequence, significant quantities of commercially exploitable oil and gas are found only in a relatively few regions of the Earth’s surface. Coal, requiring similar but far less stringent conditions for its production, is much more common. Gas too is widely dispersed but large reservoirs are relatively rare. On the other hand, gas is found widely at low concentrations in “tight” shales and sandstones. Exploitation of these diffuse resources is becoming increasingly important as the large gas fields found earlier face serious depletion. Whether or not

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 240

01/06/2017 16:51

Energy, economic growth and sustainability  ­241 these newer “unconventional” fields can maintain production at the present level for very long is unknown at this time (Miller and Sorrell 2014). Oil “Conventional” petroleum means fuels derived from geologic deposits, usually found and exploited using drill bit technology with the resources moving to the surface because of their own pressure or with additional pressure supplied by pumping additional natural gas or water into the reservoir. “Unconventional” petroleum includes shale oil, tar sands, some bitumens, and coal-bed methane. These resources are usually less processed by geological forces, of less concentrated nature (for example mixed with sand) or found in deposits requiring more energy to extract the desired resource. A somewhat grey area is “previously uneconomic” oil and gas which is usually a lower grade resource of any kind that was traditionally not worth exploiting, but becomes commercially exploitable with new technologies such as horizontal drilling and the higher prices occurring following the depletion of easier traditional reservoirs. Humans have tended to exploit the large, high-quality and easy oil deposits first. This is an example of the “best first” principle introduced by the nineteenth-century economist David Ricardo. Currently, about half of the oil we extract comes from only 3 percent of the oil fields, most of which have been exploited for 50 or more years (Simmons 2011). Onshore deposits in places such as Texas and Louisiana were developed long before the deeper offshore regions. But the large onshore resources are now depleted, and there are more than 4000 very expensive platforms in the Gulf of Mexico off Louisiana and the mouth of the Mississippi River that are responsible for much of the USA’s remaining oil and gas production. Exploitation of the North Sea deposits has involved similar, expensive technology. Over time we are moving further and further off shore, and deeper and deeper in the sediment, and are finding smaller fields. At the time of writing, Arctic exploration and development has been postponed because of the large expense and disappointing results so far, combined with the fall in the price of oil since mid-2014. Natural Gas Petroleum usually means liquid and gaseous hydrocarbons, and includes oil, natural gas liquids and natural gas. Natural gas is often found associated with oil, although it has other possible sources, including coal beds and organic-rich shales. We get natural gas when the original plant material, with molecules often of hundreds to thousands of carbon atoms

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 241

01/06/2017 16:51

242  Handbook on growth and sustainability linked together, has been cracked or broken by geological energies to a length of five or fewer carbon atoms, becoming most usually methane, with one carbon atom surrounded by four hydrogen molecules. Once distribution systems are built, gas is an ideal fuel as it is easy to handle and very useful. Since oxidizing hydrogen releases more energy per unit of carbon dioxide, its use would contribute less to climate change than other fossil fuels, at least if not much leaks from the pipes (methane has a global warming potential 28–84 times higher than carbon dioxide per molecule; Myhre et al. 2013). When natural gas is held in a tank, some heavier fractions fall out as natural gas liquids, and these materials can be used either directly or as inputs to refineries. While natural gas was once considered an undesirable and dangerous byproduct of oil production and flared into the atmosphere, with time a complex pipeline system evolved and now natural gas ties with coal as the second most important fuel in the USA and the world. An important question is, if oil supplies falter can natural gas take over its role? While it is not as energy dense or transportable as oil, it comes close, and because it is clean and malleable it has many special uses such as a feedstock for plastics and nitrogen fertilizer. Natural gas is used increasingly to make electricity although it is possible that our grandchildren will be unhappy about this if they need that gas for higher-value uses such as making fertilizer. Unconventional Petroleum: Fracking and Heavy Oil There is a great deal of excitement and debate about whether “unconventional” oil from, for example, the Bakken formation in North Dakota and the Eagle Ford field in Texas, and natural gas from shales such as the Marcellus shale can provide an energy renaissance for the USA. While the amount of oil in these formations is enormous, the rocks (actually sandstone, not shale) have low porosity (pore space) and permeability (ability of oil to flow through the formation) so that only 5 percent of the oil in place can be extracted even by new, energy-intensive “heroic” efforts. This compares with an average of 38 percent from conventional fields (Duffeyes 2002). The new technologies required, including horizontal drilling (with up to 2-mile lateral extensions) and the shattering or “fracking” of the rocks with very high pressure water have allowed considerable amounts of previously inaccessible oil and gas to be produced. So far most of this “unconventional” oil and gas has come from a relatively few “sweet spots”, so the total production may go through nearly a full exploitation cycle in just a few decades. Meanwhile conventional gas production in the USA has peaked and dropped off to less than half the peak, so that currently the unconventional gas of all kinds is mostly compensating for the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 242

01/06/2017 16:51

Energy, economic growth and sustainability  ­243 decline in conventional gas and the USA continues to import large quantities of oil and some gas from abroad. Thus, while fracked oil and natural gas are likely to be very important as conventional oil production and availability decline, it is likely to extend the petroleum age by only a few decades. At the time of writing (May 2017) both unconventional and total oil production in the USA have gone through a secondary peak, decline and partial recovery (EIA weekly petroleum statistics various years). “Heavy” oil tends to be relatively “undercooked” compared with conventional “light” oil, is very abundant in Canada and Venezuela, and can be exploited by digging out the heavy oil or the “tar sands” and treating it with natural gas to add hydrogen and make the oil more fluid. This is, in general, an inefficient and capital- and energy-intensive process. Nevertheless, the technology to exploit these deposits exists, the resources are large (but again of varying quality) and are likely to continue to supply a modest quantity of petroleum to the world. The exploitation of Canadian tar sands is especially well developed, but their extraction has been declining since 2014 with the decline in the world price of oil. Coal Coal was the backbone of the initial industrialization of the UK and of Germany, starting around 1700, and the USA in later years. It was the most extensively used fossil fuel until surpassed by oil in the middle of the twentieth century. While coal is much more widely distributed over the Earth’s surface than oil, the depletion of some of the best resources was a matter of grave concern in mid-nineteenth century in Britain (Jevons 1865 [1965]). Nevertheless exploitable coal resources remain abundant in the world, with especially large reserves remaining in Russia, the USA, Australia and China. Estimates of the resource base of coal seems to be less volatile than for oil or gas. Recent assessments by Maggio and Cachiola (2012) and Mohr et al. (2015) give a most probable estimate for global coal of some 1200 billion metric tonnes, with the largest component being medium-quality bituminous. Earlier estimates of how long coal would last, based on dividing the resource base by the annual use, were from 100 to 400 years. The more recent estimates of, for example, Mohr et al. (2015) and others is for a continued sharp increase in coal use, mostly driven by the large increase in Asian coal consumption, a peak by 2025 (or 2050 in the high resource scenario) and then decline, again led by China. The future of coal may be driven more by global efforts to decrease CO2 emissions than by continued economic growth and the cheap price of this relatively carbon-intensive fuel.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 243

01/06/2017 16:51

244  Handbook on growth and sustainability Fossil Fuels and the Economy The rapid economic growth of the past two centuries or so has been made possible by the exploitation of fossil hydrocarbons that has increased enormously the ability of humans to do all kinds of economic work. There continues to be a strong connection between energy use and economic activity for most industrialized and developing economies. From 1900 to 1984 the increase in the economy of the USA was essentially one for one with the increase in the use of energy (Hall et al. 1986). More recently “top-down” macroeconomic analysis (that is, simply dividing inflationcorrected gross domestic product by total energy used) indicates that there has been a decline in the ratio of energy used to gross domestic product (GDP) generated in industrial nations (IEA 2014). While most analysts attribute this to increasing efficiency of fuel-using processes and equipment, other analysts have shown that a shift to higher-quality fuels, higher fossil-fuel prices, structural changes in national economies (such as from increasingly generating services versus goods and changing patterns of trade; Kaufmann 2004), or, according to the website ShadowStats (2016), a systematic cooking of the books on inflation since 1985 have been important. Thus there is considerable room for debate on the degree to which economic production has been and could be decoupled from energy use and hence make our economy more sustainable. Energy prices have an important effect on almost every major aspect of macroeconomic performance because energy is used directly and indirectly in the production of all goods and services. Both theoretical models and empirical analyses of economic growth suggest that a decrease in the rate of energy availability, and an increase in energy prices, have serious impacts on the economy. For example, most US recessions after the Second World War were preceded by rising oil prices, and there tends to be a negative correlation between oil price changes and both stock prices and their returns in countries that are net importers of oil and gas. Energy prices have also been key determinants of inflation and unemployment (Hall et al. 1986; Hamilton 2009). There is a strong correlation between per capita energy use and social indicators such as the UN’s Human Development Index, although that relationship is much more important at low incomes than high – in other words increasing energy use and economic growth are far more important for improving quality of life for the poor than for the rich (Lambert et al. 2014). The use of hydrocarbons to meet economic and social needs is a major driver of our most important environmental changes, including global climate change, acid deposition, urban smog, and the release of many toxic materials. Increased access to energy provided the means to deplete

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 244

01/06/2017 16:51

Energy, economic growth and sustainability  ­245 or destroy once-rich resource bases, from mega faunal extinctions associated with each new invasion of spear-equipped humans, to the destruction of natural ecosystems and soils through, for example, overfishing, intensive agriculture and other types of “development”. Harvard biologist E.O. Wilson has attributed the current mass extinction to what he calls HIPPO effects: habitat destruction, invasive species, pollution, population (human), and overgrazing (Discover Magazine 2001). All these activities are energy intensive. Such problems are exacerbated by the increase in human populations that each new technology has allowed, as well as the overdependence of societies on previously abundant resources. Pattern of Energy Use over Time Humanity’s use of energy has increased by more than a factor of eight since 1940. During most of this period global economic output increased at about the same or a slightly faster rate. Two important questions are to what degree are the two connected and whether or not the increase in the quantity of energy produced and used can continue, and for how long, especially for the highest quality fuels. Peak Oil: How Long Can We Depend on Oil? The best-known model of oil production was developed by Marion King Hubbert, who proposed that the discovery and production of petroleum over time would follow a single-peaked, more or less symmetric, bellshaped curve. He surmised that the rate of production would initially increase exponentially as the means for exploiting and using the resource were figured out. A peak in production would occur when about 50 percent of the ultimate recoverable resources (URR) had been extracted (he later opined that there may be more than one peak). Ultimate recoverable resources is the total amount of oil that can be recovered. Hubbert’s hypothesis (1962, 1969) seems to have been based principally on his experience as a geologist and it was not a bad guess. He famously predicted in 1956 that US oil production from the lower 48 states would peak in 1970, which in fact it did. Hubbert also predicted that the US production of natural gas would peak in about 1980, which it did, although it has since shown signs of recovery and there is a second peak in early 2015 based in large part on “unconventional” and “shale gas”. He also predicted that world oil production would peak in about 2000 (see Bartlett 2000). In fact, the production of oil globally continued to increase until 2005, after which it appears to have entered an “undulating plateau”, as predicted earlier by geologists Colin Campbell and Jean Lahererre (1998). The main

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 245

01/06/2017 16:51

246  Handbook on growth and sustainability THE GROWING GAP Regular Convention Oil 60 Past discovery 50

Future discovery Production

Gb/a

40

Revisions (2015) backdata. Data rounded with 3 yr moving average.

30 20 10 0 1930

1950

1970

1990

2010

2030

2050

Note:  Our rate of finding oil peaked in the 1960s, but the use rate has increased over time. Source:  Image courtesy of Colin Campbell.

Figure 11.1  Global rate of finding and producing oil reason that the Hubbert curve “works” is that if the finding of oil peaks at some point, then inevitably and owing to the simplest of mathematics (the integral of the production curve cannot exceed the integral of the finding curve) the peak of production must follow. For the USA, the peak in finding oil was in the 1930s and for the world in the 1960s. Both have declined enormously since then (Figure 11.1), and production declines must follow. In the past decade, a number of “neo-Hubbertarians” have made predictions about the timing of global and national oil production using several variations of Hubbert’s approach. Various forecasts of the timing of global peak have ranged from one predicted for 1989 to many predicted for the first decade of the twenty-first century and one as late as 2040. The difference in these forecasts is largely due to differences in assumptions about the URR. Brandt (2007) and Hallock et al. (2014) show that the Hubbert curve is a good prediction for most post-peak nations, which includes the great majority of all oil-producing nations. Other forecasts for world oil production do not rely on such curve-fitting techniques to make future projections and/or a prior assumption about URR. According to one forecast by the US Energy Information Administration (EIA) (2003), world oil supply in 2025 will exceed the 2001 level by 53 percent. The EIA

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 246

01/06/2017 16:51

Energy, economic growth and sustainability  ­247 reviewed five other world oil models and found that all of them predict that production will increase over the next two decades to around 100 million barrels per day, substantially more than the 77 million barrels per day produced in 2001. Several of these models rely on the 2000 United States Geological Survey (USGS 2003) estimates of URR for oil. It should be noted that the majority of oil-supply forecasts (with the possible exception of post peak Hubbert analyses as in Hallock et al. 2014) have had a poor or ambiguous track record, regardless of method. Most recent results of curve-fitting methods showed a consistent tendency to predict a peak within a few years, and then a decline, no matter when the predictions were made. It is now a well-established fact that economic and institutional factors, as well as geology, were responsible for the US peak in production in 1970, forces that are explicitly excluded from the curve-fitting models (Kaufmann and Cleveland 2001). Thus, the ability (or the luck) of Hubbert’s model (and its variants) to accurately forecast production in the 48 lower states cannot necessarily be extrapolated to other regions or the world. It is too early to tell, but the evidence so far is that while the Hubbert curve might not predict the date of peak oil perfectly, the general concept is very sound and future researchers will look at our present uncertainty as small blips compared with the overall pattern of depletion over time. Global oil production is decreasing or at least no longer increasing, and most oil-producing countries are following a more or less classic Hubbert curve and are well past their peak (Hallock et al. 2014). The principal reason is that most oil production comes from very large oil fields (greater than 500 million barrels, called “elephants”) and we have found few elephants in the world since the 1960s. Now these large oil fields are aging, and their production is falling (Simmons 2011). It appears exceedingly unlikely that new oil discoveries, most of which are not large, will make up for the decline in the elephants. There has been some increase lately in other fossil fuel production, such as natural gas liquids, but little or none in real conventional oil. The longer view is not especially optimistic, and a recent and authoritative assessment suggests the probability of severe declines in the availability of all fossil fuels, perhaps within a relatively short time (Mohr et al. 2015). If this is indeed the case, the impacts on the global economy would be enormous, and indeed may have begun for a number of post peak-oil countries such as Syria, Egypt, Nigeria and Venezuela (Ahmed 2017).1 The world will not run out of hydrocarbons (for example, Lynch 2002). Instead it has, and will increasingly, become difficult to obtain cheap petroleum, because what is left is an enormous amount of low-grade hydrocarbons which are likely to be much more expensive financially, energetically, politically and, especially, environmentally. As conventional

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 247

01/06/2017 16:51

248  Handbook on growth and sustainability oil becomes less available, society will make investments in different sources of energy and improvements in energy use efficiency, reducing our dependence on hydrocarbons. Those who focus on sustainability and protecting our atmosphere and climate cheer on this process with great enthusiasm, but we need to be a little careful about what we wish for. It is extremely unlikely that we will ever have another major energy resource as valuable, abundant and flexible as oil and gas. The rate of increase in the use of these fuels, previously some 3 to 5 percent per year, has declined precipitously, especially in Western economies, to less than 1 percent per year even as prices declined. The reasons for this are several, including increased efficiencies, but appear to be mostly owing to the fact that the economies of Europe, Japan, and to a lesser degree the USA and China, experienced much slower rates of economic growth, possibly because while the price of oil seems low now, it remains high by historical standards. How this will affect future use rates of fossil fuels remains uncertain. Net Energy and EROI The main problem that we face with regard to fossil-fuel supplies is not the total quantity on Earth (there are enormous supplies remaining) but their quality. To survive and thrive, all species must balance the relation between the energy cost of getting needed resources, including additional energy, and the energy (or other attributes) in the resource exploited. This applies to predators hunting for food who must compare the energy expended in the chase and the chances of success with the energy obtained from the prey. It also applies to human economies. Thus a critically important issue for examining our energy future is what is called energy return on investment (EROI, sometimes EROEI). Investments are required to get fossil fuels out of the ground and into society. These are investments in terms of energy as well as dollars and, just as we need a profit from a financial investment, so we need a net energy profit from our energy resources for society to continue. Energy return on investment is a good way to examine this fundamental proposition. It is simply the energy gained from an energy-obtaining activity compared with the energy used to get that energy. Energy return on investment is sometimes corrected for the quality of the energy, such as electricity generated from a photovoltaic (PV) system versus the fossil energy used to build it, but should not be confused with conversion efficiency, where energy already obtained is converted to some other form, such as coal to electricity. EROI 5 Energy returned to society from an energy gathering activity Energy required to get that energy

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 248

01/06/2017 16:51

Energy, economic growth and sustainability  ­249 While the concept is very simple, undertaking the actual analyses to estimate its value is difficult because governments have been uneven in maintaining the required database, partly because costs are often closely held secrets for corporations, partly because the largest oil production is from national oil companies that tend not to make data available, and partly because information is usually kept in financial rather than energy terms. Nevertheless some countries maintain good enough energy-use databases so that it is possible to undertake analysis. Norway, which began finding major deposits of oil in the late 1960s in the North Sea, maintains good records, has been well analyzed by Grandell et al. (2011), and is a good example of what has happened around the world. Production started in 1970 and peaked in about 2000. Energy required to find, develop, and produce the oil continues to increase over time. The EROI of Norwegian oil peaked in 1996 at 45:1, that is, one barrel of oil or one Joule invested in obtaining oil generated about 45 barrels or Joules in return (Figure 11.2). By 2007 that had declined to about 20:1. If the energy in the natural gas co-produced is included the numbers are from 60:1 at the peak to 40:1 in 2007. Production, and hence EROI of Norwegian petroleum production in 1991 – 2008 70 60

EROI

50 40 30

EROI for Norwegian oil has declined by half in 11 years

20 10

Total petroleum Oil only

0

1991

1996

2001

2006

Source:  Grandell et al. (2011).

Figure 11.2  EROI for Norwegian oil and oil plus gas

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 249

01/06/2017 16:51

250  Handbook on growth and sustainability the EROI, continues to decrease through 2015. Similar patterns, although with a lower EROI, have been observed for the USA, the UK, Mexico, and China and for all privately traded companies (Gagnon et al. 2009; Guilford et al. 2011; Hall et al. 2014). Hall and Cleveland (1981) found that in years when exploitation intensity is high (that is, there is more ­drilling) the EROI tends to decline relative to the time trend. This means that it is not possible to increase conventional oil production simply by drilling more wells. You have to drill thoughtfully rather than frequently in order to yield ample net energy. There are two basic considerations relating to the long-term trend in oil (and other non-renewable) resources. Many resource analysts emphasize the importance of depletion as humans exploit and eventually exhaust higher grades (that is, more concentrated resources from more accessible deposits) over time. On the other hand, many economists believe that over time technical improvements have compensated and will more than compensate for future depletion. This view is in part based on an important book by Barnett and Morse (1963) which argued that, except for forest products, depletion had not impacted prices. Cleveland (1991) has given a new and important energy-based twist to this analysis. He showed that as depletion occurred in different resource sectors, industries used more energy, which had become cheaper during the time period of the original analysis, to compensate for the depletion. In the same vein, EROI examines the net effect between the increasing efficiency from technical improvements versus the effects of depletion. Since, in general, EROI values are decreasing it appears that depletion is the stronger force. Energy return on investment analysis is especially important because it puts a limit to the often stated economic principle that as oil (for example) gets scarcer the price will go up and lower quality reserves will then become economic. At some point it will cost a barrel of oil to get a barrel of oil, and then no matter what the price, those reserves will not be worth exploiting for energy. Thus, while it is true that there is a great deal of low-grade oil left in the ground, it is unlikely that the majority will provide a net energy surplus. In time, EROI appears to drive oil prices; as EROI declines prices tend to rise, although other factors such as drilling rate may intervene. The EROI that is needed to undertake some activity, such as to drive a truck, is far more than just what is needed to get the fuel out of the ground. To drive a truck, we must also get the energy to get the oil but also refine and transport it, make the truck and roads and bridges (or pay for their depreciation) and so on. Hall et al. (2009) found that an EROI of at least 3:1 was required to drive a truck or car. An even higher EROI is required to do that and to make something to put into the truck, say some grain. Lambert and colleagues (2014) estimated that the EROI to run modern

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 250

01/06/2017 16:51

Energy, economic growth and sustainability  ­251 industrial-consumer society is probably much higher, probably from 10:1 to 15:1 at a minimum if we are to support families, health care, education, the more complex arts, and so on. Unfortunately, the alternatives to oil available today are mostly characterized by EROIs lower than this, limiting their economic effectiveness (Lambert et al. 2014). It is critical for chief executive officers (CEOs), government officials and the public to understand that the best oil and gas are simply gone, and there is no easy replacement. We may be able to adjust to this situation, but not if we think that high levels of, or perhaps any, economic growth are necessarily going to happen. These are powerful arguments to be considered when thinking about sustainability. Most of the ongoing discussion about renewable energy and their potential contribution to a more sustainable energy future refers to the so-called new renewables that include solar (PVs and wind) but also waves, tides, and high-technology liquid biofuels. In general these energy sources have relatively low EROIs, although the output is generally high-quality electricity. Photovoltaic has been variously estimated as between 3:1 and 10:1 (see Prieto and Hall 2013). Wind appears to have a fairly high EROI of 20:1 or more with larger or coastal wind turbines (Hall et al. 2014). A major problem with solar energy is that the sun does not shine, nor the wind blow, all the time. There has not yet been an EROI analysis undertaken that includes the energy costs of dealing with this intermittency by including the energy embedded in batteries, other storage devices and back up supplies. Consequently, it remains a matter of speculation whether renewable energy sources, even with the rapid decline in their costs, could sustain high levels of economic output and continued growth (Kaufmann and Shiers 2008). We are still very much in the age of petroleum. At this point it is unclear whether future use of fossil fuels will be restricted first by physical “peaking” or, second, from volunteer reduction to protect the atmosphere (for example, McGlade and Ekins 2015) but either or both are likely to occur within a generation. Transitioning out of the age of petroleum (for reasons of depletion and/or protection from climate change) while maintaining current living standards in rich countries and raising income levels in poorer countries will be far more difficult than many anticipate, and a key reason for this is the comparatively low EROI of renewable energy sources. Economic Impacts of Peak Oil and Decreasing EROI Whether global peak oil has occurred already or will not occur for some years or, conceivably, decades, its economic implications will be enormous. We do not know if there are available substitutes on the scale required and at the EROI that is needed. Alternatives will require

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 251

01/06/2017 16:51

252  Handbook on growth and sustainability e­ normous investments in money and energy, both likely to be in short supply. Despite the projected impact on our economic and business life within relatively few years or decades, in the USA neither government nor the business community is prepared to deal with either the impacts of these changes or the new thinking needed for investment strategies (Hall et al. 2001; Hirsch et al. 2005; Hall and Groat 2010). The reasons are myriad but include: the vested interests of powerful energy companies, the disinterest and disorientation of the media, the erosion of good energy recordkeeping at the Department of Commerce, and the focus of the media on trivial “silver bullets” despite the inability of any one of them (except economic contraction and in some cases conservation) to contribute more than a few percent to the total energy mix, and the failure of government to fund good objective analytical and work on the various energy options. Consequently much of what is written about energy is woefully misinformed or simply advocacy by various groups that hope to look good or profit from various perceived alternatives. The end of cheap petroleum will be perhaps the most important challenge that Western society has ever faced, especially when considered within the context of the need to deal with climate change and other environmental issues related to energy. Businesses and governments who do not understand the inevitability, seriousness and implications of the end of cheap oil and eventually cheap fossil fuels, or who make poor decisions in an attempt to alleviate their impact, are likely to be tremendously and negatively affected as a result. At the same time the investment decisions made in the next decades will determine whether or not civilization is to make it through the transition away from petroleum-driven, growth-based economies to something more sustainable, if indeed that is possible. Developing Energy Policy Developing a comprehensive energy policy is highly complex and beyond the scope of this chapter. However, arising from certain characteristics of energy, there is a set of questions that should be asked when any energy source is proposed or whenever the word sustainable is used: 1. Is the proposed energy source consistent with the laws of thermodynamics? 2. Are external energy subsidies, including those from environmental degradation, accounted for? 3. Has a proper EROI been calculated and is the EROI 10:1 or better, as required for a viable modern economy? 4. Is the produced energy easily available to energy consumers, or is there

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 252

01/06/2017 16:51

Energy, economic growth and sustainability  ­253

5. 6. 7. 8.

a mechanism to transfer energy from the site of production to site of consumption, and how expensive, monetarily and energetically, is it? Is the produced energy available when needed, or does a storage option exist (for wind- and solar-produced electricity, for example)? Is the output synchronized with consumption patterns? Is the energy produced in a form that is easily used, stored, transported, and what are the main safety issues involved? Do the risks of producing and handling the energy exceed the potential benefits? Is there a key substance in the production process that is the limiting factor? For example the electric utility industry has concerns that copper supplies are insufficient to produce the transmission lines needed to support a transportation system reliant on electricity.

It will be necessary for a successful transition from the petroleum age that sufficient alternative energy sources be found for which all these questions can be answered in the affirmative. If not, what then?

NOTES * Derived in part from Hall and Klitgaard (2012), Hall et al. (2003), and Day and Hall (2016) and sources therein. For a more comprehensive treatment see C.A.S. Hall (2017), Energy Return on Investment: A Unifying Principle for Biology, Economics and Sustainability, New York: Springer. 1. This book is a very insightful and sobering view of the relation between energy availability and political stability or lack thereof. The degree to which non-conventional energy sources can fill in for this inevitable decline in fossil fuels is not known at this time but is a critically important issue.

REFERENCES Ahmed, Nafeez (2017), Failing States, Collapsing Systems: BioPhysical Triggers of Political Violence, New York, NY: Springer. Barnett, H. and C. Morse (1963), Scarcity and Growth: The Economics of Natural Resource Availability, Baltimore, MD: Johns Hopkins University Press for Resources for the Future. Bartlett, A. (2000), ‘An analysis of U.S. and world oil production patterns using Hubbertstyle curves’, Mathematical Geology, 32 (1), 1–17. Brandt, A.R. (2007), ‘Testing Hubbert’, Energy Policy, 35 (5), 3074–88. Campbell, C.J. and J.H. Laherrère (1998), ‘The end of cheap oil’, Scientific American, 278 (3), 78–83. Cleveland, C.J. (1991), ‘Natural resource scarcity and economic growth revisited: economic and biophysical perspectives’, in R. Costanza (ed.), Ecological Economics: The Science and Management of Sustainability, New York: Columbia University Press, pp. 289–317. Cleveland, C.J., R. Costanza, C.A.S. Hall and R. Kaufmann (1984), ‘Energy and the United States economy: a biophysical perspective’, Science, 225 (4665), 890–97.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 253

01/06/2017 16:51

254  Handbook on growth and sustainability Cook, E. (1976), Man, Energy, Society, San Francisco, CA: W.H. Freeman. Day, J. and C. Hall (2016), Sustainable Cities and Landscapes, New York: Springer. Discover Magazine (2001), ‘Biologist Edward O. Wilson – the bard of biodiversity’, Discover Magazine, December. Duffeyes, K. (2002), Hubbert’s Peak: The Impending Oil Shortage, Princeton, NJ: Princeton University Press. Dukes, J.S. (2003), ‘Burning buried sunshine: human consumption of ancient solar energy’, Climatic Change, 61 (1–2), 31–44. Energy Information Administration (EIA) (2013), ‘Few transportation fuels surpass the energy densities of gasoline and diesel’, United States Energy Information Agency, accessed at https://www.eia.gov/todayinenergy/detail.cfm?id59991. Energy Information Administration (various years), ‘US Weekly petroleum supply statistics’, accessed January 2016 at https://www.eia.gov/petroleum/supply/weekly. Gagnon, N., C.A.S. Hall and L. Brinker (2009), ‘A preliminary investigation of energy return on energy investment for global oil and gas production’, Energies, 2 (3), 490–503. Grandell, L., C.A.S. Hall and M. Hook (2011), ‘Energy return on investment for Norwegian oil and gas in 1991–2008’, Sustainability, 3 (11), 2050–70. Guilford, M., C.A.S. Hall, P. O’Conner and C.J. Cleveland (2011), ‘A new long term assessment of energy return on investment (EROI) for U.S. oil and gas discovery and ­production’, Sustainability, 3 (10), 1866–87. Hall, C. and K. Klitgaard (2012), Energy and the Wealth of Nations. Understanding the Biophysical Economy, New York: Springer. Hall, C., P. Tharakan, J. Hallock, C. Cleveland and M. Jefferson (2003), ‘Hydrocarbons and the evolution of human culture’, Nature, 426 (6964), 318–22. Hall, C.A.S. and C.J. Cleveland (1981), ‘Petroleum drilling and production in the United States: Yield per effort and net energy analysis’, Science, 211 (4482), 576–9. Hall, C.A.S. and A. Groat (2010), ‘Energy price increases and the 2008 financial crash: a practice run for what’s to come?’, Corporate Examiner, 37 (4–5), 19–26. Hall, C.A.S., S. Balogh and D.J.R. Murphy (2009), ‘What is the minimum EROI that a sustainable society must have?’, Energies, 2 (1), 25–47. Hall, C.A.S., C.J. Cleveland and R. Kaufmann (1986), Energy and Resource Quality: The Ecology of the Economic Process, New York: Wiley Interscience. Hall, C.A.S., J.G. Lambert, S.B. Balogh (2014), ‘EROI of different fuels and the implications for society’, Energy Policy, 64 (January), 141–52. Hall, C.A.S., D. Lindenberger, R. Kummel, T. Kroeger and W. Eichhorn (2001), ‘The need to reintegrate the natural sciences with economics’, BioScience, 51 (8), 663–73. Hamilton, J.D. (2009), Causes and Consequences of the Oil Shock of 2007–08, Brookings Papers on Economic Activity, Spring, Brookings Institute, Washington, DC. Hallock Jr, L.J., W. Wu, C.A.S. Hall and M. Jefferson (2014), ‘Forecasting the limits to the availability and diversity of global conventional oil supply: validation’, Energy, 64 (1), 130–53. Hirsch, R., R. Bezdec and R. Wending (2005), ‘Peaking of world oil production: impacts, mitigation and risk management’, unpublished report, US Department of Energy, National Energy Technology Laboratory. Hubbert, M.K. (1962), Energy Resources (Report to the Committee on Natural Resources), Washington, DC: National Academy of Sciences. Hubbert, M.K. (1969), ‘Energy resources’, in Committee on Resources and Man, National Academy of Sciences, and Research Council (eds), Resources and Man: A Study and Recommendations, San Francisco: W.H. Freeman. International Energy Agency (IEA) (2014), ‘Key world energy statistics’, accessed 8 October 2015 at http://www.iea.org/publications/freepublications/publication/key​ world2014.pdf. International Energy Agency (IEA) (various years), World Energy outlook, accessed January, 2016 at: http://www.worldenergyoutlook.org. Jevons, W.S. (1865), The Coal Question: An Inquiry Concerning the Progress of the Nation,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 254

01/06/2017 16:51

Energy, economic growth and sustainability  ­255 and the Probable Exhaustion of our Coal Mines, reprinted 1965, A.W. Flux (ed.), New York: Augustus M. Kelley. Kaufmann, R.K. (2004), ‘The mechanisms for autonomous energy efficiency increases: a cointegration analysis of the US Energy/GDP ratio’, Energy Journal, 25 (1), 63–86. Kaufmann, R.K. and C.J. Cleveland (2001), ‘Oil production in the lower 48 states: economic, geological and institutional determinants’, Energy Journal, 22 (1), 27–49. Kaufmann, R.K. and L.D. Shiers (2008), ‘Alternatives to conventional crude oil: when, how quickly, and market driven?’, Ecological Economics, 67 (3), 405–11. Lambert, J., C.A.S. Hall, S. Balogh, A. Gupta and M. Arnold (2014), ‘Energy, EROI and quality of life’, Energy Policy, 64 (January), 153–67. Lynch, M. C. (2002), ‘Forecasting oil supply: theory and practice’, Quarterly Review of Economics and Finance, 42 (2), 373–89. Maggio, G. and G. Cacciola (2012), ‘When will oil, natural gas, and coal peak?’, Fuel, 98 (August), 111–23. McGlade, C. and P. Ekins (2015), ‘The geographical distribution of fossil fuels unused when limiting global warming to 2 degrees C’, Nature, 517 (8 January), 187–90. Miller, R.G. and S.R. Sorrell (2014), ‘The future of oil supply’, Philisophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, 372 (13 January), doi:10.1098/rsta.2013.0179. Mohr, S.H., J. Wang, G. Ellem, J. Ward and D. Giurco (2015), ‘Projection of world fossil fuels by country’, Fuel, 141 (1), 120–35. Myhre, G., D. Shindell, F.-M. Bréon, W. Collins, J. Fuglestvedt, J. Huang et al. (2013), ‘Anthropogenic and natural radiative forcing’, in T.F. Stocker, D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung et al. (eds), Climate Change 2013: The Physical Science Basis, Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge, UK and New York: Cambridge University Press. Prieto, P.A. and C. Hall (2013), Spain’s Photovoltaic Revolution: The Energy Return on Investment, New York: Springer Science & Business Media. Redman, C.L. (1999), Human Impact on Ancient Environments, Tucson, AZ: University of Arizona Press. ShadowStats (2016), ‘Shadow government statistics’, accessed January 2016 at http://www. shadowstats.com. Simmons, M. (2011), ‘The world’s giant oil fields’, white paper, Simmons and Company International, London. Smith, T. (2015), ‘5 countries leading the way toward 100% renewable energy’, Ecowatch, accessed 8 October 2015 at http://ecowatch.com/2015/01/09/countries-leading-way-renewable-energy/. United States Geological Survey (USGS) (2003), The World Petroleum Assessment 2000, Reston, VA: USGS, accessed 8 October 2015 at www.usgs.gov. Wikipedia (2016), ‘Energy density of fuels’, Wikipedia: The Free Encyclopedia, accessed January 2016 at https://en.wikipedia.org/wiki/Energy_density.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 255

01/06/2017 16:51

12  Shortcomings of a growth-driven food system

Michalis Hadjikakou and Thomas Wiedmann

INTRODUCTION The status quo modus operandi of the global food system is not only failing to promote adequate or healthy nutrition, but is also exerting an unsustainably high pressure on our planet. This food system is in many ways similar to the growth-driven economic system in which it operates, where human and environmental health suffer as a result of profit maximization incentives. In this contribution we set out to explore country-level relationships between economic development status and food-related health and environmental issues. We focus on prevailing food consumption patterns and a global food regime that is still, in the most part, operating in a post-World War II economic growth paradigm. Based on our findings of key drivers for dietary change, we argue that the way in which food is produced, marketed and priced reinforces adverse health and environmental problems that, in turn, result in higher economic costs to society in the form of health care and environmental impacts. A growing literature on defining and promoting healthy and sustainable diets is testament to the increasing awareness of the importance of building a more sustainable food system. However, although certainly necessary, food sector-specific interventions aimed at promoting sustainable food production and consumption may not be sufficient to truly reverse current trends if economic growth remains the primary objective of nations. Following a review of existing literature on the health and e­ nvironmental impacts of growth-led food consumption patterns, we analyse some of the drivers of dietary change around the world. We then explore ­correlations between national per capita indicators of economic affluence, dietary behaviour, environmental impact, and health status at the global level. In the final sections we discuss some of the proposed solutions to the current food problem. We conclude by stressing the need for more holistic changes in the way we produce and consume food which should, themselves, be compatible with all the pillars of a sustainable society and economy. 256 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 256

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­257

ADVERSE IMPACTS OF MODERN FOOD CONSUMPTION PATTERNS Modern-day food production and consumption patterns have been linked to a number of negative impacts. Although many of these impacts are often interlinked, for the purposes of this discussion it is worth dividing them into one of three main spheres: environment, health and society, and economy. Food supply chains affect almost every aspect of the natural environment. Food production accounts for up to 30 percent of anthropogenic greenhouse gas emissions (GHGE) (Tubiello et al. 2013), an estimated 70 percent of global water withdrawals (Pradhan et al. 2013), and 38 percent of the Earth’s total land area (de Ruiter et al. 2014). Owing to their high natural resource requirements, along with the use of large amounts of chemical fertilizers, agricultural systems are implicated in serious environmental problems such as deforestation, biodiversity loss, and water, land and air pollution. From a planetary boundaries perspective (Rockström et al. 2009), modern agriculture can be seen as a major contributor to the transgression of the proposed safe operating space in four areas: climate change, biosphere integrity (genetic diversity), biochemical flows (nitrogen and phosphorus cycles) and land-system change (Steffen et al. 2015). Humans currently appropriate around one-third of terrestrial net primary production (NPP)1 (Haberl et al. 2007), most of which is for the purposes of food production (von Braun 2014). Given that an estimated 53 percent of global NPP is not harvestable, the question is not if but when will humanity reach the global NPP boundary (Running 2012). Under current dietary trends, characterized by increasing consumption of animal products and processed foods, and given a growing world population, agriculture’s impact on the environment is set to continue intensifying at an alarming rate in coming decades (Gerbens-Leenes and Nonhebel 2002; Odegard and van der Voet 2014; Tilman and Clark 2014). Meat production is particularly demanding in terms of the use of energy, grains and water (Gerbens-Leenes and Nonhebel 2002; Garnett 2009). Environmental pressures thus arise from the combined effects of an ‘expansion’ effect as per capita caloric intakes increase, as well as a ‘substitution’ effect as diets become more resource-intensive (Kearney 2010; von Braun 2014). From a health and societal perspective, the ‘westernization’ of diets has been unequivocally linked to ill-health. Westernized diets, typically high in energy but low in nutrients, are replacing traditional diets, leading to increased incidences of overweight and obesity (Tilman and Clark 2014). This, in turn, brings many comorbidities such as cardiovascular disease and type 2 diabetes (Pretty et al. 2015). High red meat consumption has

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 257

01/06/2017 16:51

258  Handbook on growth and sustainability also been linked to some types of cancers, with processed meats especially culpable (Micha et al. 2012). Although currently these types of health problems are still more pronounced in developed countries, the developing world appears to be catching up, as evidenced in countries like Mexico, Brazil, China and India where the incidence of diet-related disease is increasing (Kearney 2010; Monteiro et al. 2011; Popkin et al. 2012). Many developing countries are now faced with an obesity ‘epidemic’ while still trying to address starvation and malnutrition (Albritton 2009). Even where daily energy requirements are now met, the large percentage of calories from sweets, soft drinks and other highly processed ‘non-core’ foods may mean that some people remain in effect malnourished. Since the mid-1980s, many countries including the USA, the UK and Australia have seen striking increases in the proportion of children and adults with a body mass index (BMI) in the overweight and obese ranges (Wang et al. 2011). More than 60 percent of residents in these three countries are estimated to be overweight or obese (Wang et al. 2011). This has been attributed mainly to high (above recommended) intakes of vegetable oils, animal products and refined carbohydrates (including sugar) in addition to sedentary lifestyles (Kearney 2010). Studies also show that diet-related health problems are much more prevalent among people from poorer socioeconomic backgrounds (Albritton 2009; Popkin et al. 2012; Dixon and Isaacs 2013; Pretty et al. 2015). Long-term impacts arising from the consistently high prevalence of obesity on population health are far-reaching and diverse: premature mortality, morbidity from non-­ ­ communicable diseases (NCDs), reduced productivity and, most importantly, a reduced quality of life (Wang et al. 2011; Pretty et al. 2015). Food-related health and environmental impacts also give rise to considerable economic costs to government and society. The most obvious and significant costs are those related to health care. The direct health costs of obesity have been estimated at around £20 billion per year for the UK (Pretty et al. 2015) and A$21 billion for Australia, with indirect costs (from benefits or government subsidies) likely to be even higher (Colagiuri et al. 2010). Wang et al. (2011) estimate that by 2030, the combined medical costs associated with treatment of diet-related NCDs are set to add to healthcare costs by US$48–66 billion a year in the USA and by £1.9–2 billion a year in the UK. The environmental impacts of food production also create unwanted economic costs. Water quality impairment (from pesticides, fertilizers and micro-organisms in agricultural effluents), atmospheric pollution (from livestock, fertilizers and fuel combustion), loss of soil organic matter, and loss of biodiversity and wildlife are all associated with significant economic costs to society, estimated to be in the order of US$3.8 and US$34.7

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 258

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­259 billion annually for the UK and the USA, respectively (Pretty et al. 2000, 2001). Developed countries can afford to keep these externalities at bay, either through stricter regulation or by passing costs for water treatment directly on to the consumer. However, this is often not the case in developing countries, where agricultural pollution causes persistent health and environmental problems (Liu and Diamond 2005). Modern large-scale agricultural production has certainly also brought some positive economic impacts (through employment in the food supply chain, higher yields and cheaper food), however, in the majority of cases profits are absorbed by large corporations as opposed to the farmers themselves (Albritton 2009). The health and environmental costs are true externalities borne by governments and society. As food supply chains have grown longer, these environmental, social and economic costs are incurred in multiple global localities far away from the point of consumption. Emerging countries supply many resource-intensive food commodities at the expense of their natural capital (Salvo et al. 2015). This section has outlined some of the numerous failings which render our current food system unsustainable. As Hesterman (2012, p. xi) aptly puts it, ‘the food system that evolved to bring us abundant food at low cost has grown out of control, nourishing us by destroying some of what we hold most precious: our environment, our health, and our future’. As others have alluded to previously, we argue that a growth-driven economic system is at the heart of these problems (Albritton 2009; Hawkes 2006; Kearney 2010). The next section explores some of the main drivers and trends that are responsible for today’s unsustainable food consumption patterns.

DRIVERS OF FOOD CONSUMPTION PATTERNS: THE ‘NUTRITION TRANSITION’ The magnitude of adverse impacts from agricultural production is not simply a case of an increasing global population. Changing diets, characterized by increases in the amounts and changes in the composition of food consumed (expansion and substitution effects), have given rise to the ‘nutrition transition’, a term used to describe the radical shift in dietary patterns and nutrient intakes as populations in developing countries move from traditional diets to a diet associated with more modern lifestyles (Popkin 1998). As with other material goods, food consumption does not follow a simple linear pattern in which more is always better (Jackson 2009). In fact, there are certainly thresholds (boundaries) after which any additional

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 259

01/06/2017 16:51

260  Handbook on growth and sustainability

Total calories (kcal/capita/day)

3800 3600 3400 3200 3000 2800 2600 2400 2200 2000 1800 1980

1990

2000

Africa

World

North America

Oceania

Asia

China

Europe

India

2010

South America Sensible limit (Smil 2004)

Source:  Authors based on data from FAO (2012).

Figure 12.1 Global and regional trends in food supply in calories (kcal) per capita per day for 1980–2010 unit of food consumption and associated production risks become a threat to both human and environmental health. Tackling material overconsumption is an issue of utmost urgency and must take place alongside attempts to control population growth (Krausmann et al. 2009; The Royal Society 2012). Intensifying and changing food consumption patterns are one form of material overconsumption whose drivers need to be fully understood and curtailed. Average global per capita food supply2 has increased steadily, from just under 2500 kilocalories (kcal) per capita per day in 1980 to 2850 kcal per capita per day in 2010 (Figure 12.1). All major regions have experienced significant increases compared to their 1980 levels, with the exception of Europe.3 Allowing for 30 percent food waste loss and given today’s sedentary lifestyles and ageing populations, average caloric intakes (see black horizontal line in Figure 12.1) should be less than 2600 kcal per capita per day for meeting daily energy requirements (Smil 2004). Every major world region with the exception of Africa and India is currently above this recommended upper limit (Figure 12.1). It should be noted

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 260

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­261 that averaged regional food supply values hide considerable intra-regional and socioeconomic inequality and cannot capture issues such as access to food (Caraher 2013). It is also worth reiterating that a sufficient or above average energy intake in the form of calories is by no means an indicator of nutritional density or quality. That is, the present food system may be efficient and productive in supplying abundant calories, but that does not mean that all the food supplied is beneficial to our health, or that everyone has access to it. The nutritional explanation behind the overconsumption of calories is a shift away from traditional diets featuring predominantly grains, legumes and vegetables, and towards meals higher in animal products, sugar and fat (from both animal and vegetal sources) (Hawkes 2006; Kearney 2010; Keats and Wiggins 2014; Tilman and Clark 2014). The nutrition transition appears to be occurring at a much faster rate than ever before, as evidenced especially in rapidly transitioning countries such as China, Mexico and Brazil (Kearney 2010; Monteiro et al. 2011). A host of drivers, often acting in combination, are considered to be responsible for these rapid dietary transformations: rising incomes, urbanization, globalization and trade liberalization, increasing dominance of transnational food corporations (TFCs) and global supermarket chains,4 aggressive advertising of processed food and fast food, changing work patterns and reduced time availability, and changing tastes and attitudes with respect to food (Ezzati et al. 2005; Albritton 2009; Kearney 2010; Monteiro et al. 2011; Popkin et al. 2012; Keats and Wiggins 2014). These drivers have contributed to the profitability of the food industry. Rapid urbanization has brought about a dramatic reduction in physical activity and has created a niche for the fast-food industry (Kearney 2010). With time, people’s taste preferences have also changed, as increased sugar and fat intake results in cravings and addictions (Albritton 2009; Popkin et al. 2012). Trade liberalization has altered the food environment through reductions in the price of unhealthy foods, increased desirability and availability of processed foods, and has led to more information asymmetry between consumers and suppliers of foodstuffs (Kearney 2010). More open trade, in turn, creates incentives for TFCs to enter new markets. Hawkes (2006) argues that TFCs affect dietary choices through retailing and promoting certain foods in a way that creates a strong cultural identity for their products. Consumer preference for processed and fast foods can then reinforce the aforementioned drivers, creating a positive feedback loop which results in ‘junk food’ becoming more plentiful and more affordable compared to healthier food such as fresh produce (Wiggins et al. 2015). The rapid increase in the production and consumption of cheap vegetable oils (such as soybean or palm oil) is a case in point (Figure 12.2).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 261

01/06/2017 16:51

262

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

Animal products (kcal/capita/day)

Africa

0 1980

100

200

300

400

500

600

700

0 1980

200

400

600

800

1000

Asia

1990

1990

Europe

2000

2000

North America

2010

2010

700

Oceania

1990

1990

South America

500 1980

700

900

1100

1300

1500

1700

0 1980

100

200

300

400

500

600

World

2000

2000

China

India

2010

2010

Figure 12.2  Food supply in calories (kcal) per capita per day for 1980–2010 for selected food commodities

Source:  Authors based on data from FAO (2012).

Sweeteners (kcal/capita/day)

1200 Vegetable oils (kcal/capita/day) Cereals (kcal/capita/day)

M4269-VICTOR_9781783473557_t (colour).indd 262

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­263 These oil crops have become increasingly profitable and their production and consumption is surging despite their contribution to higher dietary fat intakes, including that of unhealthy hydrogenated trans fats (Hawkes 2006). As noted by Albritton (2009), value added tends to be positively correlated with the amount of processing. It is therefore unsurprising that supermarket aisles are usually laden with soft drinks and other processed foods, simply because it makes good business sense to promote these highly profitable products. The increased availability and affordability of ‘junk food’, aided greatly by the set of drivers mentioned above, has led to the displacement of healthy foods, especially in poorer socioeconomic segments. In most of the developed world, in addition to countries like China, Mexico and Brazil where being overweight used to be a sign of wealth, it now tends to reflect poverty (Kearney 2010; Popkin et al. 2012). The ongoing ‘sugar debate’ also highlights the current workings of the food system. Despite recommendations by the World Health Organization (WHO) that sugars should make up less than 10 percent of total energy intake per day and a recent intention to push for an even lower 5 percent recommendation (WHO 2014), sugar intakes for most developed countries remain well over 10 percent (Figure 12.2). Excessive lobbying from the food industry, which sees stricter limits as a threat to profitability, often prevents their adoption in national dietary guidelines (Albritton 2009; Owens 2014). Many of the sugars consumed are ‘hidden’ in processed foods not usually perceived as sweets (WHO 2014). The palatability and cost-effectiveness of sugar makes it an attractive ingredient for the food industry and, despite proven links to childhood and adult obesity, sugar is still omnipresent in commercial food products. As incomes rise, people tend to consume more meat and animal products (von Braun 2014; Wiedmann et al. 2015). Rising meat demand is largely being met through mass production in concentrated animal feeding operations (CAFOs) using cheap grain- and legume-based feeds.5 Meat and dairy consumption has always been a mainstay in the western diet (Figure 12.2). However, meat and dairy consumption has been surging as incomes have risen in developing countries6 (see especially China in Figure 12.2). Concentrated animal feeding operations, which now account for more than 40 percent of global meat production, are linked to animal cruelty, use large amounts of antibiotics to keep diseases at bay, and are also dangerous to workers as well as those living nearby because of the large amounts of waste they produce (Albritton 2009). At the same time, low-income African countries consume small amounts of animal products and some populations remain protein deficient (Figure 12.2). The nutrition transition and its drivers are products of the economic system in which food production and consumption operates, with

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 263

01/06/2017 16:51

264  Handbook on growth and sustainability c­ ountries undergoing rapid economic transitions being particularly prone to many of the adverse impacts outlined in the previous section. While general patterns are evident, there is still considerable variation among regions and countries, reflecting local food cultures and preferences (Keats and Wiggins 2014). According to previous studies, there may be a level of national income at which saturation occurs, and after which the per capita use of natural resources and the rate of increase in health impacts associated with food consumption appear to level off (Ezzati et al. 2005; Gerbens-Leenes et al. 2010). On the basis of these findings, it is therefore worth exploring whether there are any obvious signs of decoupling between economic growth and the adverse environmental and health impacts associated with westernized food consumption patterns. In the next section we perform a preliminary analysis of country-level relationships between indicators of economic growth and development, selected food-related environmental impact indicators, and BMI across nations in different regions and at different stages of economic development for the period 1990–2008.

ECONOMIC GROWTH AND FOOD-RELATED IMPACTS In this section we explore the extent to which economic growth and development leads to a higher food-related environmental footprint and a more overweight or obese population. We employ, for the first time, the material footprint of biomass (MFBM) (Wiedmann et al. 2015) as an environmental impact indicator for diets. The material footprint is a consumption-based indicator which sums up all impacts associated with the extraction of raw materials along global supply chains. It takes into account the impacts of domestic production and of imports, but allocates impacts associated with exports to the receiving country (Giljum et al. 2014; Wiedmann et al. 2015). In the case of MFBM, the raw materials considered are crops, crop residues (used), fodder crops, and grazed biomass.7 We also consider per capita gross domestic product (GDP) as the standard measure of the economic value of final goods and services produced in a country and the human development index (HDI)8 as a proxy for economic and social development. Food supply statistics from FAO (2012), namely, calories coming from sugar and meat as well as animal and vegetal protein, are used to describe dietary composition. Finally, BMI is considered a proxy for healthy or unhealthy weight. The BMI is an index commonly used to classify adults as underweight, overweight or obese. It is defined as the weight in kilograms divided by the square of the height in

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 264

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­265 metres (kg/m2) (WHO 2015). Gross domestic product, HDI and BMI data are sourced from the World Bank (2015), the UNDP (2014) and the WHO (2015), respectively. Figure 12.3 shows the relationship between GDP per capita and MFBM per capita at four discrete points in time (1990, 1996, 2002 and 2008) for a selected group of countries and regions. The dotted horizontal line represents the world average per capita MFBM. The BMI is also depicted as the size of the circles. The countries and regions used here are the same as those used in Wiedmann et al. (2015) with the addition of Sweden and Mexico. There appears to be a strong linear correlation between GDP and MFBM, with notable outliers such as Russia in 1990, and Brazil (1990–2008). This linear relationship is confirmed by the Pearson correlation coefficients (a measure of strength of linear correlation) for all 145 countries in our extended country sample (Table 12.1). Results from Table 12.1 also show that GDP per capita shows a strong linear correlation with the amount of animal products in addition to the total amount of calories in the diet. This is consistent with Wiedmann et al. (2015) who show that the material footprint of fodder and grazed biomass, one of the major components of MFBM, is particularly responsive to an increase in wealth, as a result of predominantly meat-based diets in richer societies. There is a rise in the global average per capita MFBM from around 2.4 tons in 1990 to 3.1 tons in 2008, providing further evidence of humanity’s increasing use of natural resources to satisfy food consumption (Figure 12.3). Beyond the general MFBM rise, the wealthier nations (the Organisation for Economic Co-operation and Development, the UK, Sweden, the European Union, Australia, the USA and Japan) have further increased their distance from the world average since 1990. Some countries such as Brazil and Russia experienced dramatic increases in MFBM during this period. Brazil has seen a significant increase in total per capita energy intake between 1990 to 2008, from 2720 to 3180 kcal per capita (expansion effect), with calories coming from animal products also increasing from around 450 to 725 kcal per capita per day (substitution effect) (FAO 2012). Brazil’s upward surge in MFBM is confirmed by a recent study which argues that the role of domestic food consumption has formerly been ignored, concluding that the biggest threat to the environment in Brazil stems, in fact, from domestic meat consumers (Salvo et al. 2015). China, Mexico, Chile, South Africa, and to a lesser extent India, have also experienced combined expansion and substitution effects (FAO 2012). This explains their similar upward movements in Figure 12.3 as incomes have risen. The 1990 MFBM figure for Russia is likely to be an underestimate,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 265

01/06/2017 16:51

266

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

MF (biomass) per capita (t/cap/year)

50 000

> 28 27–28

GDP per capita, PPP (constant 2011 international US$)

10 9 8 7 6 5 4 3 2 1 0

10 9 8 7 6 5 4 3 2 1 0

26–27

25–26

0

0

Brazil

Figure 12.3  Changes in MFBM, GDP and BMI

1996 Australia

India

India 20 000

30 000

40 000

20 000

30 000

40 000

OECD

21–22.5

< 21

GDP per capita, PPP (constant 2011 international US$)

10 000

China

50 000

50 000

AustraliaSwedenUSA UK EU

2008

South Japan Africa Mexico Chile

Russia

Brazil

GDP per capita, PPP (constant 2011 international US$)

Chile

10 000

China

USA Sweden OECD Japan EU Russia South Africa UK Mexico

22.5–25

BMI range (kg/m2)

10 2002 9 Brazil 8 Sweden USA 7 Australia 6 OECD 5 South UK EU Russia 4 Africa Mexico Japan 3 2 China Chile 1 India 0 0 10 000 20 000 30 000 40 000 50 000

GDP per capita, PPP (constant 2011 international US$)

10 1990 9 8 Australia 7 Brazil 6 Sweden USA South 5 OECD EU Africa 4 Japan Mexico 3 India Chile UK 2 Russia 1 China 0 0 10 000 20 000 30 000 40 000 MF (biomass) per capita (t/cap/year) MF (biomass) per capita (t/cap/year)

Source:  Authors based on data from WHO (2015); Wiedmann et al. (2015); World Bank (2015).

MF (biomass) per capita (t/cap/year)

M4269-VICTOR_9781783473557_t (colour).indd 266

01/06/2017 16:51

267

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 267

01/06/2017 16:51

1.00 0.62 0.54 0.37 0.58 0.41 0.48 0.46 0.56

MFBM

1.00 0.78 0.44 0.72 0.51 0.69 0.58 0.74

GDP (per cap.)

1.00 0.68 0.78 0.72 0.79 0.62 0.82

HDI

1.00 0.60 0.70 0.62 0.37 0.57

BMI

1.00 0.53 0.68 0.65 0.91

Meat (kcal)

1.00 0.61 0.36 0.59

Sugar (kcal)

1.00 0.60 0.77

Total (kcal)

1.00 0.69

Protein (animal)

1.00

Fat (animal)

Note:  Values of 0.50–0.69 indicate a strong positive linear relationship whereas values equal to or above 0.7 imply a very strong positive linear relationship (values over 0.50 appear in bold).

MFBM GDP (per capita) HDI BMI Meat (kcal) Sugar (kcal) Total calories Protein (animal) Fat (animal)

Indicators

Table 12.1  Pearson correlation coefficients for 2008 based on data for 145 countries

268  Handbook on growth and sustainability since this was the average of all Soviet Union countries. The rise in MFBM after 1996 is a result of increases in per capita energy (from 2920 to 3360 kcal/ per capita per day) and a small increase in the supply of animal products (FAO 2012). In developed nations, there has been a small to moderate increase in the amount of calories, although supply of animal products has remained at around 1000 kcal per capita per day (see Figure 12.2). The exception is Australia where there has been a slight decrease in the supply of animal products (from 1100 to 1050 kcal per capita per day) while total calories have remained at around 3200 kcal per capita per day on average (FAO 2012). The most significant increases in consumption in developed nations appear to have been in vegetable oils and cereals (see Figure 12.2) along with vegetables and fruits (FAO 2012), which would account for the slight increases in MFBM. Although it would appear that MFBM continues to increase even as per capita GDP is well over $30 000, there appears to be a slowdown in the rate of increase in MFBM at high incomes. This may be occurring because meat consumption usually shows no further increases above certain levels of per capita GDP. Figure 12.3 further illustrates the near ubiquitous increase in average BMI to above 25 kg/m2 (official threshold for the overweight category) in most countries. With the exception of Sweden and Japan, all developed countries and regions have experienced increases in the order of 2–3 BMI points. Developing nations are also affected, with only China and India having average BMIs below 25 in 2008 (despite both countries also having millions of overweight and obese people). The USA, South Africa and Mexico had an average BMI in excess of 28 kg/m2 in 2008. Such high BMI figures are reflected in the increased global incidence of diet-related disease in recent decades (Wang et al. 2011; WHO 2015). Based on a sample of 100 countries, Ezzati et al. (2005) found that BMI increased most rapidly until an average national income of about $5000, then peaked at incomes of around $12 500 for females and $17 000 for males.9 Body mass index changes for Mexico, Chile, South Africa and Brazil in Figure 12.3 appear to support this finding. Similar to MFBM, the increase in BMI has also been significant amongst the developed nations, even well over an average GDP per capita of around $20 000. Intriguingly, Table 12.1 suggests a strong positive correlation coefficient between HDI and BMI (0.68) but not between per capita GDP and BMI (0.44). Correlation coefficients between HDI and dietary composition variables such as total calories, meat (kcal), sugar (kcal), animal protein and animal fat, are also much higher than those between GDP and the aforementioned variables. This could, on the one hand, suggest that a country with a higher overall standard of living (as suggested by a higher HDI) may be more susceptible to the drivers discussed in the previous section

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 268

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­269 and that certain drivers such as urbanization and proliferation of junk food are not only GDP related, especially as western diets have become more ubiquitous. On the other hand, given that a strong correlation does not imply any causation, access to more calories in the form of protein, fat and sugar may be contributing to both a longer life expectancy and a higher educational attainment (both major constituents of the HDI, alongside GDP). Based on the results in Figure 12.3 and Table 12.1, there is no evidence of absolute decoupling between MFBM and GDP or between BMI and GDP.10 There may be some evidence of relative decoupling at higher GDP levels, however this cannot be confirmed here since the analysis only uses static snapshots and does not explicitly consider rates of change. We also concentrate on a limited 19-year period as this is the period for which material footprint estimates are currently available. Notwithstanding the above limitations, we conclude that food consumption patterns in both developed and developing nations are increasingly contributing to health and environmental problems. The role of economic growth is certainly strong in the case of environmental impacts (MFBM), owing primarily to increased meat consumption. The BMI is less correlated to GDP (despite showing a strong correlation with the HDI) which suggests that factors such as geographic diversity in dietary composition, genetics, and income inequalities across socioeconomic groups (not reflected in average GDP values) could be playing a part. Further studies using additional environmental, health, social and economic indicators and statistical modelling are needed in order to unravel causal inference between key variables.

ACHIEVING HEALTHY AND SUSTAINABLE FOOD CONSUMPTION In this section we consider some potential remedies to the food production and consumption problems outlined above. We divide these into two main types: food-specific and holistic. Food-specific solutions can take place at the consumer level, at industry or corporation levels or at the national or supranational level and may entail policies aimed at encouraging healthy and sustainable food consumption. Many such solutions have already been trialled, mostly in developed nations, with varying degrees of success. Holistic solutions, on the other hand, imply fundamental changes in the way the economy and society functions, and are capable of reversing the drivers of unsustainable and unhealthy consumption patterns. These holistic solutions are very much in line with the necessary changes to achieve sustainable levels of material consumption and a low carbon future.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 269

01/06/2017 16:51

270  Handbook on growth and sustainability Food-Specific Solutions A commonly proposed way to reduce the adverse impacts of current food consumption patterns is by informing and encouraging consumers to move towards healthier and more sustainable diets. This can take place through better health and diet education programmes, nutrition labelling and the media (Hawkes 2006; Popkin et al. 2012; von Braun 2014). Reduced consumption of animal protein through substitution with vegetal sources of protein such as grains and legumes can be achieved through meatless days, reduced portions or taxes on meat (de Boer et al. 2014). Several authors emphasize the importance of institutional and large-scale feeding programmes to provide schools, universities, and hospitals with high quality, local, seasonal food (Hesterman 2012; Popkin et al. 2012; von Braun 2014). Other means of consumption-oriented strategies include setting up food cooperatives, community gardens and cooking lessons for adults and children. Hawkes (2006) argues that such consumer-focused policies are worthwhile but prone to being undermined. Furthermore, consumer education tends to benefit more those who are already more educated, as seen in the increased demand for local, free-range, organic and seasonal products by more educated and affluent social groups in developed countries (Pretty et al. 2015). Imposing regulations to confront TFCs and advertising agencies through restricting food advertising and promotion of unhealthy and nutritionally unnecessary foods is therefore seen as vital (Hawkes 2006; Popkin et al. 2012). Lack of access to nutritious food remains an issue in both developed and developing countries. Improving healthy food accessibility, the lack of which is one of the key environmental cues leading to overweight and obesity, should be a crucial policy objective (Monteiro et al. 2011). Kearney (2010) argues that food policies will be more effective if there is collaboration between the agricultural and health sectors, so that health and environmental objectives are concurrently met. However, health and sustainability are both complex and multifaceted objectives and there are often trade-offs. A healthy diet is not necessarily sustainable and a sustainable diet is not necessarily the healthiest (Drewnowski 2014; Tilman and Clark 2014). For instance, grass-fed beef can be a healthy addition to the diet but ruminants are major consumers of biomass and also emit methane gas, a major contributor to global warming. There are also the issues of affordability and time, especially for poorer socioeconomic groups, who tend to prioritize quick and cheap meals over nutritious food (Dixon and Isaacs 2013; Wiggins et al. 2015). Replacing processed treats with fresh fruits and vegetables may also lead to a higher environmental footprint.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 270

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­271 However, we argue that where foods provide unnecessary calories and offer little by way of nutrition, consuming less should also be seen as an environmental benefit (provided daily caloric needs are already met from nutritious foods). Although the present chapter has touched on some issues of food security, the topic is one which merits its own in-depth discussion, especially in the context of a growing global population, estimated at over 9 billion by 2050. Providing healthy and sustainable nutrition for such a large number of people is a monumental challenge and will certainly require further increases in agricultural production efficiency (Godfray et al. 2010; Bringezu et al. 2015). ‘Sustainable intensification’ entails better tailored agricultural practices depending on the crop and the nature of the land, improved genomic approaches including genetically modified (GM) crops, integrated pest management methods, and reductions in waste through the food supply chain (Godfray et al. 2010). Although sustainable intensification of agricultural production is going to be required, it should not take place in the context of a business-as-usual food system model, but one that also promotes sustainable consumption patterns and equity (Garnett 2014). The above-mentioned food-specific interventions, despite their potential importance and immediate value, may still fail to holistically address the issue of unhealthy and unsustainable food consumption if we treat the problem as being exclusively food-specific. As long as the current food system remains entrenched in a profit-driven economic paradigm, real change in the food system is unlikely to occur, and most food production will continue to ignore social and environmental externalities. We argue that a holistic push towards a more sustainable society and economy will, in the longer term, have the most effective and lasting positive impact on our food system. Holistic Solutions The holistic solutions which would help arrest many of the problems discussed in this chapter are in line with suggestions made previously by ecological economists and others emphasizing the importance of prioritizing well-being over economic growth (Daly 2007; Victor 2008; Jackson 2009; Pickett and Wilkinson 2010; Pretty et al. 2015). An economy which emphasizes well-being and a clean environment over economic growth is conducive to the sustainability of society as a whole, including numerous positive spillovers on to food production and consumption. Although the precise mechanisms by which such profound changes could take place are still under debate, there are valid reasons to believe

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 271

01/06/2017 16:51

272  Handbook on growth and sustainability that an economic system designed to achieve full supply chain responsibility and accountability of corporations (Albritton 2009; Hesterman 2012; Hoekstra and Wiedmann 2014), reduced income and social inequalities (Pickett and Wilkinson 2010; Dixon and Isaacs 2013), and sustainable and ethical material consumption (Pretty et al. 2015), will also provide the foundation for healthy and sustainable nutrition by arresting or even reversing the drivers of bad dietary habits outlined earlier. Victor (2008) and Jackson (2009) envision a low-carbon society with full employment, where people enjoy more leisure time and place more value on social relationships and cultural recreation as opposed to material consumption. They also argue that this can be achieved with little to no growth. Societal transformations that would improve well-being while enabling people to work fewer hours would allow people more time to consider growing their own food, cooking and appreciating meals as well as the social interactions that food can invoke (Schor 2010). Global grassroots organizations such as the Slow Food movement emphasize a more holistic ‘good, clean and fair’ approach to food (Slow Food 2015). There is no doubt that a better, cleaner and fairer economic system will allow such movements to flourish.

CONCLUDING REMARKS Adverse environmental and health impacts, with significant economic costs to society, affect countries at all levels of economic development. The empirical evidence presented in this chapter supports earlier studies from across diverse academic fields highlighting the urgency of addressing these issues. We have also argued that some of the drivers responsible for the current failings of our food system are entrenched in the wider economic system in which it operates, where food corporations are accustomed to operating on the sole basis of profit maximization. We also reviewed some possible solutions and concluded that a combination of food-specific and holistic (wider economic and societal) changes will be required to achieve healthy and sustainable nutrition for everyone, the latter having the potential to fundamentally address many of the systemic issues in the longer term. We acknowledge that the food problems we face are extremely complex and that through our analysis, conclusions and suggested solutions, we have only scratched the surface of what is a very complex and highly challenging and contested area of sustainability. In closing, we thus emphasize the need for further research and ongoing debate on how to transition towards a more sustainable food system that would itself be part of a sustainable and equitable economy and society.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 272

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­273

NOTES   1. Net primary production is the net amount of biomass produced each year by plants and is a major indicator for trophic energy flows in ecosystems.   2. Food supply (availability) data are based on food balance sheets (FBS) published by the United Nations Food and Agriculture Organization (FAO), calculated by adding the food produced and imported into countries minus exports and animal feed, divided by population size (Kearney 2010).   3. Western European countries have a higher average (around 3500 kcal per capita per day).   4. According to estimates, around 20 major companies control 80 per cent of the global food trade (Caraher 2013; Lang et al. 2009).   5. Along with biofuel demand, the large amounts of grains being diverted to animal feeds have triggered significant increases in international grain prices (von Braun 2014).   6. Caraher (2013) estimates that China’s current annual consumption of meat and dairy is equivalent to the global total meat and dairy consumption in the 1970s.   7. See Wiedmann et al. (2015) for explanation of how material footprints are estimated.   8. The human development index is the geometric mean of normalized indices for GDP, educational attainment and life expectancy (UNDP 2014).   9. Ezzati et al. (2005) use year 2000 international US$ which is different to the currency valuation used here. 10. The only exception is Australia, whose MFBM shows a slight decrease over the entire time period, from 6.7 in 1990 to 6.5 after having experienced an increase to 7.2 in 1996. This may have been caused by the slight decrease in the consumption of animal products together with an increase in animal exports.

REFERENCES Albritton, R. (2009), Let Them Eat Junk: How Capitalism Creates Hunger and Obesity, London: Pluto Press. Bringezu, S., H. Schütz and M. O’Brien (2015), ‘Measuring and managing the global agricultural footprint of countries’ consumption’, in G.M. Robinson and D.A. Carson (eds), Handbook on the Globalisation of Agriculture, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 106–24. Caraher, M. (2013), ‘A global perspective: towards a healthy, fair and sustainable food system’, Journal of the Home Economics Institute of Australia, 20 (3), 9–12. Colagiuri, S., C.M. Lee, R. Colagiuri, D. Magliano, J.E. Shaw, P.Z. Zimmet and I.D. Caterson (2010), ‘The cost of overweight and obesity in Australia’, Medical Journal of Australia, 192 (5), 260–64. Daly, H.E. (2007), Ecological Economics and Sustainable Development, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. De Boer, J., H. Schösler and H. Aiking (2014), ‘“Meatless days” or “less but better”? Exploring strategies to adapt Western meat consumption to health and sustainability challenges’, Appetite, 76 (May), 120–28. De Ruiter, H., T. Kastner, and S. Nonhebel (2014), ‘European dietary patterns and their associated land use: variation between and within countries’, Food Policy, 44 (February), 158–66. Dixon, J. and B. Isaacs (2013), ‘Why sustainable and “nutritionally correct” food is not on the agenda: Western Sydney, the moral arts of everyday life and public policy’, Food Policy, 43 (December), 67–76. Drewnowski, A. (2014), ‘Healthy diets for a healthy planet’, American Journal of Clinical Nutrition, 99 (6), 1284–5.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 273

01/06/2017 16:51

274  Handbook on growth and sustainability Ezzati, M., S. Vander Hoorn, C.M.M. Lawes, R. Leach, W.P.T. James, A.D. Lopez and C.J.L. Murray (2005), ‘Rethinking the “diseases of affluence” paradigm: global patterns of nutritional risks in relation to economic development’, PLoS Med, 2 (5), e133. Food and Agriculture Organization of the United Nations (FAO) (2012), ‘FAOSTAT food balance sheet (collection)’, latest update 30 November 2012, FAOSTAT, accessed 1 March 2015 at http://faostat.fao.org/default.aspx. Garnett, T. (2009), ‘Livestock-related greenhouse gas emissions: impacts and options for policy makers’, Environmental Science & Policy, 12 (4), 491–503. Garnett, T. (2014), ‘Three perspectives on sustainable food security: efficiency, demand restraint, food system transformation. What role for life cycle assessment?’, Journal of Cleaner Production, 73 (June), 10–18. Gerbens-Leenes, P.W. and S. Nonhebel (2002), ‘Consumption patterns and their effects on land required for food’, Ecological Economics, 42 (1–2), 185–99. Gerbens-Leenes, P.W., S. Nonhebel and M.S. Krol (2010), ‘Food consumption patterns and economic growth. Increasing affluence and the use of natural resources’, Appetite, 55 (3), 597–608. Giljum, S., M. Bruckner and A. Martinez (2014), ‘Material footprint assessment in a global input-output framework’, Journal of Industrial Ecology, 19 (5), 792–804. Godfray, H.C.J., J.R. Beddington, I.R. Crute, L. Haddad, D. Lawrence, J.F. Muir and C. Toulmin (2010), ‘Food security: the challenge of feeding 9 billion people’, Science, 327 (5967), 812–18. Haberl, H., K.H. Erb, F. Krausmann, V. Gaube, A. Bondeau, C. Plutzar and M. FischerKowalski (2007), ‘Quantifying and mapping the human appropriation of net primary production in earth’s terrestrial ecosystems’, Proceedings of the National Academy of Sciences, 104 (31), 12942–7. Hawkes, C. (2006), ‘Uneven dietary development: linking the policies and processes of globalization with the nutrition transition, obesity and diet-related chronic diseases’, Globalization and Health, 2 (4), doi:10.1186/1744-8603-2-4. Hesterman, O.B. (2012), Fair Food: Growing A Healthy, Sustainable Food System for All, New York: Public Affairs. Hoekstra, A.Y. and T.O. Wiedmann (2014), ‘Humanity’s unsustainable environmental footprint’, Science, 344 (6188), 1114–17. Jackson, T. (2009), Prosperity without Growth Economics for a Finite Planet, London: Earthscan. Kearney, J. (2010), ‘Food consumption trends and drivers’, Philosophical Transactions of the Royal Society of London B: Biological Sciences, 365 (1554), 2793–807. Keats, S. and S. Wiggins (2014), Future Diets: Implications for Agriculture and Food Prices, London: Overseas Development Institute, accessed 15 May 2015 at http://www.odi.org/ sites/odi.org.uk/files/odi-assets/publications-opinion-files/8776.pdf. Krausmann, F., S. Gingrich, N. Eisenmenger, K.H. Erb, H. Haberl and M. FischerKowalski (2009), ‘Growth in global materials use, GDP and population during the 20th century’, Ecological Economics, 68 (10), 2696–705. Lang, T., D. Barling and M. Caraher (2009), Food Policy: Integrating Health, Environment and Society, Oxford: Oxford University Press. Liu, J. and J. Diamond (2005), ‘China’s environment in a globalizing world’, Nature, 435 (7046), 1179–86. Micha, R., G. Michas and D. Mozaffarian (2012), ‘Unprocessed red and processed meats and risk of coronary artery disease and type 2 diabetes – an updated review of the evidence’, Current Atherosclerosis Reports, 14 (6), 515–24. Monteiro, C.A., R.B. Levy, R.M. Claro, I.R.R. de Castro and G. Cannon (2011), ‘Increasing consumption of ultra-processed foods and likely impact on human health: evidence from Brazil’, Public Health Nutrition, 14 (1), 5–13. Odegard, I. and E. van der Voet (2014), ‘The future of food – scenarios and the effect on  natural resource use in agriculture in 2050’, Ecological Economics, 97 (January), 51–9.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 274

01/06/2017 16:51

Shortcomings of a growth-driven food system  ­275 Owens, B. (2014), ‘Storm brewing over WHO sugar proposal’, Nature, 507 (13 March), 150, doi:10.1038/507150a. Pickett, K. and R. Wilkinson (2010), The Spirit Level: Why Equality Is Better for Everyone, London: Penguin. Popkin, B.M. (1998), ‘The nutrition transition and its health implications in lower-income countries’, Public Health Nutrition, 1 (1), 5–21. Popkin, B.M., L.S. Adair and S.W. Ng (2012), ‘Global nutrition transition and the pandemic of obesity in developing countries’, Nutrition Reviews, 70 (1), 3–21. Pradhan, P., D.E. Reusser and J.P. Kropp (2013), ‘Embodied greenhouse gas emissions in diets’, PloS One, 8 (5), e62228. Pretty, J., J. Barton, Z. Pervez Bharucha, R. Bragg, D. Pencheon, C. Wood and M.H. Depledge (2015), ‘Improving health and well-being independently of GDP: dividends of greener and prosocial economies’, International Journal of Environmental Health Research, 26 (1), 11–36. Pretty, J., C. Brett, D. Gee, R. Hine, C. Mason, J. Morison and T. Dobbs (2001), ‘Policy Challenges and priorities for internalizing the externalities of modern agriculture’, Journal of Environmental Planning and Management, 44 (2), 263–83. Pretty, J.N., C. Brett, D. Gee, R.E. Hine, C.F. Mason, J.I.L. Morison and G. van der Bijl (2000), ‘An assessment of the total external costs of UK agriculture’, Agricultural Systems, 65 (2), 113–36. Rockström, J., W. Steffen, K. Noone, A. Persson, F.S. Chapin, E.F. Lambin et al. (2009), ‘A safe operating space for humanity’, Nature, 461 (7263), 472–5. Running, S.W. (2012), ‘A measurable planetary boundary for the biosphere’, Science, 337 (6101), 1458–9. Salvo, G., M.S. Simas, S.A. Pacca, J.J.M. Guilhoto, A.R.G. Tomas and R. Abramovay (2015), ‘Estimating the human appropriation of land in Brazil by means of an Input–output economic model and ecological footprint analysis’, Ecological Indicators, 53 (June), 78–94. Schor, J.B. (2010), Plenitude: The New Economics of True Wealth, New York: Penguin Press, 272. Slow Food (2015), ‘Our philosophy’, accessed 12 March 2015 at http://slowfood.com/inter​ national/2/our-philosophy. Smil, V. (2004), ‘Improving efficiency and reducing waste in our food system’, Environmental Sciences, 1 (1), 17–26. Steffen, W., K. Richardson, J. Rockström, S.E. Cornell, I. Fetzer, E.M. Bennett et al. (2015), ‘Planetary boundaries: guiding human development on a changing planet’, Science, 347 (6223), 1259855. The Royal Society (2012), ‘People and the planet’, London, The Royal Society, accessed 17 January 2015 at https://royalsociety.org/policy/projects/people-planet/report/. Tilman, D. and M. Clark (2014), ‘Global diets link environmental sustainability and human health’, Nature, 515 (November), 518–22. Tubiello, F.N., M. Salvatore, S. Rossi, A. Ferrara, N. Fitton and P. Smith (2013), ‘The FAOSTAT database of greenhouse gas emissions from agriculture’, Environmental Research Letters, 8 (1), 015009. United Nations Development Programme (UNDP) (2014), ‘Human Development Reports’, United Nations Development Programme, New York, accessed 15 February 2015 at http://hdr.undp.org/en/data. Victor, P.A. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Von Braun, J. (2014), ‘Food demand, natural resources, and nature’, Pontifical Academy of Sciences Extra Series 41, Sustainable Humanity, Sustainable Nature our Responsibility, Vatican City, accessed 6 February 2015 at http://www.casinapioiv.va/content/dam/acca​ demia/pdf/es41/es41-vonbraun.pdf. Wang, Y.C., K. McPherson, T. Marsh, S.L. Gortmaker and M. Brown (2011), ‘Health and economic burden of the projected obesity trends in the USA and the UK’, Lancet, 378 (9793), 815–25.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 275

01/06/2017 16:51

276  Handbook on growth and sustainability Wiedmann, T.O., H. Schandl, M. Lenzen, D. Moran, S. Suh, J. West and K. Kanemoto (2015), ‘The material footprint of nations’, Proceedings of the National Academy of Sciences, 112 (20), 6271–6. Wiggins, S., S. Keats, E. Han, S. Shimokawa, J.A. Vargas Hernández and R. Moreira Claro (2015), The Rising Cost of a Healthy Diet: Changing Relative Prices of Foods in HighIncome and Emerging Economies, London: Overseas Development Institute, accessed 10 June 2015 at http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinionfiles/9580.pdf. World Bank (2015), ‘World Development Indicators – data’, accessed 10 February 2015 at http://data.worldbank.org/indicator. World Health Organization (WHO) (2014), WHO opens public consultation on draft sugars guideline, Geneva: World Health Organization, accessed 2 March 2015 at http://www. who.int/mediacentre/news/notes/2014/consultation-sugar-guideline/en/. World Health Organization (WHO) (2015), ‘Global Database on Body Mass Index: World Health Organization (WHO)’, accessed 23 January 2015 at www.who.int/bmi.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 276

01/06/2017 16:51

13  Land as a planetary boundary: a socioecological perspective Helmut Haberl and Karl-Heinz Erb

INTRODUCTION Intuitively it is obvious that land area is a limited resource. Its size is well known and largely invariable. Most socioeconomic activities require land, including some that are indispensable for human survival, such as food production. We might be tempted to think that it should be straightforward to define planetary boundaries – that is, biophysical limits to the safe operation of human activities on earth (Rockström et al. 2009; Steffen et al. 2015) – related to land. We know how much land there is on the planet, we know how much we use . . . case closed, it seems, at first sight. The earth’s total land surface amounts to 149 million square kilometers (Mkm2). Because approximately 12 percent of this land area is covered permanently by ice and snow, only an area of approximately a 130 Mkm2 is potentially usable. Human means to enlarge this area at the global scale are limited, despite certain successes in converting shallow oceans into land – think for example of the Netherlands. However, sea-level rise resulting from global warming could easily overturn such efforts. Currently, about three-quarters of the ice-free land area are used by humans for purposes such as infrastructure, housing, cropping, livestock grazing and forestry (Erb et al. 2007; Ellis et al. 2013). Most of the remaining quarter holds little promise for further land-use expansion, as it is dry, rocky, steep or cold, and hence unproductive. Only the last remnants of the earth’s pristine forests (5–7 percent of the ice-free land) hold potential for claiming more fertile land – but doing so would entail huge costs in terms of carbon and biodiversity losses (Foley et al. 2007). So, could we not simply say that humanity is quite close to the boundary, given that humans already occupy approximately 90 percent of the potentially usable, fertile land? Well, it is not as simple as that, owing to both natural (climate, geomorphology) and socioeconomic (technology, land-use intensity) factors, the productivity of land can vary by orders of magnitude when comparing different land uses and regions. Hence, land-related limits are a lot less obvious than one may think. Discussing what we know about the relationship between human 277 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 277

01/06/2017 16:51

278  Handbook on growth and sustainability demands placed on land and the capacity of the planet to support these demands is the main goal of this chapter. Toward that end, we discuss strengths and limitations of the ecological footprint, the way land is dealt with in the planetary boundaries framework, and discuss how the concept of ‘human appropriation of net primary production’, or HANPP, can be used in that context.

THE CARRYING CAPACITY IN ECOLOGY In our journey, we first turn to ecology, where the capacity of land-based (or other) ecosystems to support populations of any species is a key concept, denoted as ‘carrying capacity’. Carrying capacity is a simple, yet powerful concept that relates to the size of a population and the size of the habitat it occupies. It holds a prominent place in ecology textbooks (for example, Begon et al. 2005). While ecologists usually study nonhuman populations, an extension of this concept to human populations has gained considerable attention in the sustainability debates with the proposition of the ecological footprint concept, as discussed in more detail below. The central concept of carrying capacity is that the ability of an ecosystem to support the population (N) of any given species is limited, implying that N cannot exceed a defined upper limit (usually denoted as K), at least for a long time. Carrying capacity denotes exactly this population maximum K, defined relative to one or more limited resources a species needs for survival in the respective ecosystem. The famous growth curve reflecting that concept is called the ‘logistic function’ (Figure 13.1); it was introduced more than 170 years ago (Verhulst 1838). It starts off with exponential growth that slows down when population numbers asymptotically approach K. Ecologists commonly classify species showing this pattern of population growth as ‘K strategists’ with relatively slow growth but a high aptitude in efficiently using limited resources. The density of species adopting a K strategy is thought to be near K most of the time, except after disturbances. A second group of species is denoted as ‘r strategists’: these species have high propagation abilities and efficiently use resources to grow fast when resources are available – but they tend to overshoot the available resource base, resulting in a consequent population decline (or colonization of new habitats elsewhere). These approaches have interesting underlying assumptions. First, while N is dynamic, showing density-dependent growth at low population density and some kind of smooth (K strategy) or catastrophic (r strategy)

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 278

01/06/2017 16:51

Population number (N)

Land as a planetary boundary  ­279

Carrying capacity (K) K strategy: Logistic growth dN/dt = r N(t) (1 - N(t)/K)

r strategy: Overshoot and subsequent decline

Time (t) Source:  Own graph.

Figure 13.1  The carrying capacity concept in population ecology, and the distinction of species adopting a K strategy (logistic growth) and those having an r strategy (overshoot and subsequent decline) regulation at higher densities, K is thought to be constant for any given species and ecosystem: depending on their respective characteristics, for example, resource requirements of the species, resource availability, and respective resource renewal rates of the ecosystem, K is constant and independent of N. Second, K refers to a specific ecosystem and depends of course on its delineation. The larger the area of the ecosystem suitable for the species in question, the larger K will be. Individuals of mobile species can avoid the effects of density-dependent regulation occurring when N approaches K by migrating to other suitable areas if those are within reach.

HUMANS AND CARRYING CAPACITY The assumption that K is independent of N and the limited applicability of density-dependent regulation to mobile species results in challenges when trying to apply the carrying capacity concept to human societies.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 279

01/06/2017 16:51

280  Handbook on growth and sustainability Hunter-gatherers knew how to cope with temporary resource shortages through migration; indeed mobility is generally thought to be an important characteristic of their mode of subsistence (Boyden 1992; Sieferle 1997). Moreover, since the Neolithic revolution around 12 000 years ago human societies have learned to modify, manage, or, in the terminology of social ecology, ‘colonize’ – that is, purposefully alter (Fischer-Kowalski and Haberl 1997) – ecosystems in order to raise their capacity to supply humans with the resources they need, through cropping, animal husbandry and forestry and so on (Vasey 2002; Smil 2013). The ability to colonize ecosystems, for example, by replacing natural vegetation with agro-ecosystems or by introducing domesticated animals, allowed humans to raise resource supply per unit area substantially, that is, by two to three orders of magnitude during the transition from hunter-gatherers to agrarian societies (Fischer-Kowalski and Haberl 1997; Haberl 2001). In addition, human societies can also overcome local resource shortages through trade and temporary resource shortages by storage. While agrarian societies in general developed options to store food over at least one vegetation period, trade was limited to selected, highly valuable items in pre-industrial societies. Supply with resources required in large quantities, for example, food, fuels or similar commodities, by land-based means of transport was restricted. Energetic limits prevented societies from organizing their supply with mass resources using human labor or draught animals because the distance over which food or energy could be transported based on muscle power without running an energy deficit (for example, needing more energy for feeding humans or animals than could be transported) is relatively short, perhaps a few dozen kilometers (Sieferle 1997). Sailing boats on oceans or lakes and downhill transport along rivers with boats and rafts were obvious options to overcome such limitations even in pre-industrial times, which helps explain why major conurbations were primarily located where they could be supplied using boats, ships or rafts (Sieferle et al. 2006). The advent of steam engines and railroads was a game changer and allowed the supply of large cities over long distances and alleviated these constraints (Boyden 1992; Sieferle 1997).

MALTHUS VERSUS BOSERUP In his famous ‘Essay on the principle of population’ first published in 1798, Thomas R. Malthus spearheaded a debate on natural limits to feeding growing human populations (Malthus 1992). He argued that, if unchecked, human populations tend to grow exponentially (he called it ‘geometrically’), while agricultural yields grow only linearly (­ ‘arithmetically’, in his

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 280

01/06/2017 16:51

Land as a planetary boundary  ­281 words) and hence cannot keep pace. Hence, he argued for measures to constrain population growth such as moral restraint or postponed marriages, and against supporting the poor because he thought that this would just encourage further population growth, which would in turn further aggravate poverty and misery. Neo-Malthusian positions prevail today but were especially prominent during the 1960s and 1970s (for example, Ehrlich 1968) when the annual growth rate of the world population had reached its all-time high of approximately two percent per year (Cohen 1995). The Danish agronomist Ester Boserup is widely seen as a prominent opponent of such views (for example, Boserup 1965). Her main argument is that more people mean not only more mouths to be fed but also a larger work force, plus more brains to invent better technologies – that is, growing populations can feed themselves by working harder and more effectively (Fischer-Kowalski et al. 2014). Boserup’s work puts land-use intensification into focus; for example, the idea that through more inputs, or more efficient use of inputs, production of land-based goods can be raised, rendering the ecological concept of carrying capacity largely meaningless in the case of Homo sapiens.

BIOCAPACITY IN THE ECOLOGICAL FOOTPRINT CONCEPT Over the past three centuries, a stunning number of efforts were launched to calculate the number of people that could live sustainably on earth over long periods. Several approaches were used in these analyses, and it may not be surprising that the range of estimates is large – from a few millions to approximately 1012 or a thousand billion people, varying by a factor of 106. Perhaps unexpectedly, the mean of the estimates (in the order of 10 billion) did not change much over the centuries, as brilliantly summarized about 20 years ago (Cohen 1995). William E. Rees and Mathis Wackernagel, co-developers of the ecological footprint concept, decided to follow another direction by reversing the original notion of carrying capacity (Rees 1992, 1996; Wackernagel and Rees 1997). Rather than asking for the maximum sustainable human population size, they proposed a method to estimate the area required to sustain the resource demand and to absorb wastes and emissions for any given human population and consumption pattern. This allows calculating a study population’s ‘ecological footprint’, which can be compared with a measure of area availability they termed ‘biocapacity’. The definition of biocapacity attempts to avoid the pitfalls of applying the carrying

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 281

01/06/2017 16:51

282  Handbook on growth and sustainability capacity concept to humans. Biocapacity is ‘the capacity of ecosystems to produce useful biological materials and to absorb waste materials generated by humans, using current management schemes and extraction ­technologies’ (Global Footprint Network 2016). ‘Usefulness’ is judged in relation to demand, meaning that biomass (or any other resource) is classified as useful when a product or service is demanded at the market. Capacities to generate products such as food or fiber are estimated based on current yields as reported in agricultural statistics (Monfreda et al. 2004). Biocapacity as well as the ecological footprint are measured in ‘global hectares’; that is, hectares (1 ha 5 104 m2) of globally average economic productivity. For example, the global average wheat yield in 2013 was 3.27 tons per hectare per year (t/ha/yr), implying that one ton of wheat used in 2013 anywhere in the world resulted in an ecological footprint of 0.31 global hectares (gha). However, Germany’s wheat yield was more than twice the global average (7.99 t/ha/yr), implying that the biocapacity of land cultivated with wheat in Germany’s was 2.44 gha/ha. For comparison, the wheat yield of Honduras was only 0.38 t/ha/yr in the same year; therefore, the biocapacity of Honduran cropland used for wheat was only 0.12 gha/ha (FAOSTAT, data downloaded on 11 June 2015). Because it is calculated using currently achieved yields (production per unit area and year; derived from census statistics), biocapacity is technology-dependent, not simply a function of ecosystems, but rather a property of an integrated socio-ecological system. This ‘global hectare’ approach allows researchers to undertake cross-country comparisons of land demand, irrespective of differences in yield levels in individual regions resulting from differences in natural endowment or technological performance (York et al. 2004; Siche et al. 2008; Rees 2013). Building upon the strong intuitive notion of land as a finite resource and the existence of other global resource limits (Opshoor 2000), the ecological footprint concept immediately gained attention and was included in environmental accounting schemes (for example, EEA 2012). Notwithstanding its success in science and policy making, however, severe criticisms of the ecological footprint concept have been raised. For example, it was argued that the notion of an ecological deficit (that is, a footprint exceeding biocapacity on the national scale) would be of limited significance as long as other countries had an ecological surplus (van den Bergh and Verbruggen 1999; Blomqvist et al. 2013; but see the rebuttal by Rees and Wackernagel 2013). The inability of the ecological footprint method to discern sustainable from non-sustainable, temporarily excessive land use practices (inherent in the approach of calculating biocapacity based on current yields) has also been criticized. Perhaps most importantly, ecological footprint analysis currently has

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 282

01/06/2017 16:51

Land as a planetary boundary  ­283 only limited capacity to detail global overshoot (that is, the situation where humanity’s footprint exceeds the earth’s biocapacity). The method can detect global overshoot only if insufficient area is available to absorb fossil-fuel related CO2 or if wood harvest exceeds regrowth in the world’s forests. All other resource categories cannot be in global overshoot by definition (except for trivial issues such as stock changes) because the biocapacity is defined by the prevailing production rate (Haberl et al. 2001). The resource category that ecological footprint analysis actually does show to be in overshoot is fossil fuel use (Rees and Wackernagel 2013; Wackernagel et al. 2002). This activity is well known to be unsustainable but is also not dependent on the availability of land – the lack of carbon sinks such as maturing forests does not prevent the combustion of fossil fuels. Ironically, the transition from biomass to fossil fuels was the very innovation allowing humans to emancipate themselves from the constraints that land-based resource supply through agriculture and forestry imposed on their metabolic rates (Sieferle et al. 2006; Fischer-Kowalski and Haberl 2007; see below). From that perspective, it is perhaps not too surprising that an index converting fossil fuel consumption into global hectares would find humanity requiring more land than is in fact available.

PLANETARY BOUNDARIES The ‘planetary boundary’ concept (Rockström et al. 2009) is a relatively recent attempt to quantify the earth’s capacity to support human activities. It is based on resilience concepts in the sense that it tries to map a ‘safe operating space’ within which fundamental detrimental changes in the operation of important ecological systems can be avoided and resilience of vital ecosystem functions and services can be maintained (Steffen et al. 2011). Although this concept also entails the idea of biophysical limits to be respected in order to avoid detrimental environmental outcomes, it differs considerably from the carrying capacity concept, among others because it is focused on resources (for example, water), concentrations (for example, greenhouse gases) and conditions (for example, land-system change) and not explicitly population. In contrast to the ecological footprint framework, it does not attempt to capture compliance with sustainable levels of resource use in one pair of numbers (for example, the ecological footprint or biocapacity). Instead, it reflects the complexity of defining and measuring carrying capacity specifying several dimensions of the problem, such as climate change, biodiversity loss, and eutrophication. However, the planetary boundary framework is a work in progress and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 283

01/06/2017 16:51

284  Handbook on growth and sustainability some of the boundaries are not well defined. In contrast to the intuitively plausible idea of land as a straightforward limit, the land boundary has so far not been well formulated. In the original work by Rockström et al. (2009) it was defined by an arbitrarily chosen upper limit to the fraction of land that could be used for cropping. A more recent paper (Steffen et al. 2015) proposes a boundary based on the ratio of current to potential forest cover differentiated by biomes. According to that concept, expanding cropland results in transgressing planetary boundaries only if it results in deforestation beyond the safe limit. This concept seems more plausible to us than the original Rockström et al. framework, but still safe thresholds for the ratio of current to potential forest area in each biome are hard to define. In the next section we discuss to what extent approaches based on biological productivity, in particular net primary production, can help to better understand land-related limits to global resource consumption (Erb et al. 2012a; Running 2012).

LAND PRODUCTIVITY – THE HANPP APPROACH Net primary production (NPP) is a measure of the amount of solar energy captured by green plants and converted to energy-rich organic materials (that is, biomass).1 In the process of photosynthesis, autotrophic organisms such as green plants use radiant energy from the sun to synthesize energy-rich organic materials from inorganic inputs, chiefly carbon dioxide (CO2) and water (H2O). In contrast, heterotrophic organisms such as animals (including humans), fungi and many microorganisms depend on the ingestion of energy-rich organic substances for their energy supply. Net primary production is the energetic basis for all heterotrophic food chains and food webs in ecosystems (Lieth and Whittaker 1975). The total amount of carbon incorporated in organic materials during photosynthesis is denoted as gross primary production. Plants use a part of this organic material for their own metabolism (‘plant respiration’). Net primary production is gross primary production net of plant respiration. It is a key process for the global biogeochemical cycles of carbon, water, nitrogen, phosphorous, and so on, and of fundamental importance for ecosystem functioning and the provision of ecosystem services (Millennium Ecosystem Assessment 2005). Net primary production is also the basis for all biomass harvested and used by humans through cropping, livestock grazing, haymaking or forestry, and is thus fundamental for human society’s biophysical resource base. The first attempts to relate socioeconomic demands for biomass

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 284

01/06/2017 16:51

Land as a planetary boundary  ­285 to NPP (Whittaker and Likens 1973) found that humanity’s food, fiber and wood amounted to few percent of global NPP, a result that was hardly noticed and failed to raise concern. However, a seminal study of what was then denoted as ‘human appropriation of the products of ­photosynthesis’ – now known as human appropriation of net primary production (HANPP) – revealed that even in the mid-1980s humans used, prevented or ‘co-opted’ up to 40 percent of the earth’s NPP (Vitousek et al. 1986). That sounded alarming, in particular to those who assumed that HANPP is closely coupled to growth of population and GDP, motivating concerns over the imminence of humanity’s trespassing of global ecological limits to growth (Daly 1996; Meadows et al. 1992). However, it was soon noted (Davidson 2000; Sagoff 1995) that the definition underlying Vitousek et al.’s highest HANPP estimates – although useful when using HANPP as a measure of human ‘domination of earth’s ecosystems’ (Vitousek et al. 1997) – rendered simple assumptions about a tight coupling between HANPP and growth questionable. Above all, Vitousek et al.’s definition included the entire NPP of ‘human dominated ecosystems’, such as croplands, intensively used meadows or plantation forests, as ‘appropriated’ even if a sizeable fraction of the NPP was not harvested or otherwise used by humans. Global HANPP estimates based on a narrower definition that included only biomass actually removed by humans as ‘appropriated’ found a lower level of 20 to 30 percent of global HANPP (Wright 1990). The HANPP definition used within the Vienna School of Social Ecology is (for detail, see Haberl et al. 2014) based on Wright’s (1990) concept. It includes (1) alterations of NPP resulting from land use (‘forgone NPP’ in the sense of Vitousek et al. 1986) and (2) harvested NPP, which included not only biomass harvested and used, but also some by-flows and residues such as roots of trees or crop plants or harvest residues left on the field. It does not include the entire NPP of human-dominated ecosystems. An empirical analysis of global terrestrial HANPP in the year 2000 based on spatially explicit data estimated global HANPP at 24 percent of potential NPP according to that definition, while a recalculation of HANPP applying Vitousek et al.’s (1986) definition to the same database gave a significantly higher estimate, consistent with Vitousek et al.’s results (Haberl et al. 2007). This is not an ‘all-clear’ signal, however. Still it implies that just one species claims a very substantial proportion of a crucial ecological resource, thereby putting high ­pressures on the ­integrity and biodiversity of the world’s terrestrial ecosystems (Millennium Ecosystem Assessment 2005), and causing carbon losses from biota and soils that exceed 1 billion tons of carbon per year (Smith et al. 2014).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 285

01/06/2017 16:51

286  Handbook on growth and sustainability

SOCIO-METABOLIC TRANSITIONS FROM AGRARIAN TO INDUSTRIAL SOCIETY Long-term empirical studies of HANPP on national (Krausmann et al. 2012; Gingrich et al. 2015) and global levels (Krausmann et al. 2013) shattered the idea that HANPP would grow largely in parallel with population, GDP or even agricultural output. The first national long-term HANPP study for Austria’s territory even found a decline of HANPP from approximately 60 percent of potential NPP (NPPpot; that is, the NPP of potential natural vegetation assumed to prevail in the absence of land use) in 1830 to 50 percent in 1995. During that period, Austria’s population more than doubled, agricultural output measured in physical units grew substantially more than that, and GDP by a factor of almost thirty. A contrasting trend prevailed in the Sahel zone, a highly vulnerable, dryland region crossing the African continent. In this region, surges in population numbers resulted in a doubling of the human demand for NPP, despite much slower NPP increases, and thus considerable increases of the human pressures on ecosystems (Abdi et al. 2014). At the global scale, such developments occurred simultaneously. Global HANPP doubled from approximately 13 percent to 25 percent from 1910 to 2005. It was accompanied by a substantial relative ‘decoupling’ between HANPP, population and GDP: while HANPP doubled, global population grew by a factor of four and GDP by a factor of 17 (Krausmann et al. 2013). Several factors contribute to the observed decoupling between HANPP, population and economic activity. The most important explanation is that the GDP trajectories during the past two to three centuries largely reflect agrarian–industrial transitions. That is, they represent a socioecological regime shift from agrarian societies whose production is  overwhelmingly based on harnessing the productive forces of agro-ecosystems and managed forests to industrial societies whose resource use is primarily based on fossil fuels and mineral resources (Boyden 1992; FischerKowalski and Haberl 2007). Because this transition involves a far-reaching shift in the resource base, we should not expect HANPP or even biomass consumption to be closely coupled with GDP. Social, economic and technological changes that allowed overcoming the constraints that landbased production systems impose on energy and raw material supply are commonly seen as a precondition of the Industrial Revolution, as they have unleashed huge potentials to raise material and energy throughput in total and per capita (Sieferle 2001). However, these changes in society’s resource during agrarian–industrial transitions are not sufficient to explain the observed relative decoupling between HANPP and population. Economic growth goes along with

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 286

01/06/2017 16:51

Land as a planetary boundary  ­287 changes in consumption patterns that have a high potential to push HANPP upwards, such as a higher intake of food calories as well as a higher share of animal products in human diets (Haberl et al. 2012). Two main factors helped to counteract these drivers: (1) agricultural intensification resulting in massive increases in yields per unit area and year, and (2) technological changes and altered livestock management have reduced conversion losses from primary biomass harvested to final products delivered (Haberl et al. 2014). Yield increases consisted of two components, namely, increases in plant growth (including NPP) resulting from higher fertilizer inputs and irrigation and a higher fraction of the crop plant’s NPP allocated to the commercial product (for example, grains in the case of cereals). Scenario analyses suggest that global HANPP would grow only moderately (from 24 percent in 2000 to between 27 and 29 percent of potential NPP) until 2050 if past trends are assumed to continue in the next decades (Krausmann et al. 2013).

NPP AS PLANETARY BOUNDARY In recent years, the discussion about the relevance of NPP in limiting human activities on earth has resurfaced, for several reasons. Large-scale proposals to substitute fossil fuels with biomass to reduce GHG emissions and to counter limits to the future supply of conventional oil (‘peak oil’ debate) were issued. This included policies to substitute biofuels derived from food crops (‘first generation’ biofuels), for example, ethanol from sugar cane, maize or wheat and biodiesel from rape seed, soy or sunflower, for conventional gasoline or diesel fuels. Policies to significantly expand the role of biomass for energy supply could easily become a ‘game-changer’ for future land use (Coelho et al. 2012). It was estimated that a large-scale bioenergy supply program would drive HANPP up to 44 percent by 2050, a clear deviation from past trends (Krausmann et al. 2013). Massive increases in agricultural prices in the years 2007–08 (most likely driven by several factors, including biofuels; Coelho et al. 2012) that occurred concomitantly with large-scale biofuel policies in the USA and Europe contributed to a renewed interest in land as a potentially limited – and limiting – factor for resource supply. The publication of the influential ‘planetary boundaries’ paper (Rockström et al. 2009) also triggered a renewed interest in global limits to resource supply. In this context, data derived from remote sensing using the MODIS NPP algorithm (Running 2012) received a lot of attention. According to these data, aggregate global NPP showed surprisingly little temporal variation over three decades, varying by less than 2 percent from year to year

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 287

01/06/2017 16:51

288  Handbook on growth and sustainability without a discernible overall trend. However, this constancy refers only to the global aggregate – regional variations in NPP were massive, a finding that renders it even more puzzling that the global average remained constant. The finding of an almost unchanged global NPP is particularly surprising given the enormous efforts aimed at raising farmland and forestry yield through land-use intensification. Throughout the past decades, agricultural yields have grown strongly, much faster than cropland areas. They contributed three to four times more to global increases in agricultural production than cropland expansion (Rounsevell et al. 2012). Since 1960, the areas cultivated with major crops (rice, maize, wheat or soybeans) were almost constant. Although cropland yields stagnated on approximately thirty percent of all croplands globally in the last decades, in particular in southern regions (Iizumi et al. 2014), the remaining 70 percent of the cropland area still experienced strong increases of output per unit area and year (Ray et al. 2012). According to the databases of the UN Food and Agricultural Organization (FAOSTAT 2014), global average cropland yields (fresh weight) increased on average by a factor of 2.3 since 1961 and by a factor of 1.6 since 1980. Harvest indices (that is, the ratio of commercial product to aboveground NPP) have grown substantially. Therefore, yields grew faster than the NPP of cropland areas. Even if increases in harvest indices are considered, yield increases translate into substantial increases in the NPP of global average cropland (Krausmann et al. 2013). If global terrestrial NPP should indeed have been constant, NPP of other land must have dropped to compensate the growing NPP of croplands. If the finding of a stable global NPP should be corroborated, for example, through further measurements or by the discovery of a plausible mechanism causing a global equalization of counteracting trends, global NPP would indeed represent a strong planetary boundary to human activities because it would imply that raising harvests could not even partially be compensated by higher NPP. In that case, any increase in harvest would translate directly into a reduction of biomass available for all other purposes in ecosystems. However, Running’s (2012) finding is at odds with the results of plant growth models, for example dynamic global vegetation models (DGVMs), which suggest considerable increases of NPP resulting from both environmental changes (in particular increased atmospheric CO2 and warmer temperatures) and land-use intensification (Bondeau et al. 2007). Clarifying this contradiction is certainly an important research need to be tackled in the near future. Even if there were a (currently unknown) mechanism to stabilize terrestrial NPP, significant options would still exist to increase production

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 288

01/06/2017 16:51

Land as a planetary boundary  ­289 of land-based products. One option is to convert land uses where only a small fraction of the NPP is available for human use, for example, forests or grasslands, to those in which a higher fraction of the NPP can be used, such as croplands. This would drive up HANPP and have ecological tradeoffs (such as the loss of ecologically valuable habitats), but would allow increasing biomass production for human purposes. Moreover, the percentage of biomass actually used by humans is a lot smaller than HANPP, suggesting that product supply can be increased without proportional increases in HANPP (Haberl et al. 2012). The volume of products and services per unit of HANPP strongly depends on the harvest index (the ratio of commercial product to biomass of a plant at time of harvest): raising the harvest index allows raising the volume of usable biomass per unit of HANPP. The volume of final products supplied per unit of usable biomass harvested depends on the efficiency with which biomass is converted into products, for example, the efficiency of technical conversion processes and biological conversions such as livestock feeding. Humans may also decide to adopt less wasteful consumption habits such as diets with lower share of animal products (Hadjikakou and Wiedmann, Chapter 12 in this volume). All of these factors contribute to the aggregate ‘HANPP efficiency’; that is, the volume of products and services derived for human use per unit of HANPP. Recent empirical work on HANPP efficiency has approximated production as kilograms of dry-matter primary biomass harvest, either including or excluding by-flows (Fetzel et al. 2014; Niedertscheider and Erb 2014; Niedertscheider et al. 2014). In conclusion, no matter whether global terrestrial NPP is constant, options exist to increase the supply of land-based products within certain boundaries – but doing so will usually be associated with monetary economic costs and environmental tradeoffs related to agricultural intensification. For example, agricultural intensification often requires higher inputs of fossil fuels, mineral fertilizers, and so on (see below).

BIOPHYSICAL OPTION SPACES FOR FUTURE BIOMASS SUPPLY One advantage of using NPP as an indicator for planetary boundaries is that biomass can be used only for one purpose at a time. In contrast, land can be used for several purposes at a time (‘multifunctional land use’; Bustamante et al. 2014). For example, grasslands may sequester carbon, host biodiversity and provide fodder for livestock simultaneously. Croplands can be harvested more than once per year under favorable

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 289

01/06/2017 16:51

290  Handbook on growth and sustainability climate and soil conditions (Zabel et al. 2014). Multi-functionality of land use may reduce land-use competition in some cases, but not when biomass flows are at stake, for example when biomass serves as an input to socioeconomic production processes (food, feed, energy, raw materials) or when it is required for a specific function in the ecosystem, for example, for carbon sequestration. An atom of carbon in biomass can be eaten, burned or stored in living plants, soils or products, but it cannot be used for two or more of these purposes simultaneously. Food and feed production competes in many instances with natural areas as well as with climate protection, for example, when it drives deforestation (West et al. 2010). Bioenergy production is known to be a strong competitor with food production (‘food vs. fuel’; Smith et al. 2014), and climate change mitigation strategies, such as the ‘Reduced Emission from Forest Degradation and Deforestation’ (REDD; for example, Dyer et al. 2012), can limit the amount of area (and related services) available for other uses. Analyzing these tradeoffs and their future importance requires land-use models that can deal with the complex drivers of future land use. Key parameters are the development of agricultural yields, the development of human diets and other socioeconomic demands for biomass, and future area availability. Factors related to livestock systems are crucial in this regard, owing to the outstanding role livestock plays for human society: it accounts for 40 percent of global agricultural GDP, and consumes nearly two-thirds of global biomass harvest from grazing lands and cropland (Krausmann et al. 2008). Grazing land represents by far the largest single land-use type globally and is estimated to extend over between 34 and 45 million km² (Luyssaert et al. 2014). Key parameters related to livestock are their biophysical input– output ratios (feed conversion ratio; Krausmann et al. 2008; Herrero et al. 2013) as well as the share of feedstuff from cropland and residues. In an attempt to delineate future global socioeconomic land-use related option spaces, data for all of these parameters have been systematically integrated in the biomass balance model (BioBaM; Erb et al. 2009, 2012b; Haberl et al. 2011). The BioBaM allows calculating the balance between global supply of and demand for biomass in 11 world regions based on anticipated changes in food demand, production technologies (yields and feeding efficiency) and land requirements. It traces global biomass flows from production on cropland and grazing land through various compartments such as monogastric or ruminant livestock or processing sectors to final consumption of biomass products, including a quantification of residue and waste flows. The BioBaM determines whether sufficient produce from cropland and grazing land is available to cover the demand for biomass, in particular food. The model uses thermodynamic principles (assessment of material and energy flows following the law of the conser-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 290

01/06/2017 16:51

Land as a planetary boundary  ­291 vation of mass and energy) and contains neither optimization algorithms nor dynamic simulation processes. Its advantage is the simplicity and transparency with which tradeoffs between different land use strategies can be assessed. In the scenario analysis, BioBaM uses forecasts from the literature, as far as possible from official sources such as the FAO, on the development of diets, yields, cropland area as well as an extrapolation of feeding efficiencies (Alexandratos and Bruinsma 2012). For population, we use the United Nations medium scenario (UN 2011). Taking these forecasts as a starting point, each parameter is varied using scenario results or assumptions from the literature. The option space is defined by the scenarios that are classified as ‘feasible’. For all scenarios, ‘feasibility’ is defined as the ability of land to produce sufficient food to meet demand, given the specific combination of diets, yields, feeding efficiencies and area demand. For scenarios classified as ‘feasible’, the difference between supply of biomass and demand for biomass products is calculated, allowing estimating the area of high-quality land that could be set aside for other purposes than food production (for example, biodiversity conservation, carbon sequestration or bioenergy production). Figure 13.2(a) shows the area of high-quality land that could be used for non-food purposes in all ‘feasible’ scenarios depending on diets, while Figure 13.2(b) does the same for yields. Lines show the area of available land in each ‘feasible’ scenario for a specific assumption on diets (respectively yields in plate b) when all other variables are varied, ranked by available land area. Figure 13.2 indicates a strong interrelation between diets and land demand, and hence the availability of relatively good land that can be potentially used for purposes other than food production. The richer humanity’s average diet, the smaller the area of potentially available land, and the higher the fraction of scenarios classified as ‘non-feasible’ (owing to lacking land resources). Less calorie-intensive diets, and in particular diets with a lower share of animal products, are found to be feasible in a higher fraction of all scenarios, for example under assumptions of lower yields, and to result in a higher potential availability of fertile land. Yields also influence the land area available for non-food purposes. Lower yields entail a lower area availability and result in a decreased number of feasible scenarios. The interplay of diet developments and agricultural technology is thus decisive for the option space of future land use. The largest area availability, for instance, results from the combination of high yields, in other words, intensive agricultural systems, and low food demand in terms of both calorie input and share of animal products. However, that combination seems unlikely, as it would entail trading off nutritional targets, for example, abundant and rich food for many, against non-food targets, such as climate

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 291

01/06/2017 16:51

292  Handbook on growth and sustainability

12

10

10

million km2

(b) 14

12 million km2

(a) 14

8 6 4 2 0

8 6 4 2

1

6

11 16 21 26 # of scenarios

31

36

Constant 2000

Less meat

BAU

Western rich

0

1

6 11 16 21 26 31 36 41 46 # of scenarios BAU

High

Low

Note:  Zero values indicate non-feasible scenarios. Source:  Own calculations (for reference see Erb et al. 2012b; Haberl et al. 2016).

Figure 13.2  Area potentially available in 2050 for other purposes than food production on good quality land, according to (a) different assumptions on future diets and (b) assumptions on yields protection or biodiversity conservation. In this context, our analysis reveals that demand-side measures, the reduction of the share of animal products in diets, represent robust strategies to mitigate such conflicts (Smith et al. 2014). Technology-oriented production-side measures aimed at increasing efficiencies or increasing yields are less robust because they are susceptible to rebound effects that annihilate efficiency gains by increased demand (Erb 2012). Because the BioBaM is a purely biophysical model, it does not capture rebound effects. Furthermore, strategies aimed at increasing landbased production per unit of land, usually summarized under the term landuse intensification, are associated with increased demand for resources such as fertilizers, machinery and water infrastructure, and are associated with manifold ecological detriments that are explored in the next section.

TRADEOFFS ASSOCIATED WITH RAISING PRODUCTIVITY As the scenario analysis in the previous section has shown, the continuation of cropland yield increases and rising livestock efficiency are ­cornerstones of all scenarios except for those where major changes on the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 292

01/06/2017 16:51

Land as a planetary boundary  ­293 demand side are assumed, in particular the widespread adoption of diets with a small share of animal products. Most analysts believe that future increases in cropland yields will be feasible. One argument is that yields deemed feasible under optimal management are often not achieved on a considerable fraction of the cropland, as evidenced by the prevalence of ‘yield gaps’, for example, the difference between existing and best possible yields (Lobell et al. 2009; Mueller et al. 2012; Erb et al. 2014). However, some scholars warn that in some regions crop yields are reaching limits and soil erosion may reduce expected yield increases (Cassman 1999; Tilman et al. 2002) and that a continuation of current trends in yields will not suffice to achieve sufficient harvest increases over the next decades (Ray et al. 2013). So far, raising cropland yields has been contingent upon increased inputs in terms of fertilizers, energy and water, in other words, agricultural intensification. However, agricultural intensification has been criticized for its high ecological costs (IAASTD 2009) and its possible effects on soil degradation (Winiwarter and Gerzabeck 2012). Nitrogen and phosphorous are both critical in terms of reaching, or even transgressing, planetary boundaries (Rockström et al. 2009; Carpenter and Bennett 2011). Global freshwater use is already high and may become limiting in the future as well (Steffen et al. 2015). Fossil energy input of global agriculture may be relatively small compared to total fossil energy use, but the energy return on investment (energy used per unit of energy gained) is a widespread concern (Giampietro and Pimentel 1991). Options to reduce such tradeoffs through better technologies and management options and through technology transfer certainly exist (Tilman et al. 2011) but the extent to which they will be successfully adopted is currently difficult to estimate. Switching from conventional to organic agriculture, however beneficial it may be in terms of many environmental criteria (Maeder et al. 2002), would entail sacrificing parts of the potential future yield growth in many regions. It could even lead to a reduction in average yields in some already highly intensively cultivated regions (Erb et al. 2009; de Ponti et al. 2012; Seufert et al. 2012). Widespread adoption of organic agriculture might hence result in an increased land demand for agriculture, if not compensated by concomitant changes in dietary habits. Little doubt exists that raising livestock feeding efficiencies is possible because of the huge differences in feeding efficiencies prevailing worldwide (Erb et al. 2009; Herrero et al. 2013). However, there are also tradeoffs in terms of animal welfare (Erb et al. 2009) as well as changes in the relative importance of cropland versus grassland-based fodder. A reason for the low feeding conversion ratios, for example, the ratio between input (feedstuff) and outputs (milk, meat) of the livestock sector, is the high share

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 293

01/06/2017 16:51

294  Handbook on growth and sustainability of animals roaming almost unattended over longer periods during the year. They forage on land that would not be otherwise usable by humans and use biomass that is of low quality when compared with nutrient-rich feedstuffs produced on croplands. Because land quality would often not allow for more intensive cropland agriculture owing to environmental constraints and prohibitively high input costs, and grazing areas are often located in regions too remote to be cultivated more intensively, landcompetition effects of such grazing systems are generally low. Thus, a more energetic or physical input–output perspective might be too narrow to grasp the tradeoffs and opportunities related to livestock rearing. This is particularly true for sustainability challenges such as food security. Livestock rearing represents a strategy to use land otherwise not usable for food production, as well as a method of risk minimization, by representing a stock of assets that is largely able to maintain itself and requires resources that are not under demand from other sectors. Hence, increasing feeding efficiencies for example by switching to cropland-derived feeds (which can be more efficiently digested) may not always be preferable (Krausmann et al. 2008).

CONCLUSIONS Land and NPP represent planetary boundaries in the sense that they are finite and constrain option spaces for human activities on earth. At present, about three-quarters of the earth’s land mass outside Greenland and Antarctica are used, albeit sometimes with low intensity (for example, extensive grazing). Little fertile land is still left untouched, perhaps 5 to 7 percent of the earth’s land mass. Using that land is, however, overwhelmingly associated with huge tradeoffs in terms of carbon and biodiversity, as it currently hosts the earth’s last pristine forests, including tropical rain forests. Most additional future increases in biomass supply will result from raising land-use intensity, which may or may not include land-use change, but will almost always entail some form of land-use competition (Smith et al. 2010; Haberl 2014). Humans currently ‘appropriate’ approximately one-quarter of potential land-based NPP (one-third of aboveground NPP; Haberl et al. 2007). Global HANPP has doubled in the past century (Krausmann et al. 2013). The question of to what extent humans may raise global terrestrial NPP through land-use intensification is contentious. However, there are options for raising future supply of land-based products and services through higher yields, improved livestock feeding efficiencies as well as more efficient conversion as well as a strategy of recycling and reuse

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 294

01/06/2017 16:51

Land as a planetary boundary  ­295 of biomass throughout the chain of production (‘cascade ­utilization’; Haberl and Geissler 2000). However, raising yields may directly or indirectly require unsustainable or scarce inputs such as fossil fuels, at least with current technologies in agriculture respectively in the economic sectors producing inputs such as tractors, pesticides, fertilizers and so on (IAASTD 2009). As long as these inputs are available, such strategies can most likely support a continuation of past trends of production growth in agriculture and forestry and would be sufficient to supply the currently foreseen future world population in 2050 (UN 2011) with growing amounts and qualities of food and fiber. In that sense, empirical work on past trajectories as well as the modelling work described above supports Boserup’s technological optimism rather than Malthus’s dire warnings. However, programs to substitute a major proportion of fossil energy with biomass would massively raise global HANPP in the next decades (Krausmann et al. 2013). Even if that could be biophysically possible, it could have major detrimental effects in terms of biodiversity and carbon emissions from land-use change (Wise et al. 2009). An environmentally benign – and healthy – option to adapt to planetary boundaries related to land would be the transition towards diets with a smaller fraction of animal products (Stehfest et al. 2009; Ripple et al. 2014; Hadjikakou and Wiedmann, Chapter 12 in this volume). Alleviating land-related boundaries through agricultural intensification may be possible but may aggravate the pressures on other boundaries such as those of biodiversity, freshwater, nitrogen or phosphorous. Sustainable solutions to the problem of raising land productivity without requiring large amounts of unsustainable inputs, such as fossil fuels, degrading soils, reducing biodiversity, setting free carbon stored in biota and soils or releasing dangerous amounts of reactive chemicals, still need to be found. In that sense, Malthus’s warnings on land’s limited ability to supply humans with biophysical resources remain valid.

ACKNOWLEDGMENTS We thank the EU-FP7 project VOLANTE (grant agreement no. 265104) and the European Research Council Starting grant ERC-2010-stg-263522 (LUISE) for research funding. Helmut Haberl wrote parts of this chapter while enjoying a research stay at the Integrative Research Institute on Human-Environment Systems (IRI THESys) at Humboldt Universität zu Berlin. This article contributes to the Global Land Project (http://www. globallandproject.org). We thank Martina Binter for technical help.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 295

01/06/2017 16:51

296  Handbook on growth and sustainability

NOTE 1. NPP also includes production of organic materials from inorganic substances based on the utilization of other sources of chemical energy (‘chemosynthesis’); the magnitude of such processes that occur among others near hot vents at the ocean floor is not well known. Organic materials produced include not only biomass but also energy-rich chemicals such as root exudates.

REFERENCES Abdi, A.M., J. Seaquist, D.E. Tenenbaum, L. Eklundh and J. Ardö (2014), ‘The supply and demand of net primary production in the Sahel’, Environmental Research Letters, 9, 094003. Alexandratos, N. and J. Bruinsma (2012), ‘World agriculture: towards 2030/2050, the 2012 revision’, ESA Working paper No. 12-03, Agricultural Development Economics Division, Food and Agriculture Organization of the United Nations. Begon, M., C.R. Townsend and J.L. Harper (2005), Ecology: From Individuals to Ecosystems, Malden, MA: Blackwell. Blomqvist, L., B.W. Brook, E.C. Ellis, P.M. Kareiva, T. Nordhaus and M. Shellenberger (2013), ‘Does the shoe fit? Real versus imagined ecological footprints’, PLoS Biology, 11 (11), e1001700. Bondeau, A., P.C. Smith, S. Zaehle, S. Schaphoff, W. Lucht, W. Cramer et al. (2007), ‘Modelling the role of agriculture for the 20th century global terrestrial carbon balance’, Global Change Biology, 13 (3), 679–706. Boserup, E. (1965), The Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure, Chicago, IL: Aldine. Boyden, S. (1992), Biohistory: The Interplay between Human Society and the Biosphere, Past and Present, Paris: UNESCO and Parthenon. Bustamante, M., C. Robledo-Abad, R. Harper, C. Mbow, N.H. Ravindranath, F. Sperling et al. (2014), ‘Co-benefits, trade-offs, barriers and policies for greenhouse gas mitigation in the agriculture, forestry and other land use (AFOLU) sector’, Global Change Biology, 20 (10), 3270–90. Carpenter, S.R. and E.M. Bennett (2011), ‘Reconsideration of the planetary boundary for phosphorus’, Environmental Research Letters, 6 (1), 011001. Cassman, K.G. (1999), ‘Ecological intensification of cereal production systems: yield potential, soil quality, and precision agriculture’, Proceedings of the National Academy of Sciences, 96 (11), 5952–9. Coelho, S., O. Agbenyega, A. Agostini, K.H. Erb, H. Haberl, M. Hoogwijk et al. (eds), Global Energy Assessment: Toward a Sustainable Future. International Institute of Applied Systems Analysis (IIASA), Cambridge: Cambridge University Press, pp. 1459–525. Cohen, J.E. (1995), How Many People Can the Earth Support? New York: Norton. Daly, H.E. (1996), Beyond Growth: The Economics of Sustainable Development, Boston, MA: Beacon Press. Davidson, C. (2000), ‘Economic growth and the environment: alternatives to the limits ­paradigm’, BioScience, 50 (5), 433–40. De Ponti, T., B. Rijk and M.K. van Ittersum (2012), ‘The crop yield gap between organic and conventional agriculture’, Agricultural Systems, 108 (1), 1–9. Dyer, G.A., R. Matthews and P. Meyfroidt (2012), ‘Is there an ideal REDD+ program? An analysis of policy trade-offs at the local level’, PLoS One, 7 (12), e52478. Ehrlich, P.R. (1968), The Population Bomb – Population Control or Race to Oblivion? New York: Sierra Club – Ballantine Books. Ellis, E.C., J.O. Kaplan, D.Q. Fuller, S. Vavrus, K.K. Goldewijk and P.H. Verburg (2013),

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 296

01/06/2017 16:51

Land as a planetary boundary  ­297 ‘Used planet: a global history’, Proceedings of the National Academy of Sciences, 110 (20), 7978–85. Erb, K.-H. (2012), ‘How a socio-ecological metabolism approach can help to advance our understanding of changes in land-use intensity’, Ecological Economics, 76 (1), 8–14. Erb, K.-H., V. Gaube, F. Krausmann, C. Plutzar, A. Bondeau and H. Haberl (2007), ‘A comprehensive global 5 min resolution land-use data set for the year 2000 consistent with national census data’, Journal of Land Use Science, 2 (3), 191–224. Erb, K.-H., H. Haberl, R. DeFries, E. Ellis, F. Krausmann, P. Verburg et al. (2012a), ‘Pushing the planetary boundaries’, Science, 338 (6113), 1419–20. Erb, K.-H., H. Haberl, F. Krausmann, C. Lauk, C. Plutzar, J.K. Steinberger et al. (2009), ‘Eating the planet: feeding and fuelling the world sustainably, fairly and humanely – a scoping study’, Social Ecology Working Paper No. 116, Wein Institute of Social Ecology, Vienna. Erb, K.-H., A. Mayer, F. Krausmann, C. Lauk, C. Plutzar, J.K. Steinberger and H. Haberl (2012b), ‘The interrelations of future global bioenergy potentials, food demand and agricultural technology’, in A. Gasparatos and B. Stromberg (eds), Socioeconomic and Environmental Impacts of Biofuels: Evidence from Developing Nations, Cambridge: Cambridge University Press, pp. 27–52. Erb, K.-H., M. Niedertscheider, J.-P. Dietrich, C. Schmitz, P.H. Verburg, M.R. Jepsen and H. Haberl (2014), ‘Conceptual and empirical approaches to mapping and quantifying land-use intensity’, in M. Fischer-Kowalski, A. Reenberg, A. Schaffartzik and A. Mayer (eds), Ester Boserup’s Legacy on Sustainability: Orientations for Contemporary Research, Dordrecht: Springer, pp. 61–86. European Environment Agency (EEA) (2012), ‘Consumption and the environment – 2012 outlook: The European environment, state and outlook 2010’, European Environment Agency, Copenhagen. FAOSTAT (2014), Statistical databases, Food and Agriculture Organization of the United Nations, Rome, accessed 1 October 2015 at http://faostat.fao.org. Fetzel, T., M. Gradwohl and K.-H. Erb (2014), ‘Conversion, intensification, and abandonment: a human appropriation of net primary production approach to analyze historic land-use dynamics in New Zealand 1860–2005’, Ecological Economics, 97 (January), 201–8. Fischer-Kowalski, M. and H. Haberl (1997), ‘Tons, joules and money: modes of production and their sustainability problems’, Society & Natural Resources, 10 (1), 61–85. Fischer-Kowalski, M. and H. Haberl (eds) (2007), Socioecological Transitions and Global Change: Trajectories of Social Metabolism and Land Use, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Fischer-Kowalski, M., A. Reenberg, A. Schaffartzik and A. Mayer (eds) (2014), Ester Boserup’s Legacy on Sustainability: Orientations for Contemporary Research, Dordrecht: Springer. Foley, J.A., G.P. Asner, M.H. Costa, M.T. Coe, R. DeFries, H.K. Gibbs et al. (2007), ‘Amazonia revealed: forest degradation and loss of ecosystem goods and services in the Amazon Basin’, Frontiers in Ecology and the Environment, 5 (1), 25–32. Giampietro, M. and D. Pimentel (1991), ‘Energy efficiency: assessing the interaction between humans and their environment’, Ecological Economics, 4 (2), 117–44. Gingrich, S., M.T. Niedertscheider, H. Kastner, G. Haberl, F. Cosor, T. Krausmann et al. (2015), ‘Exploring ‘long-term trends in land use change and aboveground human appropriation of net primary production in nine European countries’, Land Use Policy, 47 (September), 426–38. Global Footprint Network (2016), ‘Glossary’, accessed 1 February 2016 at http://www.foot​ printnetwork.org/en/index.php/GFN/page/glossary/. Haberl, H. (2001), ‘The energetic metabolism of societies: Part II: empirical examples’, Journal of Industrial Ecology, 5 (1), 71–88. Haberl, H. (2014), ‘Competition for land: a sociometabolic perspective’, Ecological Economics, 119 (November), 424–31.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 297

01/06/2017 16:51

298  Handbook on growth and sustainability Haberl, H. and S. Geissler (2000), ‘Cascade utilization of biomass: strategies for a more ­efficient use of a scarce resource’, Ecological Engineering, 16 (suppl.), S111–S121. Haberl, H., K.-H. Erb and F. Krausmann (2001), ‘How to calculate and interpret ecological footprints for long periods of time: the case of Austria 1926-1995’, Ecological Economics, 38 (1), 25–45. Haberl, H., K.-H. Erb and F. Krausmann (2014), ‘Human appropriation of net primary production: patterns, trends, and planetary boundaries’, Annual Review of Environment and Resources, 39, 363–91. Haberl, H., K.-H. Erb, T. Kastner, C. Lauk and A. Mayer (2016), ‘Systemic feedbacks in global land use’, in H. Haberl, M. Fischer-Kowalski, F. Krausmann and V. Winiwarter (eds), Social Ecology, Society-Nature Relations Across Time and Space, Cham: Springer, pp. 315–31. Haberl, H., K.-H. Erb, F. Krausmann, A. Bondeau, C. Lauk, C. Müller et al. (2011), ‘Global bioenergy potentials from agricultural land in 2050: sensitivity to climate change, diets and yields’, Biomass and Bioenergy, 35 (12), 4753–69. Haberl, H., K.-H. Erb, F. Krausmann, V. Gaube, A. Bondeau, C. Plutzar et al. (2007), ‘Quantifying and mapping the human appropriation of net primary production in earth’s terrestrial ecosystems’, Proceedings of the National Academy of Sciences, 104 (31), 12942–7. Haberl, H., J.K. Steinberger, C. Plutzar, K.-H. Erb, V. Gaube, S. Gingrich and F. Krausmann (2012), ‘Natural and socioeconomic determinants of the embodied human appropriation of net primary production and its relation to other resource use indicators’, Ecological Indicators, 23 (December), 222–31. Herrero, M., P. Havlík, H. Valin, A. Notenbaert, M.C. Rufino, P.K. Thornton et al. (2013), ‘Biomass use, production, feed efficiencies, and greenhouse gas emissions from global livestock systems’, Proceedings of the National Academy of Sciences, 110 (52), 20888–93. International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD) (2009), Agriculture at a Crossroads, International Assessment of Agricultural Knowledge, Science and Technology for Development, Global Report, Washington, DC: Island Press. Iizumi, T., M. Yokozawa, G. Sakurai, M.I. Travasso, V. Romanernkov, P. Oettli et al. (2014), ‘Historical changes in global yields: major cereal and legume crops from 1982 to 2006’, Global Ecology and Biogeography, 23 (3), 346–57. Krausmann, F., K.-H. Erb, S. Gingrich, H. Haberl, A. Bondeau, V. Gaube et al. (2013), ‘Global human appropriation of net primary production doubled in the 20th century’, Proceedings of the National Academy of Sciences, 110 (25), 10324–9. Krausmann, F., K.-H. Erb, S. Gingrich, C. Lauk and H. Haberl (2008), ‘Global patterns of socioeconomic biomass flows in the year 2000: a comprehensive assessment of supply, consumption and constraints’, Ecological Economics, 65 (3), 471–87. Krausmann, F., S. Gingrich, H. Haberl, K.-H. Erb, A. Musel, T. Kastner et al. (2012), Longterm trajectories of the human appropriation of net primary production: lessons from six national case studies’, Ecological Economics, 77, 129–38. Lieth, H. and R.H. Whittaker (ed.) (1975), Primary Productivity of the Biosphere, Ecological Studies, Berlin, Heidelberg and New York: Springer. Lobell, D.B., K.G. Cassman and C.B. Field (2009), ‘Crop yield gaps: their importance, ­magnitudes, and causes’, Annual Review of Environment and Resources, 34, 179–204. Luyssaert, S., M. Jammet, P.C. Stoy, S. Estel, J. Pongratz, E. Ceschia et al. (2014), ‘Land management and land-cover change have impacts of similar magnitude on surface temperature’, Nature Climate Change, 4 (April), 389–93. Maeder, P., A. Fliessbach, D. Dubois, L. Gunst, P. Fried and U. Niggli (2002), ‘Soil fertility and biodiversity in organic farming’, Science, 296 (5573), 1694–7. Malthus, T.R. (1992), ‘An essay on the principle of population’, in D. Winch (ed.), Cambridge Texts in the History of Political Thought, Cambridge: Cambridge University Press. Meadows, D.H., D.L. Meadows and J. Randers (1992), Beyond the Limits: Global Collapse or a Sustainable Future, London: Earthscan.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 298

01/06/2017 16:51

Land as a planetary boundary  ­299 Millennium Ecosystem Assessment (2005), Ecosystems and Human Well-being: Synthesis, Washington, DC: Island Press. Monfreda, C., M. Wackernagel and D. Deumling (2004), ‘Establishing national natural capital accounts based on detailed ecological footprint and biological capacity assessments’, Land Use Policy, 21 (3), 231–46. Mueller, N.D., J.S. Gerber, M. Johnston, D.K. Ray, N. Ramankutty and J.A. Foley (2012), ‘Closing yield gaps through nutrient and water management’, Nature, 490 (7419), 254–7. Niedertscheider, M. and K. Erb (2014), ‘Land system change in Italy from 1884 to 2007: analysing the North–South divergence on the basis of an integrated indicator framework’, Land Use Policy, 39 (July), 366–75. Niedertscheider, M., T. Kuemmerle, D. Müller and K.-H. Erb (2014), ‘Exploring the effects of drastic institutional and socio-economic changes on land system dynamics in Germany between 1883 and 2007’, Global Environmental Change, 28 (1), 98–108. Opshoor, H. (2000), ‘The ecological footprint: measuring rod or metaphor?’, Ecological Economics, 32 (3), 363–5. Ray, D.K., N.D. Mueller, P.C. West and J.A. Foley (2013), ‘Yield trends are insufficient to double global crop production by 2050’, PLoS One, 8 (6), e66428. Ray, D.K., N. Ramankutty, N.D. Mueller, P.C. West and J.A. Foley (2012), ‘Recent patterns of crop yield growth and stagnation’, Nature Communications, 3 (December), 1293. Rees, W.E. (1992), ‘Ecological footprints and appropriated carrying capacity: what urban economics leaves out’, Environment and Urbanization, 4 (2), 121–30. Rees, W.E (1996), ‘Revisiting carrying capacity: area-based indicators of sustainability’, Population and Environment, 17 (3), 195–215. Rees, W.E. (2013), ‘Ecological footprint, concept of ’, in S.A Levin (ed.), Encyclopedia of Biodiversity, 2nd edn, vol. 2, Waltham, MA: Academic Press, pp. 701–13. Rees, W.E. and M. Wackernagel (2013), ‘The shoe fits, but the footprint is larger than earth’, PLoS Biology, 11 (11), e1001701. Ripple, W.J., P. Smith, H. Haberl, S.A. Montzka, C. McAlpine and D.H. Boucher (2014), ‘Ruminants, climate change and climate policy’, Nature Climate Change, 4 (January), 2–5. Rockström, J., W. Steffen, K. Noone, A. Persson, F.S. Chapin, E.F. Lambin et al. (2009), ‘A safe operating space for humanity’, Nature, 461 (September), 472–5. Rounsevell, M.D.A., B. Pedroli, K.-H. Erb, M. Gramberger, A.G. Busck, H. Haberl et al. (2012), ‘Challenges for land system science’, Land Use Policy, 29 (4), 899–910. Running, S.W. (2012), ‘A measurable planetary boundary for the biosphere’, Science, 337 (6101), 1458–9. Sagoff, M. (1995), ‘Carrying capacity and ecological economics’, BioScience, 45 (9), 610–20. Seufert, V., N. Ramankutty and J.A. Foley (2012), ‘Comparing the yields of organic and conventional agriculture’, Nature, 485 (7397), 229–34. Siche, J.R., F. Agostinho, E. Ortega and A. Romeiro (2008) ‘Sustainability of nations by indices: comparative study between environmental sustainability index, ecological footprint and the emergy performance indices’, Ecological Economics, 66 (4), 628–37. Sieferle, R.-P. (1997), Rückblick auf die Natur. Eine Geschichte des Menschen und seiner Umwelt (Looking Back on Nature. A History of Man and His Environment), Munich: Luchterhand. Sieferle, R.-P. (2001), The Subterranean Forest: Energy Systems and the Industrial Revolution, Cambridge: White Horse Press. Sieferle, R.-P., F. Krausmann, H. Schandl and V. Winiwarter (2006), Das Ende der Fläche: Zum gesellschaftlichen Stoffwechsel der Industrialisierung (The End of Area. The Societal Metabolism of Industrialization), Cologne: Böhlau. Smil, V. (2013), Harvesting the Biosphere: What We Have Taken from Nature, Cambridge, MA: MIT Press. Smith, P., M. Bustamante, H. Ahammad, H. Clark, H. Dong, E.A. Elsiddig et al. (2014), ‘Agriculture, forestry and other land use (AFOLU)’, in O. Edenhofer, R. Pichs-Madruga and Y. Soukuba (eds), Climate Change 2014: Contributions of Working Group III to the 5th Assessment Report of the IPCC, Cambridge: Cambridge University Press, pp. 811–922.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 299

01/06/2017 16:51

300  Handbook on growth and sustainability Smith, P., P.J. Gregory, D. van Vuuren, M. Obersteiner, P. Havlík, M. Rounsevell et al. (2010), ‘Competition for land’, Philosophical Transactions of the Royal Society B: Biological Sciences, 365 (1554), 2941–57. Steffen, W., Å. Persson, L. Deutsch, J. Zalasiewicz, M. Williams, K. Richardson et al. (2011), ‘The Anthropocene: from global change to planetary stewardship’, Ambio, 40 (7), 739–61. Steffen, W., K. Richardson, J. Rockstrom, S.E. Cornell, I. Fetzer, E.M. Bennett et al. (2015), ‘Planetary boundaries: guiding human development on a changing planet’, Science, 347 (6223), 1259855-1–1259855-10. Stehfest, E., L. Bouwman, D.P. Vuuren, M.G.J. Elzen, B. Eickhout and P. Kabat (2009), ‘Climate benefits of changing diet’, Climatic Change, 95 (1), 83–102. Tilman, D., C. Balzer, J. Hill and B.L. Befort (2011), ‘Global food demand and the sustainable intensification of agriculture’, Proceedings of the National Academy of Sciences, 108 (50), 20260–64. Tilman, D., K.G. Cassman, P.A. Matson, R. Naylor and S. Polasky (2002), ‘Agricultural sustainability and intensive production practices’, Nature, 418 (August), 671–7. United Nations (UN) (2011), ‘World population prospects, the 2010 revision’, United Nations, Department of Economic and Social Affairs, Population Division, New York. Van den Bergh, J.C.J. and H. Verbruggen (1999), ‘Spatial sustainability, trade and indicators: an evaluation of the “ecological footprint”’, Ecological Economics, 29 (1), 61–72. Vasey, D.E. (2002), An Ecological History of Agriculture 10,000 BC–AD 10,000, West Lafayette, IN: Purdue University Press. Verhulst, P.F. (1838), ‘Notice sur la loi que la population suit dans son accroissement’ (‘A note on the law according to which population grows’), Correspondance mathématique et physique, 10, 113–21. Vitousek, P.M., P.R. Ehrlich, A.H. Ehrlich and P.A. Matson (1986), ‘Human appropriation of the products of photosynthesis’, Bioscience, 36 (6), 363–73. Vitousek, P.M., H.A. Mooney, J. Lubchenco and J.M. Melillo (1997), ‘Human domination of earth’s ecosystems’, Science, 277 (5325), 494–9. Wackernagel, M. and W.E. Rees (1997), Our Ecological Footprint: Reducing Human Impact on the Earth, Gabriola Island, BC: New Society. Wackernagel, M., N.B. Schulz, D. Deumling, A.C. Linares, M. Jenkins, V. Kapos et al. (2002), ‘Tracking the ecological overshoot of the human economy’, Proceedings of the National Academy of Sciences, 99 (14), 9266–71. West, P.C., H.K. Gibbs, C. Monfreda, J. Wagner, C.C. Barford, S.R. Carpenter and J.A. Foley (2010), ‘Trading carbon for food: global comparison of carbon stocks vs. crop yields on agricultural land’, Proceedings of the National Academy of Sciences, 107 (46), 19645–8. Whittaker, R.H. and G.E. Likens (1973), ‘Primary production: the biosphere and man’, Human Ecology, 1 (4), 357–69. Winiwarter, V. and M.H. Gerzabeck (2012), The Challenge of Sustaining Soils: Natural and Social Ramifications of Biomass Production in a Changing World, Vienna: Austrian Academy of Sciences Press. Wise, M., K. Calvin, A. Thomson, L. Clarke, B. Bond-Lamberty, R. Sands et al. (2009), ‘Implications of Limiting CO2 concentrations for land use and energy’, Science, 324 (5931), 1183–6. Wright, D.H. (1990), ‘Human impacts on energy flow through natural ecosystems, and implications for species endangerment’, Ambio, 19 (14), 189–94. York, R., E.A. Rosa and T. Dietz (2004), ‘The ecological footprint intensity of national economies’, Journal of Industrial Ecology, 8 (4), 139–54. Zabel, F., B. Putzenlechner and W. Mauser (2014), ‘Global agricultural land resources – a high resolution suitability evaluation and its perspectives until 2100 under climate change conditions’, PLoS One, 9 (12), e107522.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 300

01/06/2017 16:51

PART IV ARE THERE IMPERATIVES FOR GROWTH?

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 301

01/06/2017 16:51

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 302

01/06/2017 16:51

14  Prometheus unwound: shorter hours for sustainable degrowth Andrea Levy

Growth thy name is suffering. (Maxim of Foxconn CEO Terry Gou that hangs on the company’s factory walls; Heffernan 2013) In the factory and in the street, at the office and on the road, the wretchedness of the world reveals itself. The ideology of growth at any price and the dogma of work as an answer to everything rest uneasily on foundations that are as shaky as they are suspect, as duplicitous as they are dangerous. (Michel 2009, my translation)

With tedious predictability, governments throughout the global North trumpet job creation as their priority; Canadian political leaders, whether in power or in opposition, are no exception: ‘Our Government will continue to create the conditions for new and better jobs for Canadians across all sectors of our economy’, pledged former Conservative prime minister Stephen Harper in his 2013 Throne Speech, where he used the word ‘jobs’ no fewer than 30 times. In the voiceover accompanying her television advertisement campaign the same year, Ontario’s Liberal premier declared: ‘whether it’s on the farm or the factory floor and whether it’s a starting point or your dream, it’s a job. I’m Kathleen Wynne, and it’s my job to create more of them’ (cited in Benzie 2013) ‘The NDP’s recipe is job creation’, New Democratic Party leader Tom Mulcair proclaimed at the party’s 2013 convention: ‘It is the first priority in a sustainable economy’ (cited in Thompson 2013) What kind of jobs? To produce what goods or meet which needs? Under what conditions? With what social impact? At what ecological cost? These questions go largely unasked and unexamined. ‘There is no bad job’, declared the late federal finance minister Jim Flaherty (Canadian Press 2012) in a piece of patently false ideology that is everywhere given the lie, from the Foxconn factories in China to the Amazon warehouses in the United States. And all the undisputable evidence of the precarious state of Quebec’s migratory woodland caribou did not inhibit the province’s premier Philippe Couillard from vowing never to sacrifice a single job in the forestry sector for the sake of the caribou (La Presse 2014). 303 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 303

01/06/2017 16:51

304  Handbook on growth and sustainability With such an apparently fervent commitment on the part of elected officials to deliver jobs of any kind to voters, it is curious to learn that, according to research by the Canadian Labour Congress (2013), the importation of migrant workers accounted for a majority of the new jobs created in Canada from 2008 to 2011 and about 75 per cent of all the new jobs created in 2010 and 2011 – at a time when 1.4 million Canadian residents were unemployed. While those estimates may be ­exaggerated – economist Jim Stanford (2012) pegs it at closer to 30 per cent for the period from 2007 to 2011 – there is ample evidence of a steady increase of reliance in Canada on temporary migrant labour, as shown for example by Salimah Valiani (2010). This is mostly a policy choice. Notwithstanding reforms to the Temporary Foreign Worker programme (seen by many critics as mostly window-dressing; Keung 2013), it clearly has less to do now with its original purpose of remedying a dearth of qualified Canadian residents and more to do with paying low wages, as suggested by the various ­allegations of resident workers being outright replaced by cheaper t­emporary foreign workers – from information technology staff at the Royal Bank of Canada in Toronto to pipefitters and welders at the Alberta Tar Sands to fast-food workers in British Columbia. The programme has shifted over the years toward lowskill occupations and the creation of an expellable workforce deprived of rights, in a trend Jason Foster (2012) compares to Europe’s guest-worker phenomenon. The growth of a migrant labour force is one example of a broader shift toward nonstandard employment since the 1980s. ‘Canada’s shift to a nation of temporary workers’; ‘Experts fret Canada becoming a “nation of part-time workers”’ – the headlines appear with ever greater frequency. The tally of all those working part-time, on contract, in temporary positions, seasonally or as freelancers adds up, by some estimates, to roughly 40 per cent of the working population.1 Some people seek work outside the contours of the standard labour relationship in pursuit of greater autonomy and control over their time, but for others it is simply what is available. Many of the jobs emerging from the quest, driven by employers, and to a lesser extent employees, for greater flexibility are low wage and do not offer job security or the social benefits, such as pension plans and sick leave, associated with the traditional full-time job; nor are they likely to be unionized.2 As hip-hop artist Mohammad Ali Aumeer declaims in his song ‘Precarious Work’ (2014): Oh you work at Mickey Dees, what’s it like there? You work at Starbucks, how’s the childcare? Is she babysat? Where ya wages at? Rent, food, utilities, are you making that?

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 304

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 305 The song speaks to the ranks of the precariously employed, within which women, youth and immigrants are decidedly overrepresented, as shown in the Institute for Competitiveness and Prosperity’s 2013 study ‘Untapped potential: creating a better future for service workers’. A 2013 article in the Globe and Mail reported that just half of the people working in the Greater Toronto and Hamilton areas have permanent, fulltime jobs that provide benefits and stability: ‘Everyone else’, write Susan McIsaac and Charlotte Yates, ‘is working in situations that are part-time, vulnerable or insecure in some way’. We are witnessing nothing short of the transmutation of the labour market, according to a study published this year by researchers at York University on the structural transformation of work in Canada (Drache et al. 2014). While the trend is pronounced in Canada, it is discernible throughout the global North. In the United States, for instance, epithets like ‘free agent nation’ and ‘gig economy’ have gained currency for good reason: according to the 2014 study ‘Freelancing in America’ (Edelman Berland 2014), 53 million people – just over a third of the workforce – are now freelance (that figure includes 14.3 million moonlighters who may also occupy traditional full-time jobs). Using various indicators such as employer attachment, perceived job insecurity and nonstandard work arrangements, Kalleberg (2009) has found evidence of significant growth in precarious employment in the US, while the Organisation for Economic Co-operation and Development (OECD) study In It Together (2015, pp. 188–9) found that nonstandard employment (temporary, part-time and own-account selfemployment) accounts for 33 per cent of total employment in OECD countries (with significant variations among countries) and that 40 per cent of younger workers, aged 15 to 29, were in nonstandard employment situations (OECD 2015, pp. 141–2). Most importantly the study showed that nonstandard employment correlates with lower annual earnings and poorer job quality in many respects. In addition to the expansion of contingent and precarious work, there are many who cannot find work at all. At 7.0 per cent, the official unemployment rate in Canada at August 2015 is still slightly higher than it was before the financial crisis, and that is not counting those job seekers who have given up, or the underemployed and involuntary part-timers. The same is true for the US and the OECD. The average OECD unemployment rate increased by three percentage points from 2007 to 2013 (OECD 2014, p. 102). The proportion of long-term unemployed has almost doubled between 2010 and 2015, a trend, as Julian Beltrame reports (2013), that is consistent throughout the OECD countries which have witnessed an 85 per cent increase in the number of long-term unemployed since the financial crisis.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 305

01/06/2017 16:51

306  Handbook on growth and sustainability In this context of the ongoing destabilization of work, it is easy for corporations and their political allies to pit the environment against job creation, promoting environmentally disastrous projects as indispensable job generators, and justifying both environmental and labour ­deregulation on the grounds that nothing must be allowed to interfere with creating a favourable climate for investments, which will purportedly produce jobs. (Bill C-45, the omnibus bill that undercut environmental regulation in Canada at the end of 2012 is officially called the Jobs and Growth Act.) The widespread insecurity surrounding employment helps these allies succeed, however inflated the claims. As Peter Frase (2012) aptly puts it, ‘When work is scarce, political horizons tend to narrow’. Take the Keystone pipeline for example. TransCanada’s trump card in promoting the project was the claim, as relayed by Bill Kaufman of the Toronto Sun (2012), that it would create 20 000 jobs (in the US). However, those figures were soon contested, based on a widely reported study by the Cornell University Global Labor Institute which indicated that the pipeline project would add only 500 to 1400 temporary construction jobs (see, for example, Alan Sherter’s 2012 report for CBS’s Moneywatch). When the company was called out on its dubious methods of estimating the job potential, it revised its figures dramatically downward. Similarly exaggerated claims were made for the Northern Gateway project. Economist Marc Lee of the Canadian Centre for Policy Alternatives showed in a 2012 study that Enbridge’s projections of tens of thousands of jobs for its plans to ship bitumen from the Alberta tar sands to China via a pipeline in British Columbia were highly exaggerated, founded on false assumptions and unreliable conjectures. The mining sector offers yet another example. The Mining Association of Canada vaunts the virtues of the growth of the mining industry, claiming it will hire more than 100 000 additional workers in the next decade (Sankey 2012). Then we hear stories like the one about the Murray River coal mine in British Columbia where HD Mining is bringing in temporary foreign workers – Chinese miners in this instance – to do the work of building and operating the mine for at least five years (Keller 2012). In November 2014, a study by Goodman and Rowan in collaboration with Simon Fraser University’s Centre for Public Policy Research revealed that Kinder Morgan seriously overestimated the number of jobs to be created by the TransMountain pipeline in Alberta and British Columbia. The company had touted the creation of 12 000 short-term jobs over three years, but the study showed the figure to be closer to 4000 jobs. There are other examples, but the pattern seems fairly clear. Moreover, job creation projections in the extractive industries tend to neglect the jobs likely to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 306

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 307 disappear in other sectors of the economy such as tourism and agriculture as a result of their projects. In general, however much corporations and governments talk about creating jobs, the logic of the capitalist system with its implacable profit motive and competitive markets pulls squarely in the other direction. Capital is driven to reduce labour costs by any available means: introducing productivity-boosting and labour-saving technology, exporting jobs to low-wage countries, paring down payroll costs through reliance on a ‘justin-time labour’ force with little or no claim to social benefits, and impeding union organizing in various ways. This is part of what accounts for the steady decline over the last four decades in labour’s share of national income throughout the global North. In an article for Reuters, Economics correspondent Alan Wheately (2013) discusses an International Labour Organization (ILO) study indicating that in 16 developed countries labour’s share of national income dropped from about 75 per cent on average in the 1970s to 65 per cent just before the financial crisis. In its 2012–13 ‘Global wage report’ (ILO 2013, p. vi.), the ILO also found that average labour productivity in developed economies increased more than twice as much as average wages since 1999. Wheatley underscores the ILO’s explanation for the apparent discrepancy, which is confirmed by analysts like the distinguished American economist Joseph Stiglitz, namely, that the surplus is going to the owners of capital, notably in the form of much higher dividends.3 According to the Canadian Centre for Policy Alternatives’ report ‘Outrageous fortune’ (MacDonald 2014, p. 9), the richest quintile of Canadians now take away 50 per cent of all income and 70 per cent of all wealth. The reality is that no mechanism exists to ensure an equitable distribution of any economic gains of growth. From the ILO to Stiglitz there are ample sources demonstrating that by far the largest share of those gains has been captured by the economic elite. The mounting evidence of growing inequality across much of the global North was the spark that ignited the Occupy Wall Street movement which helped draw attention to the widening chasm between the 99 per cent and the 1 per cent. This doubtless helps explain the mounting evidence for a disjuncture between growth and well-being more generally. Examining the results of the 2012 Canadian Index of Wellbeing, which looks at a variety of indicators such as standard of living, citizen engagement, and leisure, Wall Street Journal reporter Ben Dummett (2012) observed that, ‘Even during sustained periods of economic growth the report shows Canadian well-being lagging significantly. Between 1994 and 2010, Canada’s gross domestic product grew by almost 29%, compared with a quality of life improvement of just 5.7%’. So the rising tide proverbially said to lift all

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 307

01/06/2017 16:51

308  Handbook on growth and sustainability boats looks increasingly like an ecological tsunami in which most vessels are, in any event, floundering. To return to the main point, in Canada, as elsewhere, the growth of the extractive economy is being marketed as a remedy to a flaccid job market, and the promise of jobs will always win out over the most urgent need for environmental protection, even though that promise is frequently a misleading one and what we are witnessing is an ongoing undermining of the majority of actual and would-be job holders with the erosion of workers’ protections and the repeal of some of the historic gains of labour, as in the recent raising of retirement age, for example.

DOWNSCALING FORMAL EMPLOYMENT Governments and corporations all sing the siren song of job creation to wed us to infinite growth at any cost, as if there is no alternative; but there are other options – even without decommodifying labour altogether or displacing wage work as the primary means of access to income, at least in the medium term. There is the reduction of working time, or more precisely, a reduction and redistribution of the time devoted to a particular category of work: the work that we perform for someone else in exchange for a wage, for purposes that are not our own and according to a timetable dictated by someone else. The reduction of time spent in this kind of heteronomous work, to borrow André Gorz’s phrase, is one viable response to the problem of more equitably distributing wage work, and by extension the income and benefits that are today accessible principally through paid employment. This is, of course, no panacea, but a pivotal part of a mix of policy measures and social experiments pointing beyond the reign of the market with its endless proliferation of wants, its elevation of profits over people and its indifference to the health and fate of non-human nature. It is arguably the structural reform poised to translate the concept of degrowth into practice, since by reducing the amount of time people spend in wage work it liberates us for the productive and creative activity essential to a vision of sustainable degrowth. In practice, degrowth has to entail a collective downscaling. It implies consuming less and doing more. It means shortening circuits of production and distribution and reclaiming at least some activities from the realm of the market in a return to some forms of localized informal production and self-provisioning – the very kinds of activities that the fetishization of paid employment in our society has ended up devaluing. It implies a way of life which will require more time than the hours left over from demand-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 308

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 309 ing wage work. That wealth of time, together with greater individual and collective autonomy and self-reliance, is also arguably the reward that degrowth can offer – time for personal development, for personal relationships, for community involvement. That is, sustainable degrowth will demand more work in the form of producing socially necessary use-values, and less employment in the form of producing commodities for exchange. In a more strategic vein, too, as long as providing paid employment continues to be one of the major justifications for the pursuit of economic growth at any cost, degrowth advocates must offer meaningful responses to the prevailing imperative to generate wage work that underpins the very structure of industrial societies, in which jobs are a primary means of distributing income, however inequitably. However, we should not forget, as Paul Ransome (2005, pp. 24–8) and others have argued, that the pre-eminence among the myriad forms of human activity of work for economic ends is itself deeply entwined with a productivist paradigm that rests on an assumption of limitless human needs and the pursuit of endless accumulation as well as the reduction of nature and labour to factors of commodity production, a theory and practice irreconcilable with ecological sustainability. It is not by accident, then, that worktime reduction figures high up on the list of social policy reforms prescribed by advocates of degrowth, in both what might be referred to as its reformist and radical guises. It is favoured by those who see capitalism as amenable to extensive regulation and culture shifts, to a point where the market-mediated activities of production and consumption could cease to overshoot the planet’s biophysical limits, as well as by those who regard degrowth as ultimately at variance with the logic of capitalism, defined very generally as a system based primarily on the production of goods and services by private enterprises pursuing profit in the marketplace and in which labour and land exist as commodities. As a practical policy measure, work reduction is something upon which everyone from James Speth to Serge Latouche seems to agree.4 In what follows I make three main arguments for worktime reduction as a central component of a strategy for sustainable degrowth: it can have concrete and direct environmental benefits in the short term; it can expand the constituency for a degrowth project through its potential appeal to several key constituencies; and it is a feasible structural reform, notwithstanding predictable objections from the purveyors of the deadly growth paradigm.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 309

01/06/2017 16:51

310  Handbook on growth and sustainability

STUDIES IN THE ENVIRONMENTAL IMPACT OF WORKTIME REDUCTION One of the arguments for worktime reduction as a central element of a degrowth scenario is that it has an empirically demonstrable positive environmental impact, as shown in a number of studies conducted over the past few years. A study by David Rosnick (2013) of the Washingtonbased Center for Economic and Policy Research estimated, remarkably, that reducing working time would eliminate about one-quarter to one-half of the global warming that he refers to as ‘not already locked in’, that is, warming that would be caused by greenhouse gas (GHG) concentrations already in the atmosphere. Rosnick found that an annual 0.5 per cent reduction in work hours in the USA would cut every degree of warming by between 8 and 22 per cent, as shorter hours result in lower production. That 0.5 per cent decrease in work hours annually would bring the average work week in the USA down from 40 to 30 hours by 2100, with seven additional weeks of vacation. In an earlier study by two Swedish scholars, Jonas Nässén and Jörgen Larsson (2010) also found that variations in worktime have a clear impact on energy use and GHG emissions, although not as marked an impact as that estimated by Rosnick. According to the study of Swedish households, a 1 per cent decrease in working hours leads on average to a 0.89 per cent reduction in energy use and GHG emissions, whereas longer hours increased those impacts. The likelihood of a favourable environmental impact of reduced working time was more recently analysed by Kyle Knight et al. (2012a) in a paper that considered the impact of shorter hours on ecological footprint, carbon footprint, and carbon dioxide emissions. Looking at data from 29 high-income OECD countries, the study’s authors corroborated their hypothesis (Knight et al. 2012b, p. 2) that ‘a reduction in working hours in developed countries could be a significant contributor to reduced environmental pressures through downward impacts on both the scale of economic activity and the environmental intensity of consumption patterns’. Knight et al. (2012a, 2012b) argue that longer work hours place higher demands on resources by contributing to the expansion of the scale of economic output, and consequently generating more waste and pollution. However, beyond the issue of scale of output, they point out other ways in which longer hours are environmentally detrimental. Confirming the old adage ‘haste makes waste’, they conclude that time pressures lead to consumption choices that are relatively worse for the environment; if you are in a hurry, you are likelier to drive or take a taxi than a bus, likelier

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 310

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 311 to reach for processed food than to cook, likelier to replace something broken than to repair it. Knight et al. (2012a, 2012b), in turn, cite a French study demonstrating an association between longer work hours and greater consumption of environmentally intensive goods. Blogger David Cain (2010) frames the problem in an apposite vein: The 8-hour work day is too profitable for big business, not because of the amount of work people get done in eight hours . . . but because it makes for such a purchase-happy public. Keeping free time scarce means people pay a lot more for convenience, gratification and any other relief they can buy. It keeps them watching television, and its commercials. It keeps them unambitious outside of work.

As Knight et al. acknowledge and as various commentators point out, the extent of the environmental impact of reduced working hours will depend in part on the degree to which any time liberated is in turn expended in resource-intensive consumption, confirming the conviction that to have a significant ecological impact worktime reduction must contribute to transforming the way we live. The hypothesis that shorter hours result in reduced carbon emissions was tested in practice on a small scale in Utah with a 2008 pilot programme that involved shutting down 1000 government buildings on Fridays and shifting about three-quarters of the 17 000 full-time state workers to a four-day, ten-hour work schedule. Instituted primarily as a cost-saving measure, this was a rearrangement rather than a reduction of hours, but the environmental impact was significant, resulting, according to the Working 4 Utah final report (2009), in a 10.5 per cent reduction in energy consumption in the first year owing to savings in heating, air conditioning and lighting, and a reduction of 10 040 metric tons of greenhouse emissions factoring in both the office closure and the one-day decrease in commuting. Tellingly too, the programme was very popular with employees, a vast majority of whom were happy with the new schedule, as indicated in the July 2010 Performance Audit of the Working 4 Utah Initiative, and the affected state workers also saved millions of dollars collectively by not commuting. However, the four-day work week was ultimately scrapped in 2011 because, as The Daily Caller (2011) reported, the government found it was not saving as much money as it had hoped since energy prices had fallen – an unhappy example of the Jevons paradox at work. On an admittedly very small scale, the Utah experiment underscores a point that is too often overlooked in a society that has been shaped by the neoliberal dictum that ‘There is no alternative’: worktime reduction is a viable structural reform that can point us past the logic and strictures of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 311

01/06/2017 16:51

312  Handbook on growth and sustainability the prevailing system in the direction of sustainable degrowth – whether you view that transition as feasible within the framework of a capitalist system, or whether you believe that convivial and sustainable degrowth necessarily entails economic arrangements incompatible with capitalism and its growth imperative.

THE FLUIDITY OF WORKTIME It should not need pointing out that the work week we take for granted today was the product of intense struggle during the industrial capitalist era, which ushered in a lengthening of the working day, and the fight for shorter hours was met with obdurate opposition on the part of employers. In Canada, a particularly fierce opponent of worktime reduction was one of the fathers of Confederation, George Brown, editor of the Globe newspaper, the forerunner of the Globe and Mail, and, by the way, a Liberal, prison-reformer and anti-slavery advocate. As historian Charles Lipton relates (1968, p. 33), during a strike in 1872 by the Toronto Printers’ Union for a nine-hour work day six days a week, Brown called on employers to ‘shut their works and starve the men in[to] submission’. While the protracted battle for the nine-hour day, and later the eighthour day, was eventually won, the struggle for and historic trend towards shorter hours that prevailed during the nineteenth century and first half of the twentieth century waned for a variety of reasons, as consumption tended to prevail over free time, with the result that worktime began to stagnate in the second half of the twentieth century, particularly in the United States and Canada. As Juliet Schor, Christoph Hermann and others have shown, gains in productivity have not lately translated into reductions in working time (Knight et al. 2012a, 2012b; Hermann 2014). The trend towards declining per capita hours worked ceased in the 1980s and 1990s and in some instances reversed. According to Lawrence Mishel (2013), typical US workers worked 181 hours more in 2007 than they did in 1979, an increase of 10.7 per cent. Christoph Hermann (2014, p. 185) calculates that although productivity and GDP growth slowed in the US in the 1980s and 1990s, they both still increased by 60 per cent between 1979 and 2009, so that in theory Americans would have to work fewer than 20 hours per week to attain the living standard of the 1970s. Mark Thomas (2006) points out that, in Canada, average weekly working hours across industries and occupations have remained in the 35to 40-hour range since the mid-1960s. If average working time in Canada had kept decreasing at the same pace it did in the first decades of the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 312

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 313 twentieth century, the work week would be considerably shorter than the nearly 40 hours per week on average that full-time employed Canadians currently spend at work.5 As Sangheon Lee et al. (2007) observe, measuring historic trends in working time within and across nations is a complex enterprise. However, the point is that worktime is a moving target. Even if we look at the issue strictly synchronically, there are considerable differences in working time in different parts of the global North, leading Knight et al. (2012a, p. 7) to conclude that ‘worktime is a malleable structural factor that could be adjusted by willing governments in order to reduce the scale of natural resource consumption’. In truth it has been adjusted: the entire move towards flexibilization which has resulted in precariousness and a polarization of working time was undergirded by policy decisions. There is nothing natural or inevitable in this increasingly imbalanced way work is now shared. It is the result of social policies governing the distribution of working time that are primarily designed to accommodate employers who want to maximize output and minimize labour costs. So the question really is not whether there should be a reapportionment of the hours of work, because that is clearly already happening, but rather what form it should take and who it will benefit. It is a question, like so much else, of political will. There have been myriad experiments and initiatives in the area of working time in the global North in the twentieth century, such as the famous Kellogg six-hour day introduced in Battle Creek, Michigan, in 1930 during the Great Depression (see, for example, Hunnicutt 1996) followed a few years later by a nearly successful effort in the USA to federally mandate a 30-hour week (see, for example, Hunnicutt 1988). The 1980s and 1990s witnessed the introduction of the French 35-hour week, the short time schemes in the German auto industry (see, for example, Bosch 2009), the Dutch shift to part-time schedules (see, for example, Wielers 2013), the Finnish 6+6 programme (see, for example, Mutari and Figart 2001), among other innovations. A matter of continuing controversy and a target of bitter criticism, especially but not exclusively by the political right in France, the 35-hour week was the object of a December 2014 parliamentary commission on the social, economic, and financial impact of the reduction of working time. Summarizing the findings of the report, French newspapers underscored the commission’s conclusion that the 35-hour legislation, introduced in stages in 1998 and 2000, was ‘the most effective and least costly job creation policy implemented since the 1970s’ (Peillon 2014). The commission of inquiry found, for example, that the reform could be credited with a level of job creation in the period from 1997 to 2001 unprecedented since the 1950s, an accomplishment not

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 313

01/06/2017 16:51

314  Handbook on growth and sustainability attributable to the rate of economic growth alone. The report also contradicted the frequently levelled charge that the worktime reduction had an adverse effect on the competitiveness of French businesses in the ten years following the reform. Not surprisingly, given the polarization of views on the subject, opinion was divided about the validity of the report itself, as Guillaume Guichard (2014) relates. Regardless of what the reform may or may not have achieved in quantifiable terms, what is telling about France’s 35-hour experiment is that despite the initial resistance to it by the French labour movement, there has been staunch resistance to its dismantling over the past ten years, suggesting that the measure actually gained in popularity with its implementation. In fact, as Le Nouvel Observateur reported on 5 February 2015, Philippe Martinez, the newly elected secretary general of the Confédération générale du travail (CGT), one of France’s largest trade unions, is now calling for a 32-hour week (Le Nouvel Observateur 2015). The Netherlands is the country that has done the most to promote shorter hours as an equitable solution to unemployment. During the 1980s, Dutch labour unions agreed to restrain their wage demands to fight inflation and, in exchange, businesses agreed to provide more early retirement plans and part-time jobs with comparable wages and benefits, in order to reduce unemployment by sharing the work. Visser et al. (2004) note that as a result, the proportion of part-time workers increased from 21 per cent in 1983 to 40 per cent by 1999, with 72 per cent of part-timers, and particularly women, choosing this work arrangement. Rudd Lubbers, the Prime Minister at the time these policies were implemented, stressed the benefits of the policy to human well-being (cited by Hayden 2003, p. 202): It is true that the Dutch are not aiming to maximize gross national product per capita. Rather, we are seeking to attain a high quality of life, a just, participatory and sustainable society. While the Dutch economy is very efficient per working hour, the number of working hours per citizen are rather limited. We like it that way. Needless to say, there is more room for all those important aspects of our lives that are not part of our jobs, for which we are not paid and for which there is never enough time.

In Finland, the 6+6 experiments in the late 1990s were also a response to recession and ensuing layoffs in the municipal sector. The Finnish government subsidized municipal governments to hire back workers and replace the conventional eight-hour shift with two or three six-hour shifts. In an article on the Finnish experiments, journalists Ellen Mutari and Deborah Figgart (2001) reported that although evaluations of the scheme by both workers and employers were on the whole quite positive, it was

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 314

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 315 abandoned once unemployment levels stabilized and the subsidies dried up. However, the idea of testing worktime reduction at the local level has also been taken up in Sweden. A number of worktime reduction projects have been implemented (misleadingly publicized in the Anglo-American media as Sweden’s move to a six-hour day) and in spite of some mixed results, the experiments continue. In 2014 the City of Gothenburg introduced a year-long trial programme involving two groups of workers, one working a six-hour day and the other an eight-hour day, to ascertain whether shorter hours will yield greater productivity and less absenteeism (Anderssen 2014). Such ventures remind us that we should not let present realities obscure and pre-empt future possibilities. Working time is historically fluid; it is a social and political decision not some unalterable economic fact. Surveying the diversity of worktime arrangements around the world, Paul Blyton (2014, p. 167) observes: ‘There is nothing fixed or immutable about working time patterns – there is no unchallengeable organizational or indeed economic logic . . . which prevents a re-evaluation of the suitability of existing patterns.’ It is on the basis of social, economic and environmental arguments that several scholars at the New Economics Foundation (NEF) in Britain adduced an argument for a 21-hour week (Coote et al. 2010). The 21-hours proposal derives from their calculation of the average amount of time people actually spend in paid employment. Currently, those hours are unevenly distributed between men and women and between various age groups and social categories, but it averages out to about 21. The NEF does not fetishize the idea of a 21-hour work week; what they suggest is exploring various ways of spreading 1092 hours over 12 months. Similarly, in Peter Victor’s (2008) compelling scenario for the feasibility of achieving positive economic, social and environmental outcomes under conditions of low or no growth, Canadians would be working somewhat more than 21 hours – a four-day week, but which would probably diminish over time. Evidently, even if the political will can be mustered, any transition to significantly shorter hours is certain to be fraught with obstacles and challenges. From the vantage point of social justice, some progressive commentators such as Molly Osberg (2014) have assailed worktime reduction as an issue mainly for white-collar workers who are nowadays ‘sleeping with their smartphones’,6 especially in the current context of mounting precarity and assaults on wages and benefits for so many workers. As with the proposals for a guaranteed annual income which span the political spectrum, there are ways of reducing worktime that indeed risk punishing working people who are already struggling. A retail operation that

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 315

01/06/2017 16:51

316  Handbook on growth and sustainability ­ nilaterally cuts the hours of low-wage workers to accommodate ebbs u in customer traffic obviously does not constitute a viable form of shorter hours nor does the manoeuvre of reducing hours to reclassify full-time employees as part-time in order to avoid paying for benefits associated with full-time work, as a number of US employers in both the private and public sector have done or threatened to do in response to the introduction of the Affordable Care Act.7 In advocating for shorter hours, the degrowth movement naturally needs to put forward concrete proposals designed to mitigate any adverse effects on the most vulnerable members of society. The NEF proposal is a model in this and many regards. In probing the numerous daunting obstacles to the transition to a 21-hour week, the authors are attentive to the possible impact of worktime reduction on the earnings of lower-income workers and set out a series of conditions for ensuring a fair living income under a 21-hour scenario that essentially entail a redistribution of wealth to narrow the gap between high and low earners (Coote et al. 2010, pp. 26–31). Two of the main strategies for safeguarding the interests of lower wage and precarious workers in a generalized worktime reduction scenario are the introduction of shorter hours with no loss of pay, except perhaps for the top tier of earners, and the uncoupling of social protections and benefits from labour-market participation, a step that also has the virtue of recognizing to some degree the vast amounts of unpaid work – cooking, cleaning, caring, and so on – performed principally by women who are not in the workforce. These are very tall orders, particularly in the current context of the politics of austerity. Nevertheless, some combination of these measures is essential to make worktime reduction a viable component of the transition to sustainable degrowth.

WORKTIME REDUCTION AS A RALLYING REFORM What makes worktime reduction particularly attractive as the iconic reform for the degrowth movement is that the desirability and advantages of shorter hours have been recognized by many constituencies at various times. As a central part of a degrowth-orientated social project, this proposition dovetails with the historic demand of the labour movement. As long as jobs remain the principal means, however flawed, of distributing income, the promise of jobs ties labour to the growth imperative. However, worktime reduction can help loosen that bond. Also, the ecological crisis lends a new dimension to the labour movement’s traditional case for shorter hours.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 316

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 317 While it is true that the trade union movement, which has been contending with a steady onslaught of anti-union and anti-worker initiatives over the last few decades, has postponed the goal of reducing the work week, the aim of shorter hours has not been eclipsed. As Mark Thomas (2006) points out in an essay on union strategies around working time, shorter hours continues to be a central policy objective of the labour movement, although in practice the goal is usually to reduce hours by indirect means such as reduced overtime, early retirement, longer vacations, and by negotiating various types of parental and compassionate leave and so on, rather than aiming for the direct reduction of the work week. Thomas’s observations are borne out by the Collective Bargaining and Political Action Program published in 2012 by the former Canadian Auto Workers union under the title ‘A better world is possible’. The programme contains a section on working time (Canadian Auto Workers 2012, pp. 87–92) that emphasizes the ongoing struggles around reducing and regulating working time, and places the emphasis on bargaining for more vacation and leave time, for example, and on the issue of overtime. In a 2002 paper for the journal Just Labour, Julie White of the Communications, Energy and Paperworkers Union analysed some numbers and concluded that total overtime paid and unpaid amounted to 20 million hours a week, or the equivalent of 500 000 full-time jobs. Also, total overtime has not diminished in the second decade of the new millennium. According to the latest available data, roughly 21 per cent of employed Canadians or 2.9 million workers put in an average of 8.5 hours of overtime each week in 2014, with more than half those hours unpaid.8 That adds up to 12.7 million hours per week of unpaid overtime alone. Unpaid overtime has actually surpassed paid overtime in recent years, and there’s a significant gender disparity here as 2007 Statistics Canada data showed that men’s overtime is typically paid while women’s is typically unpaid. Some years ago, the dollar value of unpaid overtime was estimated by one legal firm at nearly $23 billion annually (Waggott and Rousseau 2010). In championing shorter hours, then, advocates of degrowth can conceivably cultivate a wider audience and build alliances, not only by connecting with this historic demand of the labour movement, but also by mounting a solid case for a meaningful reform that is relevant to other constituencies, such as working women for whom work–life balance tends to be a constant struggle. Young people are yet another group ripe for a rethinking of the employment society. According to Statistics Canada’s Labour Force Survey, the official unemployment rate for Canadian youth (age 15–24) stood at 13.3 per cent as of October 2015. Although that may seem a paltry rate these

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 317

01/06/2017 16:51

318  Handbook on growth and sustainability days when we consider Spain, Portugal and Greece where youth unemployment has attained unimaginable heights, finding and keeping jobs is a number one preoccupation for young people, whether or not they are armed with university degrees. For growing numbers of young people, the full-time job with benefits for life is a relic of another era; many know that they can look forward to precariousness and what anthropologist David Graeber (2013) has dubbed ‘bullshit jobs’, referring essentially to the expansion of paid employment in administration, surveillance and marketing. ‘A world without teachers or dock-workers would soon be in trouble’, Graeber suggests, ‘and even one without science fiction writers or ska musicians would clearly be a lesser place’.9 However, he continues, ‘It’s not entirely clear how humanity would suffer were all private equity CEOs, lobbyists, PR researchers, actuaries, telemarketers, bailiffs or legal consultants to similarly vanish.’ Also, and more to the point, so many of today’s coveted jobs revolve around promoting the overconsumption that underpins so much of what ails us ecologically. For degrowth to make inroads among the upcoming generations, it needs an inspiring vision of the transformation of work and leisure, an entry point to which is the proposal for a general reduction of working time. Is worktime reduction a utopian idea? Perhaps we should start responding to this frequent offhand indictment by dwelling on all the dystopian ideas that pass as propositions worth entertaining, such as dumping vast amounts of iron into the oceans to produce phytoplankton explosions10 or repealing child labour laws, as some elected officials in the United States have urged and as several US states have begun to do (Lafer 2013, p. 32). Meandering online one day, I chanced upon a disturbing scenario that there is reason to fear some mainstream economists may welcome: the prospect of boosting labour productivity by cutting the amount we sleep through the use of drugs such as Modafinil, which could enable people to sleep as little as two and a half hours per night without compromising their mental acuity (Sociological Speculation 2013). As the second largest single use of time after wage work, sleep is the realm one sociology blogger sees as ripe for colonization by the employment society. By his calculations it could increase the number of hours an American worker spends at work annually from about 1800 to 2400, a 34 per cent increase. He suggests it will benefit firms by allowing them to achieve the same output with fewer workers working longer hours. ‘They can hugely reduce costs’, he argues ‘by spreading the fixed cost per worker over more hours of work. More hours worked shouldn’t increase costs of healthcare, training and fringe benefits so the fixed costs fall in line with their reduced workforce’

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 318

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 319 (Sociological Speculation 2013). By increasing the labour supply, the blogger argues, a rapid introduction of these sleep-saving drugs would cause a fall in hourly wages but people would earn more because they would be working longer hours. He even maintains that it would be an environmentally friendly growth strategy because it would reduce the fixed carbon outputs per work day (primarily through reductions in commuting resulting from the ability of companies to employ fewer workers). The whole scenario bears out the wisdom of an observation by Robert and Edward Skidelsky (2012), proffered in their meditation on Keynes’s famous 1930 essay ‘Economic possibilities for our grandchildren’, that degrowth advocates would do well to dwell less on the ecological downside of limitless growth than on its sheer absurdity. In an essay on climate change, capitalism and limits to growth, John Barry observes that ideas about growth derived from neoclassical economics exercise a cultural hegemony. Rather than being rightly viewed as a convention rooted in a particular historic form of economic organization subject to change, they are seen as the very fabric of reality – just common sense (Barry 2012, p. 135). Just as ideas about the growth model have been naturalized, so have our ideas about work. As Kathi Weeks observes in The Problem with Work, the current arrangements of work and its distribution, which are functional to the development and current stage of capitalism, are normalized and moralized so that we fail to see them as simply one way, and perhaps not the best one, of organizing productive activity and producing social wealth (Weeks 2011, p. 11). The whole notion of convivial degrowth rests on the premise that while it is desirable for ecological, social and ethical reasons, it is also likely inevitable, so the real question becomes how to manage it sustainably and equitably, rather than leaving the market to sort out the after-effects. Similarly, worktime reduction is happening now, through such mechanisms as computerization, the extension of educational requirements that delays the entry of young people into paid employment, and flexibilization policies that have spurred the growth of temporary and part-time employment. That trend is looking even more certain with the rapid advance of technological innovation that is rendering entire categories of workers obsolete, especially those in what are called ‘routine intensive jobs’, and increasingly those in low-skill jobs, to the point that a widely reported Oxford University study, which sought to quantify the impact of computerization on the future of employment, concluded that 47 per cent of US jobs are potentially at risk within two decades (Frey and Osborne 2013, p. 38). There is an extensive, long-running and often acrimonious debate about the extent to which technology is implicated in eroding employment, but it is clear that from self-serve checkout coun-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 319

01/06/2017 16:51

320  Handbook on growth and sustainability ters to driverless cars and from delivery drones to automated journalists, labour-­supplanting ­technological innovations are coming faster and becoming cheaper. McDonald’s in the US and Foxconn in China have both disclosed plans to replace millions of workers with robots – those statues of Daedalus dreamt of by Aristotle, a vast unpaid labour force with no demands and no complaints. Even if the more dire predictions significantly overstate the problem, in the short term at least, vast swathes of jobs are bound to vanish. Although there is any number of compelling reasons to espouse work reduction beyond its potential value as an antidote to massive unemployment, a substantial cut in working time could serve as a rampart against the tide of technological displacement. For the degrowth movement, work reduction is a small but crucial step away from the productivist paradigm that threatens humanity’s very survival and dooms so many other species. As the NEF puts it, much shorter hours can ‘help break the habit of living to work, working to earn, and earning to consume’ (Coote et al. 2010, p. 3). Envisioning a substantial reduction of working time is thus an essential part of the process of what Serge Latouche calls decolonizing the imaginary; it invites us to challenge conventional ways of thinking about how and why we live and to define the conditions for a transition to sustainable degrowth.

NOTES   1. As Tavia Grant (2014) reports, the part-time employment rate for 2014 was 19.3 per cent, including chosen and involuntary part-time work, while temporary employment (which includes both full-time and part-time temporary employment) stood at 13.6 per cent. The self-employed represent roughly 15 per cent of the total work force, a figure that is on the rise and includes a substantial proportion of ‘own-account’ self-employed or freelancers (see for example the Law Commission of Ontario’s ‘Interim report on vulnerable workers and precarious work’ 2012). Estimates of the total numbers of atypical workers vary depending on definitions and methods of calculation, and while the scope of non-standard employment is not altogether clear, several scholarly efforts at quantification over the past 15 years have placed it in the range of 30 to 50 per cent. At the turn of the millennium, Graham Lowe et al. (1999) estimated that 46.8 per cent of the labour force in Canada was engaged in some type of non-standard employment. Youri Chassin (2013) of the right-wing Montreal Economic Institute provides data pegging the share of non-standard employment in Canada at greater than 50 per cent.   2. There is by now a vast international literature on the subject. For a good recent overview of precarious labour in Canada see Drache et al. (2014) and for a broader more theoretical perspective see Vosko (2010).   3. The trope of the ‘1 per cent’ originated with a 2011 article by Stiglitz for Vanity Fair entitled ‘Of the 1%, by the 1%, for the 1%’.   4. See, for example, Speth (2008, p. 120) and Latouche (2006, pp. 231–6).   5. Canadians worked 36.6 hours per week on average which was down from 38.0 in 1976. But there has been an increase in the amount of available time Canadians spend in wage work. In 2012, they spent 10 per cent of available time on paid work, an increase

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 320

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 321

 6.   7.  8.  9.

10.

of about 1.3 percentage points since 1976 when that figure was 8.7 per cent (Human Resources and Skills Development Canada n.d.). Working hours actually declined in Canada in the first decade of the new millennium, according to OECD data, but analysts have attributed that primarily to the expansion of part-time work (Tencer 2012). Sleeping with Your Smartphone is the title of a 2012 book by Harvard Business School professor Leslie Perlow. See, for example, Pear (2014, p. A12). Based on the 13.838 million persons at work during the survey period (Statistics Canada 2015, Table 282-0082). This impressionistic proposition actually finds support in some research conducted by the New Economics Foundation which found that some high-paying jobs in areas such as banking, advertising and finance destroy far more value than they create. The findings are based on a variety of assumptions about the economic, social and environmental impact of various jobs, for instance, the premise that bankers engage in risky behaviour that precipitated the financial crisis and recession. Advertising executives promote excessive consumption which has quantifiably costly adverse effects in the form of obesity, anxiety disorders and indebtedness, as well as climate change and resource depletion. By contrast, the study found that the value of hospital cleaners is grossly underestimated given that for every £1 they are paid, they generate over £10 in social value. See New Economics Foundation (2009). Called ocean fertilization this geo-engineering scheme is premised on the idea that the phytoplankton will absorb carbon dioxide, bringing it down to the ocean depths when they die. Scientists have warned of potentially catastrophic risks to ecosystems that such a scheme may have owing to the disruption of the cycling of macronutrients such as phosphorus and nitrogen.

REFERENCES Andersen, E. (2014), ‘The argument for the six-hour workday’, Globe and Mail, 17 April, accessed April–October 2015 at http://www.theglobeandmail.com/life/relationships/theargu​ment-for-the-six-hour-work-day/article18052612/. Aumeer, M.A. (2014), ‘Precarious work’, online video, 17 March, accessed April–October 2015 at https://www.youtube.com/watch?v5GLB2Y7JAtPE. Barry, J. (2012), ‘Climate change, the “cancer stage of capitalism” and the return of limits to growth’, in M. Pelling, D. Manuel-Navarette and M. Redclift (eds), Climate Change and the Crisis of Capitalism, London: Routledge, pp. 129–43. Beltrame, J. (2013), ‘OECD on Canada: long-term unemployment a growing problem’, Huffington Post, 16 July, accessed April–October 2015 at http://www.huffingtonpost. ca/2013/07/16/oecd-canada-long-term-unbemployment_n_3603546.html. Benzie, R. (2013), ‘Liberals launch TV commercial touting Kathleen Wynne as a job creator’, Toronto Star, 16 July, accessed April–October 2015 at http://www.thestar.com/news/ queenspark/2013/07/16/liberals launch TV commercial touting Kathleen Wynne as a job creator.htm. Blyton, P. (2014), Changes in Working Time: An International Review, New York: Routledge Revivals. Bosch, G. (2009), ‘Working time and working time policy in Germany’, paper presented at the International Workshop on Working Time, 21–23 January, Tokyo, accessed April– October 2015 at http://www.iaq.uni-due.de/aktuell/veroeff/2009/bosch_20090121.pdf. Cain, D. (2010), ‘Your lifestyle has already been designed’, Raptitude: Getting Better at Being Human, accessed April–October 2015 at http://www.raptitude.com/2010/07/yourlife​style-has-already-been-designed/. Canadian Auto Workers (2012), ‘A better world is possible’, in Collective Bargaining and Political Action Program, Toronto: CAW-TCA, pp. 87–92.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 321

01/06/2017 16:51

322  Handbook on growth and sustainability Canadian Labour Congress (2013), ‘Migrant workers account for most new jobs’, 10 May, accessed April–October 2015 at http://www.canadianlabour.ca/national/news/migrantworkers-account-most-new-jobs-clc-has-crunched-numbers-between-2008-2011. Canadian Press (2012), ‘There are no bad jobs, Flaherty says’, CBC News Online, 15 May, accessed April–October 2015 at http://www.cbc.ca/news/canada/there-are-no-bad-jobs-fla​ herty-says-1.1246444. Chassin, Y. (2013), ‘The advantages of a flexible labour market’, Economic Note, Montreal Economic Institute, Montreal, pp. 1–4. Coote, A., J. Franklin, A. Simms and M. Murphy (2010), ‘21 hours: why a shorter working week can help us all to flourish in the 21st century’, New Economics Foundation, London. Drache, D., A. LeMesurier and Y. Noiseux (2014), ‘Non-standard employment, the jobs crisis and precarity: a report on the structural transformation of the world of work’, Research Center on Collective Action and Atypical Work and Center for Studies on Integration and Globalization, University of Quebec, Montreal, accessed April–October 2015 at http:// practa.ca/wp-content/uploads/2014/04/Drache-LeMesurier-FINAL-April-25-2014​-​1.p​df. Dummett, B. (2012), ‘Canada index finds economy/well-being disconnect’, Wall Street Journal, 23 October, accessed April–October 2015 at http://blogs.wsj.com/canadarealtime/​ 2012/10/23/canada-index-finds-economywell-being-disconnect. Edelman Berland (2014), ‘Freelancing in America: a national survey of the new workforce’, commissioned by the Freelancers Union and Elance-oDesk, accessed April–October 2015 at https://fu-web-storage-prod.s3.amazonaws.com/content/filer_public/c2/06/c2065a8a-7f​ 00-46db-915a-2122965df7d9/fu_freelancinginamericareport_v3-rgb.pdf. Foster, J. (2012), ‘Making temporary permanent: the silent transformation of the temporary foreign worker program’, Just Labour, 19 (Autumn), 22–46. Frase, P. (2012), ‘The politics of getting a life’, Jacobin, 6 (April), accessed April–October 2015 at https://www.jacobinmag.com/2012/04/the-politics-of-getting-a-life. Frey, B.C. and M.A. Osborne (2013), ‘The future of employment: how susceptible are jobs to computerisation?’, Oxford University Programme on the Impacts of Future Technology, 17 September, accessed April–October 2015 at http://www.oxfordmartin.ox.ac.uk/down​ loads/academic/The_Future_of_Employment.pdf. International Labour Organization (ILO) (2013), ‘Global wage report: executive summary’, International Labour Office, Geneva. Goodman, I. and B. Rowan (2014), ‘Economic costs and benefits of the Trans Mountain Expansion Project (TMX) for BC and Metro Vancouver’, 10 November, The Goodman Group Limited and The Centre for Public Policy Research, Simon Fraser University, Berkeley, CA, accessed April–October 2015 at http://www.thegoodman.com/pdf/TGG​ 20150​204_​SFU_EconCostBen_TMX.pdf. Graeber, D. (2013), ‘On the phenomenon of bullshit jobs’, Strike Magazine, 17 August, accessed April–October 2015 at http://www.strikemag.org/bullshit-jobs. Grant, T. (2014), ‘The 15-hour workweek: Canada’s part-time problem’, Globe and Mail, 4 October, accessed April–October 2015 at http://www.theglobeandmail.com/ report-on-business/the-15-hour-workweek-canadas-part-time-problem/article20926986. Guichard, G. (2014), ‘Les 35 heures divisent toujours les députés’ (‘Delegates still divided over 35-hour work week’), Le Figaro, 10 December, accessed April–October 2015 at http://www.lefigaro.fr/emploi/2014/12/10/09005-20141210ARTFIG00010-les-35-heuresdivisent-toujours-les-deputes.php. Harper, S. (2013), ‘Seizing Canada’s moment’, speech from the Throne, 16 October, accessed April–October 2015 at http://speech.gc.ca/sites/sft/files/SFT-EN_2013_c.pdf. Hayden, A. (2003), ‘Europe’s work-time alternatives’, in J. de Graaf (ed.), Take Back Your Time: Fighting Overwork and Time Poverty in America, San Francisco, CA: Berrett-Koehler. Heffernan, M. (2013), ‘What happened after the Foxconn suicides?’, Moneywatch, 7 August, accessed April–October 2015 at http://www.cbsnews.com/news/what-happened-after-thefox​conn-suicides. Hermann, C. (2014), Capitalism and the Political Economy of Work Time, London and New York: Routledge.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 322

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 323 Human Resources and Skills Development Canada (n.d.), ‘Indicators of well-being in Canada’, accessed April–October 2015 at http://www4.hrsdc.gc.ca/[email protected]?iid519. Hunnicutt, B. (1996), Kellogg’s Six-hour Day, Philadelphia, PA: Temple University Press. Hunnicutt, B. (1988), Work without End, Philadelphia, PA: Temple University Press. Institute for Competitiveness and Prosperity (2013), ‘Untapped potential: creating a better future for service workers’, Working Paper 17, October, Institute for Competitiveness and Prosperity and Martin Prosperity Institute, Toronto. Kalleberg, A. (2009), ‘Precarious work, insecure workers: employment relations in transition’, American Sociological Review, 74 (1), 1–22. Kaufman, B. (2012), ‘Keystone pipeline would create job boom, Trans Canada says’, Toronto Sun, 10 January, accessed April–October 2015 at http://www.torontosun.com/2012/01/10/ keystone-pipeline-would-create-job-boom-transcanada-says. Keller, J. (2012), ‘HD Mining Murray River mine won’t employ Canadian workers for years: documents’, Huffington Post, 12 December, accessed April–October 2015 at http://www. huffingtonpost.ca/2012/12/12/hd-mining-murray-river-canadian-workers_n_2286447. html. Keung, N. (2013), ‘Reforms to foreign worker program are cosmetic workers’ advocates say’, Toronto Star, 30 April, accessed April–October 2015 at http://www.thestar.com/news/ canada/2013/04/30/reforms_to_foreign_worker_program_are_cosmetic_workers_advo​ cates_say.html. Keynes, J.M. (1930), ‘Economic possibilities for our grandchildren’, accessed 6 March 2017 at http://www.econ.yale.edu/smith/econ116a/keynes1.pdf. Knight, K., E. Rosa and J. Schor (2012a), ‘Reducing growth to achieve sustainability: the role of work hours’, Political Economy Research Institute, Working Papers Series No. 304, November, accessed April–October 2015 at http://www.peri.umass.edu/fileadmin/ pdf/working_papers/working_papers_301-350/4.2KnightRosaSchor.pdf. Knight, K., E. Rosa, and J. Schor (2012b), ‘Does working less reduce pressures on the environment: a cross-national panel analysis of OECD countries, 1970–2007’, unpublished paper, Departments of Sociology, University of Washington, Pullman, WA and Boston College, Chestnut Hill, MA. La Presse (2014), ‘Couillard: les jobs avant les caribous’, La Presse, 9 March, accessed April– October 2015 at http://www.lapresse.ca/le-quotidien/actualites/201403/08/01-4745891-couil​ lard-les-jobs-avant-les-caribous.php. Lafer, G. (2013), ‘The legislative attack on American wages and labor standards, 2011–2012’, EPI Briefing Paper No.364, Economic Policy Institute, Washington, DC. Latouche, S. (2006), Le Pari de la décroissance, Paris: Fayard. Law Commission of Ontario (2012), ‘Interim report on vulnerable workers and precarious work’, 15 August, accessed April–October 2015 at http://www.lco-cdo.org/en/ vulnerable-workers-interim-report-sectionIV. Le Nouvel Observateur (2015), ‘CGT: Martinez prône une réduction du temps de travail à 32 heures’ (‘CGT: Martinez advocates a reduction of working time to 32 hours’), Le Nouvel Observateur, 5 February, accessed 10 March 2017 at http://tempsreel.nouvelobs.com/ societe/social/20150205.OBS1759/cgt-martinez-prone-une-reduction-du-temps-de-travaila-32-heures.html. Lee, M. (2012), ‘Enbridge pipe dreams and nightmares’, report summary, 21 March, Canadian Centre for Policy Alternatives, Vancouver, accessed April–October 2015 at http:// www.policyalternatives.ca/sites/default/files/uploads/publications/BC%20Office/2012/03/ CCPA-BC_Enbridge_Pipe_Dreams_2012_SUMMARY.pdf. Lee, S., D. McCann and J. Messenger (2007), Working Time around the World, London, New York and Geneva: Routledge and International Labour Organization. Lipton, C. (1968), The Trade Union Movement of Canada, 1827-1959, 2nd edn, Montreal: Canadian Social Publications. Lowe, G., G. Schellenberg and K. Davidman (1999), ‘Re-thinking employment relationships’, CPRN Discussion Paper No. W05, Canadian Policy Research Network, Ottawa, October.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 323

01/06/2017 16:51

324  Handbook on growth and sustainability MacDonald, D. (2014), ‘Outrageous fortune: documenting Canada’s wealth gap’, report, April, Canadian Centre for Policy Alternatives, Ottawa. McIsaac, S. and C. Yates (2013), ‘Half of Toronto-area workers have fallen into “precarious employment”: study’, Globe and Mail, 23 February, accessed April–October 2015 at http:// www.theglobeandmail.com/commentary/columnists/half-of-toronto-area-workers-havefallen-into-precarious-employment-study/article​9003680. Michel, F. (2009), ‘Ne pas perdre sa vie à la gagner’ (‘Don’t waste your life earning a living’), L’Autre Voie, 5, accessed April–October 2015 at http://www.deroutes.com/AV5/travail5. htm. Mishel, L. (2013), ‘Vast majority of wage earners are working harder, and for not much more’, Issue Brief No.348, Economic Policy Institute, Washington, DC, 30 January. Mutari, E. and D.M. Figart (2001), ‘Finland experiments with a six-hour work day’, Dollars & Sense, September/October (237), 32–5. Nässén, J. and J. Larsson (2010), ‘Would shorter work time reduce greenhouse gas emissions? An analysis of time use and consumption in Swedish households’, Working paper, 26 March, accessed April–October 2015 at http://jorgenlarsson.nu/wp-content/uploads/ Would-shorter-work-hours-reduce-greenhouse-gas-emissions-100326.pdf. New Economics Foundation (2009), ‘A bit rich’, New Economics Foundation, London, accessed 17 February 2017 at http://neweconomics.org/2009/12/a-bit-rich/. Organisation for Economic Co-operation and Development (OECD) (2015), In It Together: Why Less Inequality Benefits All, Paris: OECD Publishing. Organisation for Economic Co-operation and Development (OECD) (2014), Society at a Glance 2014: OECD Social Indicators, Paris: OECD Publishing, accessed April–October 2015 at http://dx.doi.org/10.1787/soc_glance-2014-en. Osberg, M. (2014), ‘A three-day work week will make the rich richer and the rest of us poorer’, Guardian, 28 July, accessed April–October 2015 at http://www.theguardian.com/ commentisfree/2014/jul/28/carlos-slim-three-day-work-week-sharing-economy. Pear, R. (2014), ‘Public sector cuts part-time shifts to bypass insurance law’, New York Times, 21 February, p. A12. Peillon, L. (2014), ‘Ce rapport qui réhabilite les 35 heures’ (‘The report that redeems the 35-hour work week’), Libération, 9 December, accessed April–October 2015 at http:// www.liberation.fr/economie/2014/12/09/ce-rapport-qui-rehabilite-les-35-heures_1160187. Performance Audit of the Working 4 Utah Initiative (2010), ‘Report to the Utah Legislature’, Report No. 20101-10, accessed April–October 2015 at http://le.utah.gov/audit/10_10arpt. pdf. Perlow, L. (2012), Sleeping with Your Smartphone, Boston, MA: Harvard Business Review Press. Ransome, P. (2005), Work, Consumption and Culture, London: Sage. Rosnick, D. (2013), ‘Reduced work hours as a means of slowing climate change’, Center for Economic and Policy Research (CEPR), London, February, accessed April–October 2015 at http://www.cepr.net/documents/publications/climate-change-workshare-2013-02.pdf. Sankey, D. (2012), ‘Wanted: 100,000 mining workers in next decade’, Financial Post, 7 March, accessed April–October 2015 at http://business.financialpost.com/2012/03/07/ wanted-100000-mining-workers-in-next-decade. Sherter, A. (2012), ‘Keystone pipeline: how many jobs really at stake?’, CBS Moneywatch, 19 January, accessed April–October 2015 at http://www.cbsnews.com/8301-505123_162-573​ 61212/keystone-pipeline-how-many-jobs-really-at-stake. Skidelsky, R. and E. Skidelsky (2012), ‘In praise of leisure’, The Chronicle of Higher Education, 18 June, accessed April–October 2015 at http://chronicle.com/article/In-Praiseof-Lei​sure/132251/. Sociological Speculation (2013), ‘The sleepless world: one more piece of low hanging fruit?’, Sociological Speculation, 13 January, accessed April–October 2015 at http://sociological​ speculation.blogspot.ca. Speth, J.G. (2008), The Bridge at the End of the World, New Haven, CT and London: Yale University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 324

01/06/2017 16:51

Shorter hours for sustainable degrowth  ­ 325 Stanford, J. (2012), ‘Temporary foreign workers and the labour market’, Progressive Economics Forum, accessed April–October 2015 at http://www.progressive-economics. ca/2012/05/07/temporary-foreign-workers-and-the-labour-market. Statistics Canada (2015), Table 282-0082 – Labour force survey estimates (LFS), employees working overtime (weekly) by National Occupational Classification for Statistics (NOCS), sex and age group, annual, CANSIM (database) last updated 2 February, accessed April– October 2015 at http://www5.statcan.gc.ca/cansim/a26?lang5eng&id52820082. Stiglitz, J.E. (2011), ‘Of the 1%, by the 1%, for the 1%’, Vanity Fair, 31 March, accessed 17 February 2017 at http://www.vanityfair.com/news/2011/05/top-one-percent-201105. Tencer, D. (2012), ‘Working hours around the world, OECD study shows shorter hours in Canada, U.S.’, Huffington Post, 25 April, accessed April–October 2015 at http://www. huffingtonpost.ca/2012/05/25/working-hours-around-world-canada_n_1546440.html. Thomas, M. (2006), ‘Union strategies to re-regulate working time’, Just Labour: A Canadian Journal of Work and Society, 9 (Autumn), 1–15. Thompson, E. (2013), ‘Mulcair gives a glimpse of what NDP platform may look like’, iPolitics, 12 April, accessed April–October 2015 at http://www.ipolitics.ca/2013/04/12/ mulcair-gives-a-glimpse-of-what-ndp-platform-may-look-like. The Daily Caller (2011), ‘Utah ends 4-day workweek experiment’, The Daily Caller, 4 September, accessed April–October 2015 at http://dailycaller.com/2011/09/04/ utah-ends-4-day-workweek-experiment. Valiani, S. (2010), ‘The rise of temporary migration and employer-driven immigration in Canada: tracing policy shifts of the late 20th and early 21st centuries’, workshop of the Research Alliance on Precarious Status, 16 September, Toronto, accessed April–October 2015 at http://www.yorku.ca/raps1/events/pdf/Salimah_Valiani.pdf. Victor, P. (2008), Managing without Growth, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Visser, J., T. Wilthagen, R. Beltzer and E. Koot-van der Putte (2004), ‘The Netherlands: from atypicality to typicality’, in S. Sciarra, P. Davies and M. Freedland (eds), Employment Policy and the Regulation of Part-Time Work in the European Union: A Comparative Analysis, Cambridge: Cambridge University Press, pp. 190–223. Vosko, L. (2010), Managing the Margins: Gender, Citizenship and the International Regulation of Precarious Employment, Oxford: Oxford University Press. Waggott, G. and A. Rousseau (2010), ‘Overtime and the salaried employee in Ontario: a disaster waiting to happen’, McMillan, April, accessed April–October 2015 at http://www.mcmil​ lan.ca/Overtime-and-the-Salaried-Employee-in-Ontario-A-Disaster-Waiting-to-Happen. Weeks, K. (2011), The Problem with Work, Durham, NC: Duke University Press. Wheately, A. (2013), ‘Analysis: what about the workers . . . and their share of income?’, Reuters, 24 July, accessed April–October 2015 at http://uk.reuters.com/article/2013/07/23/ uk-mp-economy-global-wages-analysis-idUKBRE96M0G520130723. White, J. (2002), ‘A new look at shorter hours of work in the Communications, Energy and Paperworkers Union’, Just Labour, 1 (Winter), 41–9. Wielers, R. (2013), ‘The part-time economy: part-time work in the Netherlands’, International Labor Brief, 11 (9), 1–7. Working 4 Utah (2009), ‘Initiative performance final report’, Working 4 Utah, accessed April–October 2015 at http://media.bonnint.net/slc/1615/161501/16150197.pdf.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 325

01/06/2017 16:51

15  Is there a monetary growth imperative? Sebastian Strunz, Bartosz Bartkowski and Harry Schindler

You see, circulation is everything. The money goes around, creating wealth as it does so. (T. Pratchett 2008, p. 387) If, however, we are tempted to assert that money is the drink which stimulates the system to activity, we must remind ourselves that there may be several slips between the cup and the lip. (J.M. Keynes 1936, p. 173)

1 INTRODUCTION Money, interest and debt are three interlinked economic concepts whose role for economic growth is increasingly debated within the degrowth movement. In the wake of the subprime crisis, the monetary drivers of capitalist growth dynamics have been repeatedly called a crucial, yet understudied issue (for example, Martínez-Alier et al. 2010; Jackson and Victor 2015). In consequence, numerous proposals have been put forward as possible keys to overcoming the perceived monetary triggers of growth. For instance, we are advised to ‘occupy money’ by creating ‘interest-free currency’, thereby reclaiming money from ‘exclusive private interests’ (Kennedy 2012, p. xv). Furthermore, proposals for alternative financial systems, which have been hovering around at least since the Great Recession of the 1930s, such as complementary regional currencies (Dittmer 2013; Douthwaite 2012; Seyfang and Longhurst 2013) or 100 per cent money (for a review, see Dittmer 2015), are currently resurging. Yet, a closer look at the literature reveals that monetary aspects occupy a somewhat peculiar position in theories about (de)growth. To date, there is no consensus as to whether monetary factors can trigger real economic growth and if so, in what way and to what extent. There is not even consensus about what money is and what counts as ‘monetary factors’. Some theories treat money, interest and debt as irrelevant for the real economy, whereas others claim either all or only one of them to be pivotal. Interestingly, the cleavage does not align with the usual 326 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 326

01/06/2017 16:51

Is there a monetary growth imperative?  ­327 ­ ainstream-heterodox divide: some heterodox scholars have proposed m the existence of a monetary growth imperative of some form. Others, both within mainstream economic theory and heterodox schools of thought, deny this possibility. While mainstream textbooks do not present monetary aspects as relevant for economic growth, this does not really reflect the actual complexity of debates within mainstream monetary economics. The puzzle then is, what is the appropriate place of monetary aspects in no- or post-growth strategies for a sustainable future? In order to shed some light on this question, we first critically review the pertinent literature. Next to the neoclassical analyses of the influence of money on real economic growth, there exists a range of heterodox perspectives on the problem, among others, the ‘growth spiral’ model of capitalist production and debt-centred theories of money, interest and growth. Subsequently, we compare these major theoretical approaches with respect to the logical plausibility of their main narratives. Two main results of this systematic assessment are that (1) very ­different conclusions can be reached regarding the (non-)existence of monetary growth imperatives. Indeed, contradictory results may be derived from seemingly plausible assumptions; (2) owing to the vast complexity of the  social phenomenon of money it is impossible to single out one theory  as sufficiently convincing. Yet despite this diversity of plausible views, the analysis provides a strong ‘meta-result’: the simplest propositions on the link between monetary variables and growth are, at the same time, the least compelling. Against this background, we discuss proposals for overcoming perceived monetary growth imperatives as potential obstacles for a sustainable economy. In particular, the analysis casts doubt on the merits of proposals such as interest-free or debt-free money. Therefore, simple advice on the question which policy steers best towards a post-growth financial system remains elusive. The remainder of this chapter is organized as follows: In section 2, we present the methodology for this review and clarify prominent terms and concepts. Section 3 provides a systematic overview of theories on the money-growth nexus from both orthodox and heterodox e­ conomics. Section 4 is devoted to those theories that claim to have identified a ­monetary growth imperative. Section 5 demonstrates how each of the presented theories is linked to and propped up by specific narratives. In section 6, we discuss the consequences of our analysis both for further theory ­development and for creating a sustainable economy.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 327

01/06/2017 16:51

328  Handbook on growth and sustainability

2  METHODOLOGY AND APPROACH 2.1  Conceptual Clarification The main object of interest in this chapter, as indicated in its title, is the existence of a monetary growth imperative. All three sub-terms (money, growth, imperative) are anything but unambiguous and clearly defined. Throughout the chapter, we explicate different notions and their consequences for our lead question as clearly as possible. First, one basic difficulty arises from the diverging interpretations ascribed to ‘money’ by different actors in the fields reviewed (this issue is more thoroughly discussed in section 5.1). In the degrowth debate especially (cf. Martínez-Alier et al. 2010), money is not only discussed as a means of payment but also linked to credit/debt or the financial system in general. But even within the relatively homogenous neoclassical paradigm, there are various (sub-)categories of money. These distinctions may stem from different modelling approaches (endogenous versus exogenous money), they may relate to specific subsets of money (inside versus outside money), its origin (credit money versus central bank money), its degree of liquidity (interest-bearing versus non-interest-bearing money) and so on. So as not to get lost, the reader may be advised that money as a medium of exchange is the most popular (functional) definition of money (see Table 15.1 in section 5.2), the limitations of which will be elaborated on in due course. Second, the term growth may refer to different things. It may denote the speed with which an economy attains its full potential (that is, growth in the rate sense). Then again, it may relate to the final steady state at which an economy comes to rest when it has fully exploited its potential (that is, growth in the level sense). This distinction derives from the neoclassical perspective and may be disputed by heterodox approaches that reject all notions of steady state or equilibrium (see section 3). Similarly, it has been debated whether growth is necessarily a quantitative phenomenon or whether economies may also grow in a purely qualitative way (Daly 1996). In summary, it is important to realize that misunderstandings and confusions may arise if the term growth is used without specification of what exactly is meant to grow and how the concept can be operationalized accordingly. Third, what characterizes an imperative (to grow)? In the papers and books we analyse in this chapter, the concept ‘growth imperative’ is seldom explicitly defined or thoroughly discussed. Implicitly, it seems that a growth imperative is something that ‘forces’ the modern economy to grow, in accordance with the English meaning of the word ‘imperative’,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 328

01/06/2017 16:51

Is there a monetary growth imperative?  ­329 which implies necessity (Oxford Thesaurus 1991). Binswanger (2012) explicitly distinguishes between growth imperative (a seemingly unavoidable mechanism embedded in the structure of the economy which makes the latter grow, without there being a viable alternative option, namely, not to grow) and growth impetus (a mechanism that incentivizes growth, but which does not prohibit not growing). Crucially, then, the theoretical statement of an imperative is much more ambitious then the comparatively weak statement of mere influence between two variables. 2.2  Literature Selection The start for our literature selection was to look at the degrowth literature, where the interest in monetary growth imperatives is pronounced. A particular emphasis lies on publications that do not only claim the existence of a monetary growth imperative, but also try to explain the mechanism(s) behind it. As much of the relevant literature is not published in the form of scientific articles, but as books or reports, we had to rely heavily on (cross-)citations. We found only a handful of analyses explicitly hypothesizing the existence of a monetary growth imperative. These are discussed in section 4 of this chapter, including some sources where a monetary growth imperative is posited, yet not explained further. To assess the different claims about monetary growth imperatives, it seems fruitful to contrast them with what both orthodox and heterodox monetary economics have to say about the interactions between monetary and real variables. The resulting overview, which mainly aims to provide a basis for the evaluation of the monetary growth imperative hypotheses, is given in section 3. It should be noted that our focus is on recent discussions, so we do not investigate the historical development of specific arguments: whole libraries can been filled with classic contributions on monetary and real variables, such as those from Böhm-Bawerk, Hume, Marx or Wicksell, and comparative studies based upon these works. One classic author needs to be included in this review, though, because several of the presented theories directly and heavily draw on his arguments: accordingly, the gist of Keynes’s reasoning is briefly sketched in section 3. Against this backdrop, we acknowledge that it is hardly possible to draw objective boundaries between what is relevant and what is not for such a review. In a sense, the scope of this review needs to be both broad and narrow at the same time. It has to be broad so as not to miss literature that is important for analysing claims about the links between economic growth and money. On the other hand, as especially the term ‘money’ can be interpreted extremely broadly, some strands of money-related literature have to be excluded from our review. In particular, we focus the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 329

01/06/2017 16:51

330  Handbook on growth and sustainability ­ resentation in section 3 on those issues which dominate the monetary p growth imperative literature, namely: the distinctions between credit and money, as well as between credit-based and central bank money; the influence of changes in money quantity on the real economy; and the ‘nature’ of interest. What is not addressed, even though it also goes under the label ‘money’ sometimes, is the wider financial system and the issue of public debt because they do not feature prominently within theories of monetary growth imperatives. As already mentioned, this literature review is multi-stage in a certain sense. While we attempted to review all relevant explicit arguments about the existence of a monetary growth imperative, the presentation of ‘nonimperative’ orthodox and heterodox monetary economic literature is deliberately summarized and aims at providing a background for better understanding and assessment of the claims advanced by monetarygrowth-imperative thinkers.

3 MONEY AND GROWTH IN ORTHODOX AND HETERODOX ECONOMICS 3.1  Orthodox View(s)

Money has always been something of an embarrassment to economic theory. Everyone agrees that it is important; indeed, much of macroeconomic policy discussion makes no sense without reference to money. Yet, for the most part theory fails to provide a good account for it. Indeed, in the best developed model of a competitive economy – the Arrow-Debreu [1954] framework – there is no role for money at all. Rather than there being a medium of exchange, prices are quoted in terms of a fictitious unit of account, agents trade at those prices, and that is the end of the story. (Banerjee and Maskin 1996, p. 955)

Thus reads the opening paragraph of a paper delivering a ‘Walrasian theory of money’. This quote also happens to nicely summarize the status of money in standard growth theory. The mainstream perspective highlights three functions of money: money is supposed to serve as (1) a medium of exchange, (2) a store of value and (3) a unit of account. The first function directly relates to the origins of money, as argued by, among others, Jones (1976), Kiyotaki and Wright (1989), Banerjee and Maskin (1996) and Luo (1998). Similarly, in classic contributions to the topic Baumol (1952) and Tobin (1956) focus on money as a ‘lubricant’, that is, a means to reduce the transaction costs of trading. Second, money can serve as a store of value. This function is

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 330

01/06/2017 16:51

Is there a monetary growth imperative?  ­331 first highlighted in Samuelson’s (1958) overlapping-generations model, in which money facilitates the reallocation of resources across generations. Third, money is used as a unit of account, that is, a standard of measurement. For instance, Doepke and Schneider (2013) provide a model explaining money’s role as a unit of account for future payments. Though there have been major model-based developments (see Friedman and Woodford 2011), these central tenets prevail. Particularly the first view of money as a medium of exchange sets the stage for the negligent treatment of money in specific theories of economic growth: it lends itself to justify the assumption that money is neutral – which means that nominal variables (that is, those measured in monetary units) do not affect the real variables (that is, those measured in physical units) that actually determine the economy.1 ‘This silence [of growth theory on money] is understandable because a basic theoretical paradigm focuses on the fundamental mechanisms of the growth process, whereas finance is like the lubrication that reduces friction and thereby enables the machinery to function’ (Aghion and Howitt 2009, p. 129). The presumed fundamental mechanisms, for example, technological progress and its constitutive factors such as research and development (R&D) and patent laws, individual preferences and scarcity of resources (see Romer 1990; Barro and Sala-i-Martin 2004; Aghion and Howitt 2009), are, crucially, regarded as long-term issues. That is, they determine the level of an e­ conomy’s steady state by directly affecting marginal productivity of capital. In the steady state, net investments are no longer relevant for growth because the depreciation rate has kept up with capital productivity. In contrast, monetary aspects are considered as short-run phenomena, as possible frictions that may slow down or support economic processes along the growth-path towards the steady state. Money affects neither the long-run growth rate nor the final level of output. In conclusion, common wisdom among economists says that money is neutral in the long run but not in the short run (for example, Mankiw 2009, p. 684). Barro (1997, p. 716) even opines that ‘although the nonneutrality of money deserves some attention, it is likely that economists have given it too much weight. The interplay between nominal and real variables is neither as large nor as pervasive as most people believe’. When discussing this interplay, heterodox perspectives also address interest as a monetary phenomenon (see below). In contrast to that, the mainstream conceptualizes interest as a real phenomenon, representing individuals’ decisions how to allocate consumption over time. Thus, the real interest rate may affect the speed with which an economy attains the steady state but it has no role in determining the long run fundamentals of growth – the productivity of the capital stock. Note the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 331

01/06/2017 16:51

332  Handbook on growth and sustainability critical ­conceptual framing here: neoclassical economics sees interest and growth as independent of money. Both concepts are explained by certain characteristics of the capital stock (positive but diminishing returns on accumulation), individual preferences (saving versus consuming) and technological progress as essential variables. The quintessence reproduced by most textbooks (for example, Mankiw 2009; Samuelson and Nordhaus 2010) that money is not relevant for growth in the long run, critically depends on which assumptions are made. Alternative assumptions concerning, for instance, marginal productivity of capital, the characteristics of economic agents, the distribution of seigniorage and the saving rate, would not necessarily leave the neutrality paradigm intact, as Orphanides and Solow (1990, p. 225) acknowledge: only ‘for those who can bring themselves to accept the single-consumer, infinite-horizon, maximization model as a reasonable approximation to economic life, superneutrality is a defensible presumption. All others have to be ready for a different outcome’. In addition to interest, credit often draws equal attention. However, the mainstream conceptualizes money and credit as different economic phenomena in the first place: money enables immediate exchange (no intertemporal dimension), while transactions based on credit await future settlement (intertemporal dimension). This conceptual difference notwithstanding, credit and money are considered to be functionally largely equivalent in so far as they both serve as a means of exchange (Kocherlakota 1998). Against this background, it is interesting to see that orthodox analyses of the ‘credit–growth nexus’ have not resulted in a neutrality hypothesis as well. On the contrary, the expansion of credit is widely acknowledged to be closely correlated with gross domestic product (GDP) growth (for example, Aghion et al. 2005; Levine 2005; Beck et al. 2014). Does this divergence amount to a paradox? Not necessarily. The correlation between credit and growth is non-linear and vanishes at a certain amount of credit (Beck et al. 2014). One common explanation for this non-linearity is that a lack of credit hampers investments needed to close up to the technological frontier and thus undermines the full development of an economy’s potential. Once the frontier is reached, credit ceases to be a limiting factor and a further expansion will have no longer any effect. In this respect, credit appears more to be a precondition for growth triggered by (other) real variables such as investments and technology, instead of being a driving force by itself. Furthermore, we might recognize different analytical foci: while the credit-growth correlation refers to a context where the lack of credit poses a severe friction in the economy, the money neutrality hypothesis refers to situations where money is a priori assumed to allow for the smooth progress of economic

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 332

01/06/2017 16:51

Is there a monetary growth imperative?  ­333 transactions. Thus, the credit–growth correlation might be squared with the notion of money as a lubricant. 3.2  Heterodox Views Keynes’s liquidity preference theory of money and interest While in mainstream growth theory interest is always a real phenomenon, Keynes (1936) argued that it is primarily of monetary origin. He acknowledged that individual saving/consumption decisions may influence the interest rate, but he emphasized the individual’s subsequent decision in which form to hold savings. Here, individual preferences to hold liquid assets are crucial – hence the term liquidity preference to denote the desire to hold cash rather than less liquid yet interest-bearing assets. Consequently, Keynes defined interest as ‘the reward for parting with liquidity for a specified period’ (Keynes 1936, p. 167). This liquidity preference theory directly links interest to money: money is the most liquid asset. Liquidity enables individuals to store wealth while retaining the ability to react to unforeseen events. Thus, Keynes stresses the precautionary aspect of holding money (see Davidson 1972). As individuals hold cash, they will always demand a minimum ‘reward for departing with liquidity’. This minimum is called the ‘liquidity premium’. It represents one of Keynes’s central tenets that the liquidity premium induces a lower bound on interest rates. Against this background, the question emerges how Keynes’s theory links money, interest and growth. Keynes assumed a set of interdependent variables that determine growth, including monetary aspects. Hence, he rejected the classical dichotomy between real and nominal variables as a ‘false division’ (Keynes 1936, p. 293). Yet there are no simple causal links within this theory. For instance, the interest rate is only one among several growth determinants, which are ‘themselves complex and each is capable of being affected by prospective changes in the others’ (Keynes 1936, p. 184). The fact that Keynes’s (1936) general theory does not build on simple causalities but unfolds a complex set of interdependent variables may explain why his theory has been used to back up a diversity of, at times, contradicting perspectives on monetary aspects of growth. In the following, we give an overview of the most prominent strands of pertinent heterodox literature. Heterodox approaches The most salient heterodox departures from mainstream growth theory concern the mainstream’s focus on equilibrium models, where money is introduced as an exogenous variable whose effect on the real economy

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 333

01/06/2017 16:51

334  Handbook on growth and sustainability peters out in the long run (neutrality). We outline common heterodox objections below – most of which ‘stand on the shoulders’ of Keynes. Broader historical presentations of the development of heterodox thought can be found in King (2002), Lee (2009) or Lavoie (2014). In fact, there is such a broad diversity of alternative approaches that disagreement reigns over how to appropriately classify them. For instance, while Davidson (2005) suggests defining ‘post-Keynesianism’ rather narrowly,2 King (2002) and Lavoie (2005) argue for setting up a broader tent. Discussing remote issues, such as whether Kaleckians and Sraffians might legitimately be called post-Keynesians, lies beyond the intention of this chapter. We mention these debates, however, to alert the reader to the fact that beyond some shared critiques directed at the mainstream, the heterodoxy fights its own battles. The heterodox perspective ‘rejects any formulation of neoclassical general equilibrium’ (Lavoie 1984, p. 772). It thus affirms its heirship to Keynes, who in his General Theory refuted the notion of equilibria to which markets could reliably expected to converge – as exemplified by his focus on involuntary unemployment. Furthermore, the heterodox perspective takes aim at the mainstream treatment of money as exogenous; that is, the assumption that the central bank controls the money supply. In that case, the money supply appears exogenous to real economic processes (production of goods and services, and so on). A central heterodox tenet (whether referred to as post-Keynesian, circuitist or something else) says that the assumed exogeneity is absurd. Indeed, practitioners from central banks agree on this point (McLeay et al. 2014): the central bank does not determine the money supply. Rather, money should be understood as the flow of credit from banks to entrepreneurs who first finance and then sell their production: ‘money is a by-product of the workings of a production economy’ (Fontana and Sawyer 2015, p. 5) and ‘Money is introduced into the economy through the productive activities of the firms, as these activities generate income. There can be no money without production’ (Lavoie 1984, p. 774). This is the theory of endogenous money. The relevance of this point for the debates about money’s influence on growth and long-term neutrality should be clear: if the creation of money is intrinsically connected to production processes, rather than exogenously spread over the real economy ‘like the manna from heaven of a Patinkinesque world or dropped by helicopter as in Friedman’s construction’ (Davidson 1972, p. 106), assuming neutrality of money does not seem as obvious as implied by neoclassical monetary economics. Indeed, heterodox scholars have put a variety of arguments forward that attest to the long-run impact of monetary on real variables. Amongst others, Chirinko et al. (1999) point out that investment

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 334

01/06/2017 16:51

Is there a monetary growth imperative?  ­335 capacities of firms shrink if interest rates on money rise. Davidson (2002) demonstrates that firms may not be able to exploit their full potential in case of a lack of advance money needed for investments. More generally, as the unpredictability of nominal interest rates determines the value of investments, it is the profit rate that depends on the nominal interest rate and not vice versa, as neoclassicals would have it (Moore 1988). In sum, heterodox monetary economics appreciates the non-neutrality of money as a major cornerstone of Keynes’s legacy. At this point, however, start the differences within the heterodox camp. For instance, debates about the appropriate role of central banks within the process of endogenous money creation pins ‘structuralists’ and ‘accomodationists/horizontalists’ against each other. Moreover, the ‘reconciliation problem’ (Howells 2006) concerns the relation between credit and money, interest bearing and non-interest bearing or inside money and outside money. Moore (2006) holds that the above abstract distinctions do not enhance our understanding of what in reality is a complex adaptive system. At the same time, Dow (2006) asserts that we should not conflate holders of money with holders of credit because the former are driven by liquidity preference while the latter are driven by saving/ consumption decisions. Again, we do primarily intend to indicate the diversity of heterodox perspectives here. The handbook by Arestis and Sawyer (2006) contains a collection of different approaches. Currently, a variety of heterodox research programmes are flourishing, as, for instance, the works of Lavoie (2014) and Fontana and Sawyer (2015) demonstrate. As regards the position of heterodox thought within the topic’s conceptual landscape, two coordinates stand out. First, while the mainstream has recently adopted endogeneity of money (cf. Romer 2000) in its models (albeit this ‘new macroeconomic consensus’ fails to credit the post-Keynesians for their work), it still clings to the long-run neutrality of money. Second, this schism concerning neutrality notwithstanding, the above-mentioned heterodox and mainstream positions agree on one crucial issue: money emerges as a by-product of the real economy, not the other way round. So even if money constitutes an important impetus for long-run growth, none of the above suggests necessity and inescapability; no monetary growth imperative is posited. In sum, the main heterodox approaches, while clearly dissenting in important respects, still share some common ground with the mainstream. In the next section we move towards those theories that actually perform a critical turn and claim that monetary aspects constitute growth imperatives.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 335

01/06/2017 16:51

336  Handbook on growth and sustainability

4 MONETARY GROWTH IMPERATIVES? ‘GROWTH SPIRAL’ THEORIES AND THE ROLE OF DEBT 4.1  The Money-Induced Growth Spiral In addition to the mainstream and Keynes-inspired analyses, there exist a number of other heterodox approaches to the problem. One prominent example is Binswanger’s (2012) ‘growth spiral’ theory (see also Hixson 1991; Douthwaite 1999; Greco 2001). Binswanger’s starting point is a post-Keynesian-like critique of neoclassical economics’ treatment of money, which is imposed over a barter-like economy. In contrast, he emphasizes money’s role as a means of payment and focuses on the role of credit as advance money needed to produce in an economy based on specialization. In his production model, a firm needs advance money to make an investment, that is, to produce in one period what will be sold on the market in the next period.3 This advance money can be provided either by owners of the firm (its shareholders) and/or by external finance (bank credits). As it is scarce, advance money has a price – interest in the case of credits and dividends in the case of shares. This means that the firm has to generate enough profit to remunerate its shareholders and creditors. However, in the aggregate, there is only as much money in the system as was injected by firms when they bought factors of production; hence, firms are also indirect creators of purchasing power for their own products. The general structure of Binswanger’s argument is closely related to the circuitist view (that is, endogenous money, see section 3.2) of the economy. Thus, profits are not possible unless firms invest at least as much as their production from the preceding period is worth (including profits). Of course, households also might use the interest income of banks to pay for the value added by the firm. However, the argument has been made that banks have to keep a portion of their interest income as reserves to be able to expand credit in the future (Binswanger 2009; Wenzlaff et al. 2014). Thus, as a consequence of the need to create demand for its own products and the alleged need of banks to keep some of their profits away from circulation, the firm is forced to demand more advance money in every period. As new credit-money again requires profit to enable the firms to pay back interest, this mechanism constitutes a growth imperative. Within this model, any attempt not to grow would lead to a downward spiral reducing the standard of living to the level of a subsistence or ‘Robinson Crusoe economy’.4

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 336

01/06/2017 16:51

Is there a monetary growth imperative?  ­337 4.2  Positive Interest Rates as Growth Imperative? Using different degrees of sophistication, several approaches eventually yield the same conclusion, namely, that positive interest rates trigger an imperative for real economic growth. Loehr (2012) combines Keynes’s liquidity preference theory with the Golden Rule of capital accumulation from mainstream growth theory. Within the latter, the real interest rate equals the rate of capital stock’s productivity. A positive real interest rate means that capital is scarce and investments are profitable – the capital stock grows (Phelps 1961). That is, zero growth is not possible as long as there is a positive interest rate. However, if the interest rate ‘is always significantly higher than 0, due to the liquidity premium of money’ (Loehr 2012, p. 232), the economy continuously grows. Thus, the interest rate yields a monetary growth imperative. This perspective depicts the liquidity premium as a threshold that reverses causal relations: above the threshold, the productivity of the (real) capital stock determines the monetary interest rate, below the threshold the monetary interest rate determines the real interest rate and the rate of capital accumulation (Huth 2002). Wenzlaff et al. (2014) argue that the existence of positive interest rates alone is not sufficient to create a growth imperative. How creditors use the income they receive in the form of interest payments from debtors is crucial. If creditors fully consume their interest income, thereby re-injecting it into the economy, a stable cycle without growth may endure. So, positive interest rates as such do not necessarily yield permanent growth (see also Richters and Simoneit 2017). However, if creditors tend to hoard their income rather than to consume it (with reference to Keynes’s liquidity preference theory, this is argued to be a plausible assumption), money is drawn from the cyclical interrelation of debtors, banks and creditors. In consequence, economic dynamics will eventually come to a standstill unless new money is fed into the economy. As this monetary growth takes place via investments, it is necessarily accompanied by real growth. Within the degrowth debate, we can also encounter simplistic arguments positing an interest-related growth imperative, which mostly rely on plausibility arguments. For example, Kennedy (2012) offers the following explanation: (1) households or firms that are indebted need not only to pay back the sum they borrowed but also interest; (2) overall money supply needs to grow accordingly; and (3) if bubbles and financial crises are to be averted, real economic growth must follow. Similar statements often coincide with references to the work of Soddy (1934), who famously considered ‘debt money’ an evil, and involve concepts like ‘usurious ­interest’, believed to be the source of all evil in modern times (Kuzminski 2013). This argument’s quintessence is that ‘the way money is created,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 337

01/06/2017 16:51

338  Handbook on growth and sustainability bearing interest – so that debts have to be paid back in a way that demands unsupportable infinite growth – is a built-in driver of unsustainability in the economic system’ (Boyle and Simms 2009, p. 90; see Lietaer et al. 2012). Specific mechanisms leading from credit/interest to growth are not offered. 4.3  Debt as Growth Imperative Another heterodox view on the role of money in a modern growth economy focuses on its characteristic as debt (Malik 1998). Two major proponents of this approach are Heinsohn and Steiger (1996, 2013). They reject neoclassical analyses’ usual assumptions regarding money’s function as reducing transaction costs, storing wealth or satisfying precautionary motives, and focus on money as a means to settle debts arising from the exchange of goods via credit. A key thesis of their work relates to the nature of interest, which cannot, according to Heinsohn and Steiger, be explained by the growth of real variables, which is rejected as tautological. Instead, interest is believed to compensate the creditor (owner of capital) for having his or her property ‘blocked’ in the sense that this property cannot provide a security for loans to the creditor him or herself. Such loans again constitute a key factor of modern economies in so far as they are required to facilitate exchange. Money enters this theory as a crucial element because in complex societies loans usually cannot be offset by other loans but have to be repaid with a fully liquid asset. This viewpoint corresponds to the historical analysis by Graeber (2012), who emphasizes that the invention of money has been both prerequisite for and origin of a debt-based economy. How does this perspective lead to a growth imperative? Heinsohn and Steiger refer to the profit motive as a driver of capital accumulation and thus growth, which is conventionally traced back to the human nature (propensity to activity and the pursuit of a better life). They reject this explanation as a tautology as well, and refer to historical and socialist societies where no such profit motives prevailed. In their view, earning profits is a structural coercion in modern economies owing to money and property-based interest. The basic line of argument is that production requires capital, which requires credit, which requires money (liquidity), which requires the payment of interest, which requires the firm to make profit, which requires it to produce more (efficiently), thus contributing to aggregate growth. Heinsohn and Steiger conclude: ‘Neoclassical ideas like sacrificing consumption, which can be used to accumulate real capital or to increase productivity by accumulation of human capital, convey the idyll of voluntariness not existing in a property-based economy’

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 338

01/06/2017 16:51

Is there a monetary growth imperative?  ­339 (Heinsohn and Steiger 1996, p. 363, own translation). Finally, with interest being interpreted as a phenomenon of property rights, growth dynamics start only given a sufficient amount of correspondingly defined property, which, according to the authors, explains the absence of growth in tribal and feudal societies.

5  OF MODELS AND MYTHS 5.1  What Is Money Anyway? In the following, we need to make sense of the wide array of approaches presented in the last section. Some approaches assert that monetary variables crucially influence economic growth, others deny this possibility. Interestingly, the cleavage does not exclusively run along the mainstream– heterodox divide. While standard textbooks quickly declare monetary aspects as irrelevant and relegate them to the realm of short-term business cycles, pertinent scholarly discussions are much more nuanced. It is no surprise, then, when a mainstream literature review concludes: ‘“My main conclusion is that equally plausible models yield fundamentally different results”, wrote Jerome Stein in the introduction of his 1970 survey of monetary growth theory. Two decades later, all we have is more reasons for reaching the same conclusion’ (Orphanides and Solow 1990, p. 224). This view seems all the more appropriate if heterodox approaches are considered as well. In particular, Keynes-influenced perspectives exhibit the whole range of growth–money relations. Some post-Keynesians hold that no monetary growth imperative exists (for example, Cahen-Fourot and Lavoie 2016) whereas other Keynes-influenced scholars claim it does or that this is at least probable (for example, Loehr 2012). One possible explanation of this rather confusing situation is the inherent fuzziness of the term ‘money’. This starts from the question whether we look at and define money from historical-anthropological (Davies 2002), psychological (Lindgren 1991) or economic perspectives, which are anything but clearly distinguishable from each other. However, even if we consider the economic dimension of modern money only, it is not clear at all what money actually is. Is it relevant whether money is endogenous or exogenous, created mainly via credits made by private banks or via the actions of the central bank? Is money just a lubricant that helps to ‘smooth’ barter-like economic operations or has it essentially transformed the way economies are functioning, as compared with barter? Is money linked to existing property or is it created ‘out of thin air’? What about bitcoins? What role does money illusion play and how does this phenomenon

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 339

01/06/2017 16:51

340  Handbook on growth and sustainability influence the workings of the economic system? Is interest a monetary phenomenon, as Keynesians and Wicksellians argue it is? Or is it a real variable, as neoclassical economists maintain? Or is it just the result of socio-political factors, as the chartalist argument goes (see Smithin 2006)? Particularly interesting from the point of view of the monetary growth imperative theories discussed here are the issues of what links money and credit. Intermingling money and credit will appear to many economists as analytically daring, to say the least. The conventional view holds that money and credit are clearly different economic phenomena: While money constitutes a means to completely facilitate an exchange without reference to former or future transactions, the use of credit for the same purpose is devoid of a final settlement, being thus inextricably linked to debt and interest. However, against this strict separation it might be argued that, first, the creation of most money today arises from credit transactions and, second, that money can be regarded as just another (imperfect) form of credit, fulfilling its functions in settings where credit is not accepted as a means of exchange due to insufficient information (Kocherlakota 1998; Nosal and Rocheteau 2011; Williamson and Wright 2011). Just as indicated in the quotation above, depending on which interpretation of ‘money’ we choose, we may well arrive at very different, often conflicting conclusions regarding its influence on the real economy. The problem is, in our contention, that there is no single ‘right’ interpretation. Many different perspectives on money are admissible and, depending on context, can provide meaningful insights into the mechanisms governing socio-economic systems. However, when comparing their arguments, it is important to keep in mind that different authors understand money differently. Unfortunately, some such assumptions about money and other factors relevant to this chapter’s analysis are taken as given by those who apply them. They have become narratives, whose upholding may sometimes limit the scope of insights that can be provided in analyses of the money–growth nexus. These narratives are the subject of the next section. 5.2  Competing Narratives and their Limits We might say that we have to do here with myths (Holling et al. 2002; see also Dodd 2014) or, more neutrally, narratives. These are generalized descriptions of reality, which are not necessarily wrong, yet they do not reflect the whole ‘truth’ of the matter. The danger of such narratives is that they might make us blind to the actual complexity of the real world – they are models, and models always have a limited domain (Musgrave 1981). Ignoring this limitation might lead to what Taleb (2010) calls the ‘narrative fallacy’, a tendency to impose patterns and relationships where

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 340

01/06/2017 16:51

Is there a monetary growth imperative?  ­341 there are none, at least given our limited set of available information and understanding. In a very stylized way, Table 15.1 displays the different approaches presented in the last section. In order to provide an accessible overview, Table 15.1 is not an all-encompassing list of theories; rather, it contrasts the economic textbook version of the irrelevance of monetary variables with the most prominent versions of monetary growth imperative hypotheses. Despite the wide variety of approaches, they exhibit the following features common to many theories in social science: ●

They deductively analyse relations between specific monetary aspects and economic growth. While the inductive formation of theories from case studies runs the risk of failing to grasp overarching patterns due to empirical complexity, these purely deductive approaches risk neglecting the diversity and nuances of social reality (cf. Reiss 2013). ● More specifically, the approaches tend to (1) abstract from allegedly irrelevant aspects for the sake of keeping the model manageable – aspects which nevertheless may play a significant role in reality; (2) they operate with causal links, which are socially contingent and thus plausible in some settings but not necessarily valid in others. ● As a result, these theories rely on and promote distinct myths – in the colloquial sense of catchy stories that may or may not be true (see Elster 1989). These myths are closely entwined with the deductive model approaches: their specific analytical settings are to be rendered plausible and relevant via these story lines. In the end, this manufactured plausibility and the internal logical consistence, sometimes along with the formal elegance of a model may make us blind to deviant facts or alternative intuitions regarding the empirically elusive nature of the phenomena in question. While not methodologically harmful per se, these issues spell trouble if the myths disconnect from the modelling exercise. In the following, we point out that each of the respective myths, while possibly contributing to our understanding of specific issues, is limited in reach and should not be regarded as revealing essential truths. ‘Money is a neutral medium of exchange’ The economic textbook story of how money solves the difficulties of barter economies is one prime example of a myth – it has some truth to it, in that complex patterns of trade are unimaginable without the ­transaction ­cost-reducing function of money as a medium of exchange,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 341

01/06/2017 16:51

342

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 342

01/06/2017 16:51

Yes

Money is a neutral medium of exchange

Basic myth

Role for growth

Function

Role for growth

Function

Based on Solow (1956) and modern endogenous growth theory Mediates between productivity of the capital stock and consumers’ pure rate of time preference Interest resulting from growth (Ramsey-Irving), not the other way around ● Medium of exchange: transaction cost reduction ● Store of value ● Unit of account No long-term impact: money is neutral in the long run

Steady state feasible within the current system?

Perspective on money

Perspective on interest

Theoretical approach/ background

Mainstream growth theory

Liquidity premium is a timeless fact

No

Not applicable

Rules out zero growth within the standard framework ● Transactions ● Precaution ● Speculation

Combines neoclassical and Keynesian assumptions Equilibrates demand for and supply of cash (Keynes 1936)

Loehr

Money is scarce

of exchange: advance money for production ● Store of value ● Unit of account Real impact due to money illusion; fiat money made growth possible in the first place No

●  Medium

Part of the growth imperative

Signalizes scarcity of credit (being its price)

Idiosyncratic

Binswanger

Liquidity costs bring about the profit motive

Real impact: lending on property creates money with interest as the source of growth No

Medium of exchange: precise settlement of debts

Growth imperative as source of profit motive

Idiosyncratic (some parallels to New Institutional Economics) Compensation for departing with property premium during credit transaction

Heinsohn/Steiger

Table 15.1  Schematic comparison: ‘growth imperative’ theories versus mainstream growth theory

Is there a monetary growth imperative?  ­343 yet it is very limited in scope. The medium of exchange narrative is flatly wrong if understood as an historical hypothesis about the emergence of money (for example, Luo 1998). Historical and anthropological evidence clearly demonstrates that money has originated within manifold religious, political and economic practices (for example, Davies 2002; Graeber 2012). Humans have used an enormous variety of objects – among them, for instance, ‘salt, thimbles, umiaks, vodka’ (Davies 2002, p. 27) – to manage their social relations, whether it be settling feuds, arranging marriages or worshipping gods. Meanwhile, these objects evolved into some sort of (commodity) money. This is more than a matter of historical correctness. The neutral medium-of-exchange narrative justifies the perspective of money as a lubricant without impact on real economic variables. Yet fundamental doubts about this neutrality assumption are warranted if one acknowledges the overwhelming evidence: money is and has always been a social institution. So what is growth theory missing? For instance, people regularly succumb to ‘money illusion’; that is, they base their decisions on nominal/monetary values rather than real variables, which entails ‘significant implications for economic theory’ (Shafir et al. 1997, p. 341; see also Akerlof and Shiller 2009, ch. 4). Moreover, the ‘double coincidence of wants’ as point of departure for many conventional models of moneybased exchange is widely acknowledged to seriously misrepresent actual transaction contexts (Williamson and Wright 2011). Again, this does not rule out assuming long-run neutrality in particular model settings, but it does preclude treating money as an essentially neutral lubricant, regardless of the specific context. It is of utmost importance to acknowledge the respective models’ restricted domain. ‘Money is scarce’ The arguments of Binswanger (2009, 2012), Douthwaite (1999), Greco (2001), Hixson (1991) and Wenzlaff et al. (2014) are closely related to each other and might be summarized under the narrative proposing that ‘money is scarce’. The growth imperative they all identify holds that there is not enough money in the market system to make profitable production possible in the aggregate – unless firms invest in every period, whereby the investments are effectively needed to ‘finance’ the consumption of production from the preceding period. However, this analysis is based on a number of possibly problematic assumptions and corollaries: corporations finance a large fraction of their capital investments from retained earnings, while external financing accounts for less than a quarter of all capital expenditures in US corporations at least (Leary and Roberts 2010; Berk and DeMarzo 2014); it is not entirely clear why interest income should be retained for any

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 343

01/06/2017 16:51

344  Handbook on growth and sustainability purpose in a stationary economy, as there would be no need for growing reserves to expand credit volume in the aggregate; credit-financed purchases of factors of production are not the only source of money in the system, as assumed in the respective models – consumption credits could potentially close the alleged ‘demand gap’, even if the latter were to exist in the first place. In addition, the ‘growth spiral model’ exhibits serious microeconomic limitations. In particular, it is neither clear why within this model market transactions are needed at all – the time gap between production and consumption might be closed by means of a contract. Also, the model is based on the implicit assumption that (1) firms identify the problem of a demand gap and thus invest more in every period and (2) do not free ride on others who might close the gap by means of their investments. Thus, while appealing prima facie, the ‘money is scarce’ arguments draw much of their power from a rather questionable narrative. In fact, in a recent model-based ‘test’ of the Binswanger (2009) version of the growth spiral ‘no evidence of a growth imperative arising from the existence of a debt-based money system per se’ was found (Jackson and Victor 2015, p. 29). ‘The liquidity premium is a timeless fact’ Loehr (2012) aims to analyse whether economies would (need to) grow even if other drivers of growth, such as the political imperative to prevent unemployment in times of productivity rises, can be ruled out. Indeed, Loehr (2012, p. 233) maintains that ‘even under the preconditions of cultural change, zero growth is not possible as long as a positive interest rate exists’. While his objective is analytically laudable, Loehr’s main result nurtures a myth about the interest rate. The narrative concerns the liquidity premium as origin of positive interest rates. Loehr’s claim that even under cultural change, the liquidity premium might prevent the transition to a sustainable, non-growing economy, misses the crucial point; the desired cultural change (humans prefer leisure and community over material wealth) would transform economic relations in a way that might entirely change the meaning of interest. In particular, such a transition might be similar to Keynes’s vision about the ‘economic possibilities for our grandchildren’ (Keynes 1930): The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, s­ emi-­pathological propensities which one hands over with a shudder to the specialists in mental disease. (Keynes 1930, p. 329)

This kind of cultural change would sharply diminish the liquidity premium (that is, the motivation to hold money out of liquidity preference).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 344

01/06/2017 16:51

Is there a monetary growth imperative?  ­345 ‘Liquidity costs bring about the profit motive’ The property rights-based monetary theory of Heinsohn and Steiger (2013) posits an inseparable connection between private property rights, money as a prerequisite for production and, thus, growth. Their theory traces growth back to the need to make profit in order to be able to pay the interest on money loans. Thus, Heinsohn and Steiger essentially reject the homo oeconomicus hypothesis: Individuals do not ‘naturally’ want to make profits (thereby unwillingly contributing to growth) but are forced to do so by ‘debt money’, that is, by interest paid on money loans. Empirical studies do indeed cast doubts about the relevance of a genuine profit motive of entrepreneurs (for example, Amit et al. 2001). Furthermore, in principle, extensive trade can take place beyond any profit motive on the grounds of social prestige or to secure the livelihood in an economy based on division of labour (see Polanyi 1944 [2001]). By contrast, the transition towards a profit-based trade structure requires the use of money in order to precisely (and ‘objectively’) account for the often marginal benefits of a transaction which otherwise might be overlooked or simply forgotten (Graeber 2012), and for the precise settlement of debts. Thus we can unmask the seeming naturalness of trading for profits as a cultural artefact, which sidelines alternative behaviour (not-for-profit trade). We could argue that money and credit contribute to the reproduction of this social structure as they constantly ‘teach us’ to trade only with a precision that allows for and makes us used to marginal profits, just like the omnipresent existence of interest ‘teaches us’ not to simply acquire wealth in order to consume it but to reinvest it. Along these lines, ‘debt money’ does indeed contribute to growth by outlining the opportunity costs of not-for-profit actions. By itself, however, it does not constitute a growth imperative. If we consider money or credit as a factor of production similar to labour or other capital, than the interest payment simply represents the cost of one of the production factors. If paying for labour (wages) and physical capital (capital costs) does not require a firm to grow, why should paying for money (interest)? On top of that, while it is certainly legitimate to question the assumption of a ‘natural profit motive’ of humans (Polanyi 1944 [2001]; Callon 1998; Lux 2003), it is rather far-fetched to explain firm growth solely by monetary coercions and to dismiss individual motives such as economic independence or ambition (Amit et al. 2001; Tyszka et al. 2011). ‘Positive interest rates are incompatible with a non-growing economy’ The narrative of monetary interest forcing the economy to grow revolves around the conclusion that positive aggregate interest can be paid only in

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 345

01/06/2017 16:51

346  Handbook on growth and sustainability a growing economy, a conclusion that is implicitly assumed obvious and thus non-controversial and not requiring a justification. In a relatively more sophisticated argumentation, Loehr (2012, p. 234) opines that a zero interest rate is ‘an important necessary condition for a zero-growth steady state’ (see above). Others (Boyle and Simms 2009; Kennedy 2012; Kuzminski 2013) rely on plausibility arguments to reach a similar conclusion. Yet, alternative theories regard positive interest rates and non-growing economies very well reconcilable. For instance, Cahen-Fourot and Lavoie (2016) argue that the above reasoning needs to be dismissed on grounds of confusing flows and stocks. Interest payments are to be conceived as flows, which accrue on a given stock of debt. There is no reason, then, why the stock of debt would need to grow so as to enable the flow of interest. A non-growing stock of debt reflects a non-growing economy. Hence, positive interest rates are perfectly compatible with zero economic growth, according to the authors. In a very similar vein, Jackson and Victor (2015) show that a stock-flow consistent model may very well deliver the result that a non-growing economy is possible despite a ‘debt-based money’ system. Others seem to agree: What would happen to the interest rate in a SSE [steady-state economy]? Would it not fall to zero without growth? Not likely, because capital would still be scarce, there would still be a positive time preference, and the value of total production may still increase without growth in physical throughput – as a result of qualitative development. Investment in qualitative improvement may yield a value increase out of which interest could be paid. However, the productivity of capital would surely be less without throughput growth, so one would expect low interest rates in a SSE, though not a zero rate. (Daly 2008, p. 7)

In a stationary system positive and negative interest payments could cancel each other out. Interest, then, is considered a zero-sum game where one’s gain is another one’s loss. The existence of interest in earlier stationary societies clearly demonstrates that interest has not always reflected the rate of capital accumulation throughout the greater part of history. Humans have charged one another interest even before the ascent of writing, and did so about 2000 years before the ascent of money (Homer and Sylla 2005), and within the most diverse cultural arrangements. This suggests that we consider the ‘nature’ of interest, that is, its economic determination base as well as its effects (like implications for growth), as a historically contingent social institution. In a ‘culture of growth’, where positive real interest rates are taken as natural, monetary interest reflects growth rates simply because the society connects these two phenomena up to the point where they seem identical. As a result, within this framing,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 346

01/06/2017 16:51

Is there a monetary growth imperative?  ­347 interest payments may indeed depend on an ever-increasing capital stock. However, that interest rates reflect an amalgam of our rate of time preference regarding consumption and capital productivity is no law of nature but merely a social convention. A monetary growth imperative therefore exists (if at all) only in so far as the cultural habit of linking monetary interest to growth persists and only as long as the features of our economy enable this cultural habit.

6 DISCUSSION 6.1  Theoretical Challenges As Dittmer (2015, p. 15) rightly observes, ‘[t]he debt-money growth ­imperative . . . has yet to be rigorously shown to exist’. The previous sections have illustrated that the theoretical claim to identify an imperative sets the bar very high; in our view, none of the presented theories convincingly meets this challenge. At the same time, doubts as to whether mainstream economics has comprehensively captured the role of money in modern economies are warranted. Not only do the outcomes of the extensive modelling efforts undertaken critically depend on the assumptions used to build these models, but also can one question the methodological approach as such. Consider the vast gap between the extraordinary diversity of forms, functions and structural relations of money, on the one hand, and the highly simplified environments simulated in the models, on the other. For instance, some basic models start by assuming that goods are indivisible, trade in the ratio one to one and each individual holds either zero or one ‘unit’ of money. Among others, this excludes all questions about the value of money (cf. Nosal and Rocheteau 2011). Subsequent models relaxing these extreme assumptions quickly accumulate a complexity hard to handle (Nosal and Rocheteau 2011, p. 9), being, nevertheless, themselves still far from capturing all the major contingencies of monetary transactions. Yet, as reduced as these mathematical models might appear, they result from our very efforts to handle this complexity. Less formalized or fully verbal approaches are not per se better suited for this purpose. Even if breaking the chains of mathematical methods does indeed allow for a broader view of the picture, it bears the disadvantage that unavoidable assumptions are often implicit and hidden. Furthermore, the limitations of the foundations on which the neutrality paradigm emerged do not automatically provide any substance to claims for a growth imperative. Even if money is non-neutral in the long run, this

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 347

01/06/2017 16:51

348  Handbook on growth and sustainability does not necessarily imply a position anywhere near to a growth imperative. It is crucial to acknowledge the difference between (1) stating that the current configuration of monetary institutions contributes to growth and (2) claiming that inherent, unidirectional causal relations have been identified. While 1 might draw on broad theoretical and empirical support, the same cannot be said for 2. The complexity of money entails that related theories inevitably exhibit features of narratives and myths. While the term myth is often used pejoratively, and entertaining myths may arguably lead to parochialism, they may as well contribute to new theoretical insights by pointing out blind spots and thus inciting new research programmes (Holling et al. 2002). Irrespective of a theory’s position within or outside the dominant narrative, all approaches must reflect their critical paradigmatic assumptions more rigorously so as to account for the diversity and contingency of money. Also, each founding narrative must strive to formulate concise empirical hypotheses, which poses no minor challenge considering the polymorphism of money. Otherwise, it risks inhibiting rather than advancing the understanding of the complex relationship between monetary variables and economic growth. In the end, the social nature of money implies that the one theory, which explains all of money’s aspects including its effects on economic growth, may be elusive: ‘money has no essence. It is not “really” anything; therefore, its nature has always been and presumably always will be a matter of political contention’ (Graeber 2012, p. 372). In line with this reasoning, Davies’s (2002) ‘metatheory of money’ argues against the urge to choose between contradictory theories of money and Dodd (2014) expects a ‘pluralistic monetary future’. Against this background, it would appear that the impact of monetary variables on growth constitutes an equally open matter. 6.2  Practical Consequences for Sustainability Given the substantial uncertainty (carefully spoken) regarding a monetary growth imperative, what practical lessons can be drawn? Even if one would be inclined to ‘abolish’ money and interest, so as to eliminate the residual risk of monetary growth imperatives, such efforts are, most likely, futile anyway: ‘a complex industrialized society, even with a dramatically reduced material throughput, will find it impossible to function without some form of money’ (Kallis et al. 2013, p. 101). Again, consider the wide variety of cultural forms in which money and interest have appeared. For instance, money as a medium of exchange has been used ‘in Egypt, Mesopotamia, America, India, and China before town civilizations

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 348

01/06/2017 16:51

Is there a monetary growth imperative?  ­349 ­ eveloped’ (Homer and Sylla 2005, p. 20). The same adamant presence d applies to interest, which is demonstrated by its common presence even in those medieval times where interest taking was banned by the Catholic Church as ‘usury’ (Davies 2002). In consequence, the transition to a sustainable post-growth economy implies, if at all, a transformation rather than the abolition of monetary and financial institutions. The latter may, in principle be beneficial from a sustainability perspective. For example, while financial markets have seen their well-deserved share of bad press, their two original main functions, that is, providing insurance against risks and facilitating intertemporal consumption transfers, may facilitate intraand intergenerational justice. So the task would be to create a culture that restricts money, finance and interest to their appropriate roles. Recently, two proposals have surged as possible solutions within the degrowth community: communal currencies and 100 per cent money. It seems ironic, however, that the degrowthists popularize concepts which have originally been suggested as ways towards fostering growth. Consider, first, the calls for communal or regional currencies (for example, Greco 2001; Boyle and Simms 2009; Kallis et al. 2012; Seyfang and Longhurst 2013). Prominent real-world examples such as that in Wörgl (Austria) in the 1930s were actually successful means to re-launch regional growth in the Great Recession. Also, many such proposals are implicitly or explicitly inspired by the work of Silvio Gesell, whose original ideas were also meant to foster economic activity by increasing the velocity of money (Gesell 1916 [1958]). Nonetheless, as Loehr’s (2012) support demonstrates, Gesell’s ideas to eliminate conventional interest rates are currently in vogue. The ample examples of community currencies worldwide prove that there is some potential for a diversity of ‘customized money’ (see Douthwaite 1999). Secondly, 100 per cent money (that is, banks are not allowed to create new money out of the void, they can only lend out previously attracted savings5) was originally proposed and supported by neoclassical economists such as Irving Fisher (1935) and Milton Friedman (1959). Current cleavages do not sort along the mainstream–heterodox divide: in both camps, there are supporters as well as opponents. Dittmer (2015) provides an enlightening overview on common arguments in favour and against 100 per cent money. Arguably, the search for post-growth compatible monetary regimes and financial institutions is just beginning. Even in the absence of a monetary growth imperative, financial structures might still constitute an effective steering tool to regulate growth, as restrictions to use money and credit for exchanging goods will undoubtedly slow down the economy (even though unregulated substitutes might emerge). However, such a naïve, because undifferentiated, degrowth strategy is doomed to produce massive

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 349

01/06/2017 16:51

350  Handbook on growth and sustainability economic disruptions and social dislocations (Tokic 2012). Rather, a sectoral approach, restricting resource-intensive activities while simultaneously allowing for ecologically beneficial growth, for example, in terms of increasing resource efficiency, is needed (van den Bergh 2011). Innovations, both social and technological, might, in principle, contribute to the desired transition. For instance, the ‘new technologies of peer-to-peer economic activity are potentially powerful tools for building a social movement of sharing and cooperation’ – keeping in mind that ‘technologies are only as good as the political and social context in which they are employed’ (Schor 2014): whether money’s dominating function in mediating exchange would emerge strengthened or weakened is not predetermined. Likewise, electronic currencies may either induce speculative bubbles or simplify complex economic calculations (Shiller 2014). Interestingly, a growth imperative is mostly posited in the context of money, as if there were no others. We may well wonder, however, why other ‘growth drivers’ are not considered ‘imperatives’ (cf. Sorrell 2010). Are cultural factors, such as conspicuous consumption and positional competition (Veblen 1899; Hirsch 1976), not forcing the economy to grow? What about institutional factors, such as growth-oriented social security systems (Feldstein and Liebman 2002), or political-economic factors, such as the tendency to solve distributional conflicts via growth instead of controversial redistribution, an approach sometimes called ‘trickledown economics’ (Stiglitz 2007)? There seems to be no coherent reason to deny these the status of growth imperatives, as they are deeply embedded ‘mechanisms’ in the current structure of socio-economic systems, which, within this structure at least, appear unavoidable. Assuming that monetary aspects are only one among a number of growth drivers and imperatives, the question becomes one of prioritization. Binswanger (2012), for instance, contends that institutional drivers, such as growth-oriented social security systems, are by far easier to overcome than monetary drivers. Yet this is debatable at the very least. As we have been at pains to point out, money and interest are social institutions and, as such, amenable to change. Where and how to best trigger cultural change is, of course, another story.

ACKNOWLEDGEMENTS The authors acknowledge useful comments from Louison Cahen-Fourot, participants in the Economics Colloquium at the Helmholtz-Centre for Environmental Research on 10 February 2015. The usual disclaimer applies.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 350

01/06/2017 16:51

Is there a monetary growth imperative?  ­351

NOTES 1. More technically, neutrality of money is defined as follows: a one-time change in money supply does not alter the real variables of an economy and only affects the price level. In its strongest version, in what is also called the ‘classical dichotomy’, neutrality of money implies a complete separation of nominal and real variables. It is, however, a unidirectional dichotomy: neutrality of money does not rule out the possibility that real variables affect nominal variables. 2. Davidson (2005, p. 393) would like to ‘limit the term Post-Keynesian to those who adopt the analytical framework of Keynes’s general theory principle of effective demand as the basis of further theoretical development’. 3. Ironically, even though Binswanger’s starting point is a critique of neoclassical economics for using money-less models of the economy and although he claims that his model shows why money is important, this is not necessarily the case. In fact, in the simple one production facility – one household model, there is no need for money at all, as the provision of factors of production in advance could well be based on a contract, in which the later supply of produced goods would be guaranteed. We are thankful to Christian Klassert for pointing this out to us. 4. A formal model showing the workings of the ‘growth spiral’ can be found in a recent publication of Binswanger’s son (Binswanger 2009, p. 724): ‘A continuous credit expansion enables a continuous increase in aggregate spending, which in turn results in profits and, as long as firms operate successfully, continuous growth.’ 5. This is how the monetary system is modelled in many basic economic models, which are based on the assumption that investment (must) equal savings (I 5 S). The current monetary system has little in common with that (McLeay et al. 2014).

REFERENCES Aghion, P. and P. Howitt (2009), The Economics of Growth, Cambridge, MA: MIT Press. Aghion, P., P. Howitt and D. Mayer-Foulkes (2005), ‘The effect of financial development  on convergence: theory and evidence’, Quarterly Journal of Economics, 120 (1), 173–222. Akerlof, G.A. and R.J. Shiller (2009), Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, Princeton, NJ: Princeton University Press. Amit, R., K.R. MacCrimmon, C. Zietsma and J.M. Oesch (2001), ‘Does money matter? Wealth attainment as the motive for initiating growth-oriented technology ventures’, Journal of Business Venturing, 16 (2), 119–43. Arestis, P. and M.C. Sawyer (eds) (2006), A Handbook of Alternative Monetary Economics, Cheltenham, UK, and Northampton, MA, USA: Edward Elgar. Banerjee, A.V. and E.S. Maskin (1996), ‘A Walrasian theory of money and barter’, Quarterly Journal of Economics, 111 (4), 955–1005. Barro, R.J. (1997), Macroeconomics, 5th edn, Cambridge, MA: MIT Press. Barro, R.J. and X. Sala-i-Martin (2004), Economic Growth, 2nd edn, Cambridge, MA: MIT Press. Baumol, W.J. (1952), ‘The transactions demand for cash: an inventory theoretic approach’, Quarterly Journal of Economics, 66 (4), 545–56. Beck, R., G. Georgiadis and R. Straub (2014), ‘The finance and growth nexus revisited’, Economic Letters, 124 (3), 382–5. Berk, J.B. and P.M. DeMarzo (2014), Corporate Finance, 3rd edn, Boston, MA: Pearson. Binswanger, M. (2009), ‘Is there a growth imperative in capitalist economies? A circular flow perspective’, Journal of Post Keynesian Economics, 31 (4), 707–27.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 351

01/06/2017 16:51

352  Handbook on growth and sustainability Binswanger, H.C. (2012), The Growth Spiral: Money, Energy, and Imagination in the Dynamics of the Market Process, Berlin and Heidelberg: Springer. Boyle, D. and A. Simms (2009), The New Economics: A Bigger Picture, London and Sterling, VA: Earthscan. Cahen-Fourot, L. and M. Lavoie (2016), ‘Ecological monetary economics: a post-Keynesian critique’, Ecological Economics, 126 (C), 163–8. Callon, M. (1998), ‘Introduction. The embeddedness of economic markets in economies’, in M. Callon (ed,) The Laws of the Markets, Sociological Review Monograph Series, Oxford: Blackwell Publishers and Malden, MA: Sociological Review, pp. 1–57. Chirinko, R.S., S.M. Fazzari and A.P. Meyer (1999), ‘How responsive is business capital formation to its user cost? An exploration with micro data’, Journal of Public Economics, 74 (1), 53–80. Daly, H.E. (1996), Beyond Growth: The Economics of Sustainable Development, Boston, MA: Beacon Press. Daly, H.E. (2008), ‘A steady-state economy’, Sustainable Development Commission (SDC) Reports & Papers, Sustainable Development Commission, London. Davidson, P. (1972), ‘Money and the real world’, Economic Journal, 82 (325), 101–15, doi:10.2307/2230209. Davidson, P. (2002), Financial Markets, Money, and the Real World, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Davidson, P. (2005), ‘Responses to Lavoie, King, and Dow on what post Keynesianism  is  and  who is a post Keynesian’, Journal of Post Keynesian Economics, 27 (3), 393–408. Davies, G. (2002), A History of Money: From Ancient Times to the Present Day, Cardiff: University of Wales Press. Dittmer, K. (2013), ‘Local currencies for purposive degrowth? A quality check of some ­proposals for changing money-as-usual’, Journal of Cleaner Production, 54 (September), 3–13. Dittmer, K. (2015), ‘100 percent reserve banking: a critical review of green perspectives’, Ecological Economics, 109 (C), 9–16. Dodd, N. (2014), The Social Life of Money, Princeton, NJ: Princeton University Press. Doepke, M. and M. Schneider (2013), ‘Money as a unit of account’, NBER Working Paper No. 19537, National Bureau of Economic Research, Cambridge, MA. Douthwaite, R. (2012), ‘Degrowth and the supply of money in an energy-scarce world’, Ecological Economics, 84 (C), 187–93. Douthwaite, R. (1999), The Ecology of Money, Bristol: Green Books. Dow, S.C. (2006), ‘Endogenous money: structuralist’, in P. Arestis and M.C. Sawyer (eds), A Handbook of Alternative Monetary Economics, Cheltenham, UK ; Northampton, MA, USA: Edward Elgar, pp. 35–51. Elster, J. (1989), Nuts and Bolts for the Social Sciences, Cambridge and New York: Cambridge University Press. Feldstein, M. and J.B. Liebman (2002), ‘Social security’, in A.J. Auerbach and M. Feldstein (eds), Handbook of Public Economics, Amsterdam and New York: North-Holland, pp. 2245–324. Fisher, I. (1935), 100% Money, New York: Adelphi. Fontana, G. and M. Sawyer (2015), ‘Towards post-Keynesian ecological macroeconomics’, Ecological Economics, 121 (January), 186–95. Friedman, B.M. and M. Woodford (eds) (2011), Handbook of Monetary Economics, Amsterdam and New York: North-Holland. Friedman, M. (1959), A Program for Monetary Stability, New York: Fordham University Press. Gesell, S. (1916), Die natürliche Wirtschaftsordnung, 9. Auflage, 1949. ed. R. Zitzmann Verlag, Lauf bei Nürnberg; English translation P. Pye (1958), The Natural Economic Order, revd edn, London: Peter Owen. Graeber, D. (2012), Debt: The First 5,000 Years, New York: Melville House.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 352

01/06/2017 16:51

Is there a monetary growth imperative?  ­353 Greco, T.H. (2001), Money: Understanding and Creating Alternatives to Legal Tender, White River Junction, VT: Chelsea Green. Heinsohn, G. and O. Steiger (1996), Eigentum, Zins und Geld: Ungelöste Rätsel der Wirtschaftswissenschaft (Property, Interest and Money: Unsolved Mysteries of Economics), Reinbek bei Hamburg: Rowohlt. Heinsohn, G. and O. Steiger (2013), Ownership Economics: On the Foundations of Interest, Money, Markets, Business Cycles and Economic Development, New York: Routledge. Hirsch, F. (1976), Social Limits to Growth, New York: ToExcel. Hixson, W.F. (1991), A Matter of Interest: Reexamining Money, Debt, and Real Economic Growth, New York: Praeger. Holling, C.S., L.H. Gunderson and D. Ludwig (2002), ‘In quest of a theory of adaptive change’, in L.H. Gunderson and C.S. Holling (eds), Panarchy: Understanding Transformations in Human and Natural Systems, Washington, DC: Island Press, pp. 3–22. Homer, S. and R.E. Sylla (2005), A History of Interest Rates, 4th edn, Hoboken, NJ: Wiley. Howells, P. (2006), ‘The endogeneity of money: empirical evidence’, in P. Arestis and M.C. Sawyer (eds), A Handbook of Alternative Monetary Economics, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 52–68. Huth, T. (2002), ‘Zins und Wachstum’ (‘Interest and growth’), Zeitschrift für Sozialökonomie (Journal of Social Economics), 39, 7–13. Jackson, T. and P.A. Victor (2015), ‘Credit creation and the “growth imperative” – a quasistationary economy with debt-based money’, PASSAGE Working Paper No. 15/01, University of Surrey, Guildford. Jones, R.A. (1976), ‘The origin and development of media of exchange’, Journal of Political Economy, 84 (4), 757–76. Kallis, G., E. Gómez-Baggethun and C. Zografos (2013), ‘To value or not to value? That is not the question’, Ecological Economics, 94 (C), 97–105. Kallis, G., C. Kerschner and J. Martínez-Alier (2012), ‘The economics of degrowth’, Ecological Economics, 84 (December), 172–80. Kennedy, M.I. (2012), Occupy Money: Creating an Economy Where Everybody Wins, Gabriola Island, BC: New Society. Keynes, J.M. (1936), The General Theory of Employment, Interest and Money, Cambridge: Cambridge University Press. Keynes, J.M. (1930), ‘Economic possibilities for our grandchildren’, in J.M. Keynes, Essays in Persuasion, New York: W.W. Norton, pp. 358–73. King, J.E. (2002), A History of Post Keynesian Economics since 1936, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Kiyotaki, N. and R. Wright (1989), ‘On money as a medium of exchange’, Journal of Political Economy, 97 (4), 927–54. Kocherlakota, N.R. (1998), ‘Money is memory’, Journal of Economic Theory, 81 (2), 232–51. Kuzminski, A. (2013), The Ecology of Money: Debt, Growth, and Sustainability, Lanham, MD: Lexington Books. Lavoie, M. (1984), ‘The endogenous flow of credit and the post Keynesian theory of money’, Journal of Economic Issues, 18 (3), 771–97. Lavoie, M. (2005), ‘Changing definitions: a comment on Davidson’s critique of King’s history of post Keynesianism’, Journal of Post Keynesian Eocnomics, 27 (3), 371–6. Lavoie, M. (2014), Post-Keynesian Economics: New Foundations, Cheltenham, UK, and Northampton, MA, USA: Edward Elgar. Leary, M.T. and M.R. Roberts (2010), ‘The pecking order, debt capacity, and information asymmetry’, Journal of Financial Economics, 95 (3), 332–55. Lee, F. (2009), A History of Heterodox Economics: Challenging the Mainstream in the Twentieth Century, London: Routledge. Levine, R. (2005), ‘Finance and growth: theory and evidence’, in P. Aghion and S.N. Durlauf (eds), Handbook of Economic Growth, vol. 1A, Boston, MA: Elsevier, pp. 865–934.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 353

01/06/2017 16:51

354  Handbook on growth and sustainability Lietaer, B., C. Arnsperger and S. Goerner (2012), Money and Sustainability: The Missing Link, Axminster: Triarchy Press. Lindgren, H.C. (1991), The Psychology of Money, Malabar, FL: Krieger. Loehr, D. (2012), ‘The euthanasia of the rentier – a way toward a steady-state economy?’, Ecological Economics, 84 (December), 232–9. Luo, G.Y. (1998), ‘The evolution of money as a medium of exchange’, Journal of Economic Dynamics and Control, 23 (3), 415–58. Lux, K. (2003), ‘The failure of the profit motive’, Ecological Economics, 44 (1), 1–9. Malik, F. (1998), ‘Verschuldung und Wachstumszwang’ (‘Debt and growth imperative’), in H.C. Binswanger and P. Von Flotow (eds), Geld Und Wachstum: Zur Philosophie Und Praxis Des Geldes (Money and Growth: On the Philosophy and Practice of Money), Stuttgart: Weitbrecht, pp. 125–33. Mankiw, N.G. (2009), Principles of Economics, 5th edn, Mason, OH: South-Western Cengage Learning. Martínez-Alier, J., U. Pascual, F.-D. Vivien and E. Zaccai (2010) ‘Sustainable de-growth: mapping the context, criticisms and future prospects of an emergent paradigm’, Ecological Economics, 69 (9), 1741–7. McLeay, M., A. Radia and R. Thomas (2014), ‘Money creation in the modern economy’, Bank of England Quarterly Bulletin, 54 (1), 14–27. Moore, B.J. (1988), Horizontalists and Verticalists: The Macroeconomics of Credit Money, Cambridge and New York: Cambridge University Press. Moore, B.J. (2006), Shaking the Invisible Hand: Complexity, Endogenous Money, and Exogenous Interest Rates, New York: Palgrave Macmillan. Musgrave, A. (1981), ‘“Unreal assumptions” in economic theory: the F-twist untwisted’, Kyklos International Review for the Social Sciences, 34 (3), 377–87. Nosal, E. and G. Rocheteau (2011), Money, Payments, and Liquidity, Cambridge, MA: MIT Press. Orphanides, A. and R. Solow (1990), ‘Money, inflation and growth’, in B.M. Friedman and F.H. Hahn (eds), Handbook of Monetary Economics, Amsterdam and New York: North Holland, pp. 223–61. Oxford Thesaurus (1991), The Oxford Thesaurus: An A–Z Dictionary of Synonyms, Oxford: Clarendon Press. Phelps, E. (1961), ‘The golden rule of accumulation: a fable for growthmen’, American Economic Review, 51 (4), 638–43. Polanyi, K. (1944), The Great Transformation: The Political and Economic Origins of Our Time, 2nd edn (2001), Boston, MA: Beacon Press. Pratchett, T. (2008), Making Money, London: Corgi. Reiss, J. (2013), Philosophy of Economics: A Contemporary Introduction, New York: Routledge. Richters, C. and A. Simoneit (2017), ‘Consistency and stability analysis of models of a monetary growth imperative’, Ecological Economics, 136 114–25. Romer, D. (2000), ‘Keynesian macroeconomics without the LM curve’, NBER Working Paper No. 7461, National Bureau of Economic Research, Cambridge, MA. Romer, P.M. (1990), ‘Endogenous technological change’, Journal of Political Economy, 98 (5), S71–S102. Samuelson, P.A. (1958), ‘An exact consumption-loan model of interest with or without the social contrivance of money’, Journal of Political Economy, 66 (6), 467–82. Samuelson, P.A. and W.D. Nordhaus (2010), Economics, 19th revd edn, Boston, MA: McGraw-Hill Irwin. Schor, J. (2014), ‘Debating the sharing economy’, Resilience, accessed 17 March 2015 at http://www.resilience.org/stories/2014-11-25/debating-the-sharing-economy. Seyfang, G. and N. Longhurst (2013), ‘Growing green money? Mapping community currencies for sustainable development’, Ecological Economics, 86 (February), 65–77. Shafir, E., P. Diamond and A. Tversky (1997), ‘Money illusion’, Quarterly Journal of Economics, 112 (2), 341–74.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 354

01/06/2017 16:51

Is there a monetary growth imperative?  ­355 Shiller, R.J. (2014), ‘In search of a stable electronic currency’, New York Times, 1 March. Smithin, J. (2006), ‘The theory of interest rates’, in P. Arestis and M.C. Sawyer (eds), A Handbook of Alternative Monetary Economics, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 273–90. Soddy, F. (1934), The Role of Money: What It Should Be, Contrasted with What It Has Become, London: George Routledge and Sons. Sorrell, S. (2010), ‘Energy, economic growth and environmental sustainability: five propositions’, Sustainability, 2 (6), 1784–809. Stiglitz, J.E. (2007), Making Globalization Work, New York: W.W. Norton. Taleb, N.N. (2010), The Black Swan: The Impact of the Highly Improbable, 2nd edn, New York: Random House Trade Paperbacks. Tobin, J. (1956), ‘The interest-elasticity of transactions demand for cash’, Review of Economics and Statistics, 38 (3), 241–7. Tokic, D. (2012), ‘The economic and financial dimensions of degrowth’, Ecological Economics, 84 (December), 49–56. Tyszka, T., J. Cieślik, A. Domurat and A. Macko (2011), ‘Motivation, self-efficacy, and risk attitudes among entrepreneurs during transition to a market economy’, Journal of SocioEconomics, 40 (2), 124–31. Van den Bergh, J.C.J.M. (2011), ‘Environment versus growth – a criticism of “degrowth” and a plea for “a-growth”’, Ecological Economics, 70 (5), 881–90. Veblen, T. (1899), The Theory of the Leisure Class, New York: Macmillan. Wenzlaff, F., C. Kimmich and O. Richters (2014), ‘Theoretische Zugänge eines Wachstumszwangs in der Geldwirtschaft’ (‘Theoretical approaches of a growth imperative in a monetary economy’), discussion paper, Zentrum für Ökonomische und Soziologische Studien, Hamburg. Williamson, S. and R. Wright (2011), ‘New monetarist economics’, in B.M. Friedman and M. Woodford (eds), Handbook of Monetary Economics, Amsterdam and New York: North-Holland, pp. 25–96.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 355

01/06/2017 16:51

16  Thomas Piketty, growth, distribution and the environment Steven Pressman and Robert H. Scott, III

INTRODUCTION Perhaps the simplest summary of Thomas Piketty’s (2014) Capital in the Twenty-First Century is the famous “fundamental inequality”, r > g. This equation explains how and why income inequality and wealth inequality will rise. It also has important economic implications because of the conflict between distributional issues and ecological issues that are contained r > g. But before getting to this, we begin with a brief summary of Piketty’s fundamental inequality and how it is related to distributional issues.

PIKETTY’S INEQUALITY: r > g The variable r represents the rate of return on wealth holdings. Wealth is important according to Piketty (2014, p. 113) because it produces rents. The term “rentier” literally means someone who collects fees from tenants. Originally it referred to people who inherited land and then lived off the proceeds obtained from owning that land. Today most rentiers do not own land; instead they own lots of shares of stock, as well as large quantities of government and corporate bonds. They are coupon clippers who collect interest on bonds (which used to have coupons that required clipping in order to receive interest payments); they are trust babies who live on returns from their inheritance. Rentiers can live comfortably on the returns on their wealth and so do not have to work for someone else. In contrast, most people have at best several months of savings to cushion them in case of emergency; they work because they need to put food on the table and survive. Piketty’s r is the average return to stocks, bonds, savings accounts, real estate and other assets. Not all wealth, and not everyone’s wealth, grows by r. Piketty (2014, p. 448) presents data from US college endowments showing that larger wealth holdings tend to earn higher rates of return. He also argues that the wealth of those on the Fortune 500 list of the richest people in the world have seen their wealth grow by more than average. 356 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 356

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­357 In addition, riskier assets (such as stocks) tend to receive higher returns than less risky assets (such as corporate bonds and real estate), which in turn earn higher returns than virtually riskless assets (government bonds and insured bank deposits). Similarly, wealth does not grow by r in every single year. Rather, r is how much wealth grows each year on average over relatively long periods of time. The second variable, g, represents the economic growth rate, or the annual increase in gross domestic product (GDP). It is also the average increase in incomes throughout the economy since these are essentially two sides of the same coin – the value of output sold must equal the value of income because all the money obtained from selling something is someone’s income. Revenue going to the firm from selling something that is not paid to workers becomes the profit of the business firm and the income of their owners. Again, not everyone’s income will rise by this amount; g is the average growth rate of income for the whole economy. Some people will see their income grow by a lot more than g; for others, income will grow by something close to g; and for yet others, income will fall. The main thesis of Capital in the Twenty-First Century is that i­ nequality increases under capitalism because r tends to exceed g. Historical data, which Piketty and his colleagues have compiled from national tax data, shows that r has averaged around 5 percent over long periods of time. In contrast, g has averaged around 2 percent and Piketty fears that it will decline in the future. A concrete example can help make clear the ­importance of r > g when it comes to the distribution of income and wealth. Suppose you receive an inheritance (your wealth) of $100 000 from your parents; you also make $100 000 a year. Potentially, you can consume your wage income and all your wealth this year. To keep things simple, we assume no consumption out of wealth (or from the returns to wealth), and that your wealth and your income both grow at the average rate of 1 percent every year. If you spend your entire labor income, your wealth and your labor income will grow in tandem over time. After 35 years, your assets will be worth $140 000 and you will make $140 000 through your work. Now consider what happens when your wealth grows at a rate of 5 percent per year instead of 1 percent. After 35 years, a typical working life, your labor income still increases to $140 000 but your wealth increases to well over $500 000. With a 5 percent return on this money, you can consume more than $25 000 in goods and services per year in addition to what is possible through your wages. Your standard of living can increase by nearly 20 percent and your wealth remains intact. After several generations, or 100 years, this divergence becomes much

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 357

01/06/2017 16:51

358  Handbook on growth and sustainability greater. Your great grandchild (assuming continuous 1 percent wage growth) would make $268 000, but would have $12.5 million in assets. With a 5 percent rate of return, their income from wealth would exceed $600 000; it would dwarf their labor income. Your great-grandchild would not have to work. He or she would care much less about their labor income than you care about your wages. You have to survive on your labor income and preserve your wealth for retirement (and leave something to your heirs); they would not need to worry about any of this. This scenario describes what happens in capitalist economies according to Piketty – barring exceptional circumstances. Some people begin with wealth and others do not. Those with wealth thrive because they receive high returns to wealth. They will be able to live well off the annual returns on their wealth. In contrast, those without wealth must save substantial fractions of their income to generate wealth and catch up to those who have wealth. The power of compounding entails that inequality will rise due to r > g. Because wealth is distributed more unequally than income, those with wealth see their wealth grow by more than incomes grow (on average) throughout the economy. The faster wealth grows relative to the growth of income, or the greater the difference between r and g, the greater the increase in inequality. With a large difference, those with wealth come to dominate society after several generations. The inequality r > g does not mean that wealth inequality is inevitable. There are a few additional factors that will also affect our results. Some wealth may be used for consumption and some returns to wealth may have to be paid to the government in the form of taxes. In addition, because the return to wealth is an average for all households, some families will experience negative growth rates and wealth will be lost. Finally, wealth can become diluted because the family has a large number of children. To see this, we expand our simple numerical example from above and focus on just two of the possible countervailing forces. We let t be the tax on returns to wealth and let c be the marginal propensity to consume from returns to wealth. If r 5 5 percent and c 5 0.25 and t 5 0.2, then 1 percentage point of the return to wealth goes to pay taxes (20 percent of the entire 5 percent return) and another 1 percentage point of my return supports my annual consumption (25 percent of the after-tax return of 4 percent). This still leaves a gain of 3 percent, compared with an average income gain of 1 percent. Wealth still grows faster than output and income; so the ratio of wealth to income will rise. Returning to your great grandchild, of their $600 000 income (the 5 percent return to their wealth), $120 000 gets paid in taxes to the government and $120 000 is used for annual consumption. The remaining $360 000 is the annual addition to wealth, or 3 percent of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 358

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­359 the $12.5 million in assets they own. Next year their wealth is $12.9 million. This slows down the process of rising inequality but does not end it. Besides providing a cushion against adversity, national wealth and its annual return determines how income gets divided up between labor income and non-labor income. If wealth is seven times GDP and earns a 5 percent return, owners of wealth receive 35 percent of the national income. The remaining 65 percent goes to people who work; it is their labor income. In contrast, if wealth is only four times GDP, a 5 percent return to wealth gives rentiers only 20 percent of GDP, with the other 80 percent of national income going to wages. On the other hand, if wealth grows and becomes ten times GDP (1000 percent wealth-to-income ratio), rentiers would collect half of national income, with the other half going to labor. Rentiers and workers, of course, are not entirely separate and distinct groups. Some rentiers do work. The problem for Piketty is that most rentiers do not have to work and are not likely to work. Even if they do work, their children and grandchildren will not have to work and are not likely to work. In effect, we may lose the efforts of some talented individuals because they have no financial incentive to work. Piketty notes that the importance of having considerable wealth, or being a rentier, was clear to everyone at the beginning of the nineteenth century when there was virtually no middle class. Those with a good deal of wealth lived extremely well; those lacking wealth had to work hard their entire lives, and their standard of living was not nearly as great as that of rentiers. His book raises concerns that we are moving back to such an era.

THE WEALTH-TO-INCOME RATIO AND PIKETTY’S SECOND LAW As noted in the previous section, what happens to inequality depends on the wealth-to-income ratio. Hence, we need to know what determines its value and what happens to this ratio over time. Piketty (2014, p. 166) answers this question with a single equation, which he deems a “law” of economics: b 5 s/g. It is one of two laws that he sets forth in his book. Beta (b) is the long-run ratio of wealth to income. The value of b, the equation contends, depends on two things – the savings rate (s) and the economic growth rate (g). Savings is how much gets added to our wealth each year from current income, which includes both labor income and the returns to wealth or non-labor income. The savings rate measures the extent to which wealth grows; wealth grows based upon how much savings takes place. If nothing gets saved, wealth does not grow. In this case, all the annual returns to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 359

01/06/2017 16:51

360  Handbook on growth and sustainability wealth get consumed and there will be no additions to wealth during the year. Over time, if s equals zero and wealth never grows, as the economy grows, the denominator of the b equation gets bigger and bigger and the ratio of wealth to income approaches zero. On the other hand, a large savings rate will increase wealth and increase b. Wealth will grow rapidly each year as most of the returns to wealth get saved and returns to wealth will then come to dominate income from work as a means of support and sustenance for the few people who possess a great deal of wealth (as shown in our example in the previous section).1 Piketty (2014, p. 166) contends that b determines the long-run wealth/ output ratio: “if a country saves 12 percent of its national income every year, and the rate of growth of its national income is 2 percent per year, then in the long run the capital/output ratio will be equal to 600%: the country will have accumulated capital worth six years of national income”. A simple numerical example can make this point in concrete terms. We extend our example above (without the extraneous zeros, so all figures for wealth and income are in the thousands of dollars). If s 5 12 percent, g 5 2 percent, wealth 5 100 and income 5 100, wealth grows by 12 percent of income, or 12, pushing up wealth/income ratio to 1.1 after one year (it equals 112/102). If this continues over time, the ratio will continue to grow until it eventually reaches 6. At this point it remains constant. Once wealth reaches 6000 and income 1000, if wealth grows by 12 percent of income (or 120), and income grows by 2 percent (or 20), our wealth/income ratio becomes 6120/1020, which also equals 6; and it will remain 6 as long as s and g do not change. This is important because b determines the share of output going to workers and the share going to wealth owners. Moreover, because wealth is distributed much more unequally than income, a high value for b means that the annual gains from owning wealth go mainly to the very wealthy, and income inequality worsens. Things begin to look bad for future income inequality if savings rates far exceed economic growth rates. This leads to our next important question.

GROWTH AND DISTRIBUTION: THE IMPLICATIONS OF PIKETTY’S SECOND LAW One consequence of this analysis is that we run into distributional problems as g falls, assuming that r remains constant. Remember, Piketty has estimated r to be constant at around 5 percent over long periods of time and assumes that it will remain at this level even if growth declines towards zero. As a result, if g falls from 2 percent to 1 percent, as Piketty predicts,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 360

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­361 Table 16.1  Growth rates in rich countries, 1970–2010 (percentage) Country US Japan Germany France UK Italy Canada Australia

Growth Rate of Growth Rate Growth Rate of Per Private National Income of Population Capita National Income Saving 2.8 2.5 2.0 2.2 2.2 1.9 2.8 3.2

1.0 0.5 0.2 0.5 0.3 0.3 1.1 1.4

1.8 2.0 1.8 1.7 1.9 1.6 1.7 1.7

7.7 14.6 12.2 11.1 7.3 15.0 12.1 9.9

the long-run wealth-to-GDP ratio (b) will double from 6 to 12. If g falls to 0.5 percent, it doubles once again to 24. It goes to infinity if there is no economic growth at all. In this case, all the output produced in any given year will go to the very wealthiest of households, those owning the majority of national wealth. The large majority of the population will receive no income from work or from market activity, and most people will have little or no returns from wealth to live on during the year since, except for the top few percent of wealth holders, most people have little wealth. The only way that average people will be able to survive is through charity from the wealthiest families or if the government imposes taxes on the very wealthiest and then provides some form of income to everyone else through various government redistributive programs. Figure 5.1 of Capital in the Twenty-First Century (see Table 16.1) presents historical data on growth for eight developed nations over the 40-year period from 1970 to 2010. Growth rates tend to be a little bit greater than 2 percent. Savings rates tend to be a little greater than 10 percent. This implies a capital/output ratio of around 500 percent, a figure close to current and historical levels, according to Piketty (2014, chs 3 and 4). Piketty thinks this 500 percent figure is low compared to what we can expect in the twenty-first century because he forecasts future growth rates to lie between 1 percent and 1.5 percent. Also, he leans towards the lower end of this range, mainly because in the long run g depends mainly on two things – population growth and productivity growth. Population growth and labor force participation have both been slowing over time; Piketty thinks population growth will continue to slow and approach zero, but that productivity growth will continue to grow at around 1 percent per annum, resulting in 1 percent economic growth.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 361

01/06/2017 16:51

362  Handbook on growth and sustainability This claim receives some outside empirical support from the European Commission (2013), which forecasts economic growth in the Eurozone at only 1 percent over the next decade or so. It also receives support from what we know about the determinants of economic growth. Most developed nations are experiencing something close to zero population growth; a few (such as Italy and Japan) are facing population decline. Around three-quarters of a century ago, John Maynard Keynes (1937 [1973]) noted that countries with a declining population are likely to experience declining economic growth also. With 1 percent growth rates and 10 percent savings rates, wealth-toGDP ratios should stabilize at around 1000 percent. If this comes to pass, with the return to wealth averaging 5 percent, wealth holders will receive one-half of all national output as its income. Labor’s share of income will fall to 50 percent. To put this into a rather broad historical context, labor has received around two-thirds of total income for long periods of time in the US, stretching back to the early twentieth century. If economic growth falls from 2 percent to 1 percent, and the rate of return to capital remains at 5 percent, around 15 percent of national output will get transferred from workers to rentiers. This is Piketty’s main concern – that g will fall to 1 percent, pushing up b, and transferring more wealth and income to rentiers. However, if s falls when g falls, this will mitigate his results somewhat; still, it does not invalidate them. Piketty’s conclusion continues to hold because s will not likely fall as fast as g. Even if g approaches 0, it is unlikely that s will fall to zero; rather, something will be saved. The savings rate will be positive; it will probably even remain fairly high, especially relative to g. People need to save for future uncertainties and for retirement. Savings also generates wealth, which brings with it political power and other benefits besides economic security. If the returns on this wealth (r) remain positive and do not approach zero as g approaches zero, it will still hold that r > g, pushing up inequality as Piketty argues. This brings us to the consequences of Piketty for ecological e­ conomics, something that few commentators on Capital in the Twenty-First Century have discussed. As Jamie Morgan (2015, p. 820) notes, Piketty (2014, p. 95) only once mentions potential ecological problems stemming from too rapid economic growth. However, ecological issues may result in worse distributional consequences than even Piketty himself projects. If g needs to fall to zero, or even close to zero, in order to save the planet (Victor 2008; Jackson 2009; Jackson and Victor 2016), b gets very large and begins to approach infinity. As this happens, more and more annual income takes the form of returns to wealth, r, and inequality soars. Things may turn out to be a great deal worse than this. Worsening income

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 362

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­363 and wealth inequality will tend to raise the savings rate, further supporting the outcome predicted by Piketty. A good deal of economic research has examined the actual propensity to consume out of wealth. This research concludes that an increase in wealth of $1 on average will result in 5 cents additional consumption (Poterba 2000; Starr-McCluer 2002). The rest tends to be saved and added to wealth. Concretely, this means that few of the gains from wealth, or very little of the 5 percent return, will go to additional spending. A very large part of the income from owning wealth will get saved and most of it will add to future wealth. This, in turn, will push up the income of rentiers in succeeding years and lead to even greater income from wealth and greater savings. This will further worsen the problem of inequality because it will increase the national savings rate as more income becomes a return to wealth and gets saved. Rising savings rates and falling growth rates will then reinforce one another, leading to a sharply rising b, and more and more income going to the very rich. Chapter 11 of Capital in the Twenty-First Century draws out the consequences of r > g. In stark terms, this inequality “implies that the past tends to devour the future: wealth originating in the past automatically grows more rapidly, even without labor, than wealth stemming from work” (Piketty 2014, p. 378). Piketty’s Figure 11.1 best illustrates this principle at work (see Figure 16.1). It shows the ratio of inheritances to GDP in France. While remaining steady at around 20 percent for most of the ­nineteenth century, it rises slightly to 24 percent by 1880 and then falls precipitously to 4 percent by the end of World War II. Essentially, the two world wars set the wealth counter back to zero. The great inequality that existed at the beginning of the twentieth century disappears and wealth becomes a less important determinant of income inequality. Perhaps most important of all, this change gave people hope that one downside of capitalism (great income and wealth inequality) had been eliminated. At the end of the twentieth century, wealth inequality again began to rear its ugly head. Inheritances and gifts rose to over 12 percent of GDP. While still considerably less than the figures from the nineteenth century and early twentieth century, it points to a return of the rentiers. Similar things are true for Germany and the UK. As Piketty’s Figure 11.12 shows, inheritances fell in these two nations during most of the twentieth century (see Figure 16.2). But, starting in 1980, we see resurgence of inheritances relative to the size of the economy. Even worse, “r > g implies that the entrepreneur always tends to turn into a rentier” (Piketty 2014, p. 395). The children of Bill Gates do not have to work; they can live off the wealth that Bill Gates accumulated. The second section, “Piketty’s inequality: r > g”, provided a numerical

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 363

01/06/2017 16:51

364  Handbook on growth and sustainability

Annual Value of Inheritance and Gifts (% National Income)

% 40 Economic Flow

36

Fiscal Flow

32 28 24 20 16 12 8 4 0 1820

1840

1860

1880

1900

1920 Year

1940

1960

1980

2000

Note:  The annual inheritance flow was about 20–25 percent of national income during the nineteenth century and until 1914; it then fell to less than 5 percent in the 1950s, and returned to about 15 percent in 2010.

Figure 16.1  The annual inheritance flow as a fraction of national income: France, 1820–2010 example demonstrating this fact of economic life; it showed that after a few ­generations wealth can grow and render the income from labor irrelevant to our current standard of living. This process deprives society of a good deal of creative talent. This is important not just for economic reasons, but for political and social reasons as well. The top 1 percent of wealth owners are an elite “that plays a central role in shaping the economic, political, and symbolic structure of society” (Piketty 2014, p. 409) when they control a large fraction of the national wealth. This was the case of the aristocracy in nineteenthcentury France, and it is the case today for those who have inherited a great deal of wealth. Yet, for those born between 1910 and 1960 this was not the case – because much wealth had been destroyed by the World Wars and the Great Depression, the wealthy had less wealth to spend and it was possible to reach the top 1 percent of earners without having a great deal of wealth. We see this in the control of the media and national conversations on important issues by wealthy individuals, including Rupert Murdoch controlling Fox News and the Wall Street Journal. We see it in the efforts to lobby in the US Congress and have Congress pass legislation that supports the well-to-do.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 364

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­365

Annual Value of Bequests & Gifts (% National Income)

% 25 France United Kingdom

20

Germany 15 10 5 0 1900

1950 Year

2000

Note:  The inheritance flow follows a U-shaped curve in France as well as in the UK and Germany. It is possible that gifts are underestimated in the UK at the end of the period.

Figure 16.2  The inheritance flow in Europe, 1900–2010 At this point things begin to resemble the world that Karl Marx described, and a world Piketty hints at with his book title. Exploitation of labor by capital is made necessary by the abundance of capital and its need for high rates of return. Labor experiences falling absolute and relative standards of living, with average wages growing less than average labor productivity (Bivens and Mishel 2015). We encounter a world where banks push risky mortgages onto consumers because it earns them slightly higher interest rates, and so their profits will rise. However, this is also a world where capitalism may self-destruct owing to the socio-economic consequences of rising inequality and the push for higher rates of return.

SOME POSSIBLE SOLUTIONS The logic of r > g, and Piketty’s second law, paint a bleak picture of our economic future. This is especially the case if g will have to fall (maybe to near zero) in order to ward off environmental disaster. Piketty, unfortunately, does not address this issue, nor does he set forth any policy solutions to deal with the distributional problems arising from slower growth. His work does help us highlight problems associated with a lower g, which include rapidly rising income and wealth inequality and loss of jobs (and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 365

01/06/2017 16:51

366  Handbook on growth and sustainability in conjunction rising poverty rates). However, the model is somewhat incomplete if we assume that a rising g will continue to put pressure on the biosphere making life more unpleasant for the expanding working class and perhaps uninhabitable for all humans. It is necessary, therefore, to consider policies that reduce g to environmentally sustainable levels and ward off the big, twin effects of rising inequality and job loss. First, Piketty himself provides a well-known solution to income and wealth inequality, which is a more progressive tax structure. It is beyond the scope of this chapter to discuss the percentages of each tax that will achieve specific goals; however, according to Piketty a progressive tax structure is necessary to assuage income and wealth inequality in the twenty-first century, in the same way that it did for much of the twentieth century. According to Piketty (2014, p. 497), “a progressive tax is a crucial component of the social state: it played a central role in its development and in the transformation of the structure of inequality in the twentieth century, and it remains important for ensuring the viability of the social state in the future”. Yet in many countries income taxes have become less progressive, which has exacerbated the rise of income inequality and wealth accumulation. In part this has occurred because people with high incomes save more money, which then becomes their wealth, but it has also shifted the tax burden to those people who make much less money. An example of this is the budget of the state of Kansas. In 2012 and 2013 Kansas reduced income taxes for top earners and eliminated income taxes for small business owners who file as individuals. The goal was to increase economic growth, but the result was tepid growth and a massive budget deficit of $600 million by 2015. In order to plug the deficit Kansas increased sales taxes, which are regressive (hitting poor people the hardest). This reverse-Robin Hood policy of taking from the poor and giving to the rich is one example of what Piketty sees in the future. Inheritances (and estates) are “much less heavily taxed than income” (Piketty 2014, p. 497). Also, as mentioned above, inheritances are a direct transfer of wealth without production and can promote greater wealth inequality. In 2010 the United States Congress allowed a lapse in estate taxes. As a result, when Dan Duncan (a Texas pipeline billionaire) died that year he passed on his $9 billion estate to his family tax free. While this tax lapse year may be an outlier, it is another sign of the shift in social provisioning towards less progressive (and sometimes regressive) tax structures. Progressive taxation has important implications for supporting a lowgrowth economy. A less progressive tax structure will put greater tax pressure on less-wealthy citizens to pay for the social state. Yet those incomes may be insufficient to maintain (or increase) state spending on infrastructure and education, and many other social services often get cut. If

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 366

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­367 economic growth slows, the social state will shrink further, putting greater strain on less-wealthy citizens. The only way to combat this shrinking of the social state is to re-institute a more progressive tax system that redistributes money from the top to support those social programs that benefit society in general (see Jackson and Victor 2015). More importantly, if redistribution of these tax dollars can support programs that boost renewable energy technology and reduce environmental pollution, then society not only reduces inequality but gains significant energy efficiency that will benefit society now and into the future (much as investments in infrastructure after World War II produced economic benefits for countries such as the US and Japan). Initially these investments may actually increase g, leading to more economic growth; however, this is not necessarily a bad thing if the growth is focused on things such as reducing carbon dioxide emissions. Not all economic growth is equal. Economic growth that results from mass consumption and burning of fossil fuels is ecologically harmful, but growth that provides clean energy, less pollution and a safer environment is positive growth. Piketty’s g does not differentiate between $1000 spent on gasoline and $1000 spent on solar panels, but these two “goods” have different outcomes not currently captured by mainstream metrics. It may be necessary to think of g and g´ where g´ is an alternative measurement of g that takes into account pollution, natural resource use and so on, and g´ accounts for the ecological effects of economic growth such that the goal is for g´ (green growth) to exceed g (brown growth). For example, reducing fossil fuel use will reduce g but if renewable substitutes are used then g´ will rise. Initially the two measures may increase together, but if the long-run (or even medium-run) investments in renewables improve efficiency, then g´ will start rising above g. The more that g´ cuts into g, the closer we get to a green economy and a more environmentally sustainable society. There are two additional ways to solve the problem of job loss that would result from a smaller g. First, worker co-operatives would enable labor to benefit from profit sharing. The second is a guaranteed jobs program. Capital in the Twenty-First Century begins with an August 2012 labor dispute at the Marikana platinum mine in Johannesburg, South Africa. The strike took place over the low wages that workers received in contrast to the high salaries paid to mine managers. It is one of the few places Capital in the Twenty-First Century discusses actual labor relations. In this case, the government sided with the mine owners and sought to break the strike; 34 miners were killed. The situation is similar to the story told by Emile Zola in his novel Germinal, although the Marikana miners (unlike the French miners who were unfairly treated in Zola’s novel) did get a small monthly pay rise. Piketty uses this example to make a single

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 367

01/06/2017 16:51

368  Handbook on growth and sustainability point – if the miners had owned shares in the mine, and if they received some of the firm’s profits (in addition to their wages), there would have been no strike and no violence. The problem, as Piketty sees it, is that workers must live off their wages because they have no wealth and receive no profits. This analysis almost seems to cry out for the development of worker co-operatives (Vanek 1970; Alperovitz 2013), inspired by the writings of Louis Blanc and the French Revolution of 1848 (Cole 1953; Loubère 1961), or for some form of market socialism (see Lange and Taylor 1964; Kowalik 1991). Piketty does not go quite this far. Short of market socialism, a more elegant solution to the reduction in jobs is a job guarantee program, such as the Works Progress Administration (WPA) created by President Franklin Roosevelt’s New Deal. The WPA employed millions of people who built roads, bridges, parks and so on. Mathew Forstater (2006) provides a vision for a modern WPA (that he calls public service employment, PSE) that promotes green jobs: the Green Job Corps. Ironically, the destruction of jobs owing to a shrinking g might have a significant long-run impact on the environment (boosting g´). In the Green Job Corps, anyone ready, willing and able to work can have a job at a federally determined wage rate (say, minimum wage). The jobs are not based on profit seeking, but are evaluated on their social and environmental benefits. These jobs are designed to “use fewer natural resources, cause less pollution, and reduce ecological damage” (Forstater 2006, p. 63). These workers could engage in community and industrial recycling, carpooling, urban landscaping, environmental education, research and so on (Forstater 2006, p. 64). Workers could improve the energy efficiency of homes and businesses through better insulation or renewable energy systems, such as solar or geothermal power. We know this type of job program worked in the 1930s and there are many people looking for meaningful work that is scarce in the private sector since these jobs produce public benefits that largely outweigh profit generation. As more people work in the Green Job Corps they may take their knowledge and apply it to the private sector, discovering new technology or new implementation strategies, which may produce additional benefits to society. An important question is how to pay for these jobs. Several solutions advanced by Piketty would provide the tax revenues for the Green Job Corps – a wealth tax, a more progressive individual income tax and greater reliance on corporate income taxes. Another way to pay for this program (and other environmentally beneficial efforts) is through raising taxes on environmentally harmful goods. A carbon tax is one way to redirect and perhaps slow economic growth, increase tax revenue and reduce the environmental impact of economic growth. It would also create incentives to use carbon-intensive energy more efficiently. Given the costs of climate change, such a tax can be

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 368

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­369 j­ ustified on a simple cost–benefit basis. The revenue gains from the tax can then be used to support spending programs that reduce the need for people to work in order to maintain their standard of living. One concern with a carbon tax is whether (and to what degree) it is regressive, thereby worsening the inequality problem. Research by Grainger and Kolstad (2009) shows that while an all-inclusive carbon tax is regressive in some respects, it could be offset by “recycling revenues”. For example, we could take the gains from the carbon tax to offer cuts in payroll taxes and fund more social programs. This approach is used in Norway to make their high gasoline taxes more progressive in nature. The revenue from the gasoline taxes is used to pay for public education, health services and other social programs that tend to benefit everyone equally. This recycling of revenues for social gain can turn a ­regressive tax into a progressive tax-and-spend fiscal program (see West and Williams, 2004). Gasoline taxes are also considered regressive – the poor and middle class suffer more than the wealthy. While this is generally the case for most sales taxes, a gasoline tax might not be as regressive as most people believe. Poterba (1991) used an expenditure approach to gasoline sales and found that most consumption occurs at higher income levels. There are several reasons for this finding. First, low-income people are less likely to buy gasoline because they are less likely to own cars. Murakami and Young (1997) found that 26 percent of low-income households did not have a car (compared to 4 percent of everyone else). Second, low-income people are much less likely to buy large sport utility vehicles (SUVs), which are the least fuel-efficient vehicles. Third, gasoline taxes are easy to collect and recycle into socially beneficial programs – and it can be implemented at the federal level. A primary concern with a carbon tax is its implementation. In this respect, a gasoline tax is preferable because it is easy to implement and simple to understand. A carbon tax is more complicated and requires greater oversight and tracking costs. There needs to be close monitoring of carbon emissions and how those emissions will be taxed. Furthermore, one concern is that not all carbon emissions will get taxed the same, or emissions will not get taxed based on the proportional damage that they do to the environment. This can create disparities among industries, and may even create incentives for firms and power plants to switch to more damaging production techniques. Another concern is that a carbon tax would need to be global, otherwise firms could move production facilities to countries with low or no taxes, leading to greater pollution worldwide. These concerns would have to be addressed to successfully implement a carbon tax, and may recommend a simpler gasoline tax in the short term.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 369

01/06/2017 16:51

370  Handbook on growth and sustainability

CONCLUSION Thomas Piketty’s Capital in the Twenty-First Century is a study of how and why income and wealth inequality has increased in most developed nations over several decades. His findings have implications for the environment because economic growth is inversely related to inequality, so that pursuing policies that lower growth to reduce negative environmental effects will exacerbate inequality.2 In this chapter we explain how a progressive tax structure can ameliorate the rise in inequality resulting from low economic growth. More importantly, to counter-balance the negative macroeconomic effects of low growth (for example, increased poverty and unemployment), the revenue generated from higher taxes should be funneled to programs such as a Green Job Corps, infrastructure and research that promotes environmental sustainability. We also suggest that a carbon tax could raise revenue, increase conservation and promote a shift to low-carbon energy sources. In addition, promoting more worker co-operatives would help equalize incomes in a more fair and balanced way. Beyond the financial equality that co-operatives create, the effects on employee morale and commitment are also valuable. These policies are needed to ensure not only a more equal share of capital in the twenty-first century, but that our biosphere is capable of promoting human life in the twenty-second century and beyond.

NOTES 1. Piketty (2014, pp. 215–22) argues that r will not decline in the face of growing wealth owing to a high elasticity of substitution (greater than 1) between capital and labor keeps. This claim has generated a great deal of criticism, including the claim that it is not true empirically (see Semieniuk 2017). However, the relative constancy of r can be explained by both institutional factors (see Pressman forthcoming) and by relying on the Cambridge savings or growth equation (see Kaldor 1955–56; also see López-Bernardo et al. 2016). 2. This assumes that capital and labor can be easily substituted for each other in the production process, as Jackson and Victor (2015) note.

REFERENCES Alperovitz, G. (2013), What Then Must We Do? White River Junction, VT: Chelsea Green. Bivens, J. and L. Mishel (2015), Understanding the Historical Divergence between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real, Washington, DC: Economic Policy Institute. Cole, C.D.H. (1953), Socialist Thought: The Forerunners, 1778–1850, London: Macmillan. European Commission (2013), ‘The euro area’s growth perspective over the coming decade’, Quarterly Report on the Euro Area, 12 (4), 7–16.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 370

01/06/2017 16:51

Thomas Piketty, growth, distribution and the environment  ­371 Forstater, M. (2006), ‘Green jobs: public service employment and environmental sustainability’, Challenge, 49 (4), 58–72. Grainger, C. and C. Kolstad (2009), ‘Who pays a price on carbon?’, NBER Working Paper No. 15239, National Bureau of Economic Research, Cambridge, MA: National Bureau of Economic Research, accessed 2 February 2016 at http://www.nber.org/papers/w15239. Jackson, T. (2009), Prosperity without Growth: Economics for a Finite Planet, London and New York: Routledge. Jackson, T. and P. Victor (2016), ‘Does slow growth lead to rising inequality? Some theoretical reflections and numerical simulations’, Ecological Economics, 121 (C), 206–19. Kaldor, N. (1955–56), ‘Alternative theories of distribution’, Review of Economic Studies, 23 (2), 83–100. Keynes, J.M. (1937), ‘Some economic consequences of a declining population’, in The Collected Writings of John Maynard Keynes, Vol. XIV, The General Theory and After, Part 2: Defence and Development, reprinted 1973, London: Macmillan, pp. 124–33. Kowalik, T. (1991), ‘Oskar Lange’s market socialism’, Dissent, 38 (Winter), 86–95. Lange, O. and F. Taylor (1964), On the Economic Theory of Socialism, New York: McGraw Hill. López-Bernardo, J., F. López-Martinez and E. Stockhammer (2016), ‘A post-Keynesian response to Piketty’s “fundamental contradiction of capitalism”’, Review of Political Economy, 28 (2), 190–204. Loubère, L. (1961) Louis Blanc: His Life and His Contribution to French Jacobin Socialism, Evanston, IL: Northwestern University Press. Morgan, J. (2015), ‘Piketty’s calibration economics: inequality and the dissolution of solutions?’, Globalizations, 12 (5), 803–23. Murakami, E. and J. Young (1997), ‘Daily travel by persons with low income’, paper presented at the Nationwide Personal Transportation Survey (NPTS) Symposium, Betheda, MD, 29–31 October, accessed 5 April 2015 at http://ntl.bts.gov/lib/5000/5100/5141/ LowInc.pdf. Piketty, T. (2014), Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press. Poterba, J. (1991), ‘Is the gasoline tax regressive?’, in J. Poterba (ed.), Tax Policy and the Economy, vol. 5, Cambridge, MA: MIT Press and National Bureau of Economic Research, pp. 145–164, accessed online at http://www.nber.org.ezproxy.library.yorku.ca/ chapters/c11271.pdf. Poterba, J. (2000), ‘Stock market wealth and consumption’, Journal of Economic Perspectives, 14 (2), 99–118. Pressman, S. (forthcoming), ‘Piketty after post Keynesian economics’. Semieniuk, G. (2017), ‘Piketty’s elasticity of substitution: a critique’, Review of Political Economy, 29 (1), 64–79. Starr-McCluer, M. (2002), ‘Stock market wealth and consumer spending’, Economic Inquiry, 40 (1), 69–79. Vanek, J. (1970), The General Theory of Labor – Managed Market Economics, Ithaca, NY: Cornell University Press. Victor, P. (2008), Managing without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. West, S. and R. Williams (2004), ‘Estimates from the consumer demand system: implications for the incidence of environmental taxes’, Journal of Environmental Economics and Management, 47 (3), 535–58.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 371

01/06/2017 16:51

17  Growth and sustainability in a material world: the self-reinforcing cycle of population, GDP and resource use Marina Fischer-Kowalski and Julia K. Steinberger

1 INTRODUCTION In approaching the issue of ‘growth and sustainability’, we interpret our task comprehensively. From a sociological perspective, the economy is but one subsystem of society; it has its specific programmes and codes, and the code ‘money’ is particularly powerful, also among other subsystems (Luhmann 1986). Monetary systems and the rules and institutions that govern our economic and financial worlds have co-evolved alongside changes in technology and resource use. They are themselves products of a market and industrialized age. As we turn to a sustainability transition, where human societies should limit themselves to existing within safe planetary boundaries, these systems and institutions must, inevitably, also undergo fundamental transformations. The goal of this chapter is a macro-scale discussion of growth – human, economic and material – and the positive feedback links between these macro elements. A sustainability transition, we argue, must address the full spectrum of these macro forces, and do so with the awareness of the historical forces that have shaped them. Many ‘green growth’ or ‘degrowth’ proposals superficially address only one node or linkage in an overall very strong and coherent growth machine; dismantling it, or changing the direction of the feedback loops, requires a concerted effort (Meadows 1999, 2008). In a purposefully ironic version of what commonly is addressed as ‘pillars of sustainability’ (an economic, a social and an environmental; see Gallopin 2014), we start our arguments from a related but rather vicious cycle, representing human society as feedback loops between economic activity (as measured by gross domestic product, GDP, in monetary units), the human population, and social metabolism (measured as physical flows set in motion) (Figure 17.1). The nodes of this triangle are mutually reinforcing; economic growth is in part driven by population growth, larger 372 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 372

01/06/2017 16:51

Growth and sustainability in a material world  ­373 + PROSPERITY

Economic activity (in monetary units)

Income (distribution); employment; female role and education

Labour and resource productivity

+

+ +

+ Population numbers

POPULATION

+

METABOLISM

Physical societal flows (in tons, joules, carbon tons)

Life styles

Society Environment – Source:  After Fischer-Kowalski et al. (1997), p. 211.

Figure 17.1  Idealized model of human society as a beneficial/vicious cycle of economic activity, population and socioeconomic metabolism populations require more resource use, and more resource use enables greater economic investment and activity. The feedback loops can be seen as going in the opposite direction as well. The more economic activity, the more energy and materials are being mobilized and set in motion, the more energy and materials feed into economic activity, the higher the human population that can be sustained and contribute to economic activity. In Figure 17.1, human society is thus portrayed as a prototypical set of positive feedback loops that reinforce growth – or decline. This vicious cycle is aggravated by self-reinforcing cycles at each node; economic activity creates profits, profits are re-invested, economic output increases, profits increase – to put it very simply. Population is self-reinforcing, too; the more people surviving into reproductive age, the larger the existing population pool, the more children will be born. How strong this selfreinforcing effect is depends on the difference between fertility rates and mortality rates. Finally, the same holds for metabolism; a larger stock of physical capital artefacts and livestock requires a larger flow of energy as well as repair and replacement materials and generates a larger flow of wastes and emissions (Wiedenhofer et al. 2015). Again, this is historically variable; a

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 373

01/06/2017 16:51

374  Handbook on growth and sustainability larger existing stock can also mean saturation of certain demands, so fewer materials are needed for building up new infrastructure. An important source of moderation, or negative feedbacks, that would slow down the dynamics of the human society growth machine, operates outside the societal system via so-called externalities; environmental change triggered by social metabolism (such as depletion of resources and systemic changes owing to overuse, wastes and emissions) in turn may threaten the human population, its health and well-being.1 Within the social system, there are also a number of processes that intervene and influence the strength of the mutual feedbacks between the nodes, to the degree that some may become negative at some point (see Figure 17.1). Most of what has been discussed as policy responses to sustainability problems can be framed within this picture. We discuss them one by one below. The key lesson we draw from this rather simplistic model is to pay attention not just to the economy, but to the interrelations of growth dynamics, the self-reinforcing at each node, and the mutual reinforcement. This structures our contribution; we first discuss population dynamics, then prosperity and economic growth, and, finally, the dynamics of social metabolism.

2 THE FEEDBACK LOOP BETWEEN ECONOMIC ACTIVITY AND HUMAN POPULATION In the take-off phase of the British industrial revolution, Malthus (1803) argued that the only way to contain population growth was to keep poor people starving; as soon as they were allowed a minimal level of welfare, they would multiply and their food requirements would outgrow the capacity of land available; only hunger would teach them the sexual self-restraint necessary. One hundred and fifty years later, development theorists thought that liberating people from poverty would lower their reproduction rates (critically see Sachs 1993). Currently, women’s empowerment and education are the magic wands to lower fertility rates (Lutz et al. 2014a). China, after a short phase of pro-natalism in the 1950s, employed an institutional solution, and the one-child policy was established, bringing population growth far below its original trajectory (Greenhalgh 2008). Chinese ­population growth is projected to end altogether by 2020 (Lutz et al. 2014b, p. 45), while, for example, the Indian population is supposed to grow until 2050 or longer (Lutz et al. 2014b, p. 51). Currently, we find a globally divergent situation for population growth (see Klingholz 2014, p. 220). There is one cluster of developed countries in

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 374

01/06/2017 16:51

Growth and sustainability in a material world  ­375 which fertility rates are below or far below population replacement (1.7 on average). These countries include member states of the European Union, Russia, Turkey and Japan, as well as the USA, Canada, Australia, China, and several South American and South East Asian countries. This cluster is characterized by a well-educated population with steadily increasing life expectancy. By their internal dynamics, there is or would be population reduction unless compensated by immigration. For example, in Japan, which hardly allows immigration, there is an ongoing population decline, and one-quarter of the population is beyond the age of 65. A second cluster consists of countries where fertility rates in the past decades have substantially decreased but are still beyond replacement rates. This cluster contains some Latin American countries, India, Malaysia and Indonesia, as well as a few African countries. In these countries, population numbers are still rising. Finally, cluster three contains most sub-Saharan African countries and many Middle Eastern countries. Three to seven children per woman are still common and population numbers may double or triple by 2050. In the Middle East, this is culturally and religiously driven.2 In sub-Saharan Africa, the population is very young, uneducated, and poor. Referring to the logic in Figure 17.1, it becomes apparent that the selfreinforcing cycle of population, under conditions of economic growth, has become much weaker and turned into an anti-Malthusian mechanism; the more prosperous people are, the fewer children they have. However, this relation, again, is not entirely deterministic or direct; what matters to fertility rates are female empowerment and education (Lutz et al. 2014a). Alternatively, we find a continuing growth dynamic with regard to lengthening human lifetimes (Oeppen and Vaupel 2002). Historically, population growth fuelled economic growth in industrializing countries. As a result of population stabilization, economic growth in these countries is now considered ‘too low’ by many policy makers. Stable or declining population numbers mean stagnating or declining domestic demand, all other things being equal,3 and they mean a decline in size of the young domestic workforce. In addition, an increasing share of people in the older age groups constitutes a burden for the welfare system4 and lowers the demand for consumer products in favour of health and other services. In the provision of these services, we must expect lower productivity gains than in manufacturing. In effect, in cluster 1 the positive feedback from population on economic activity becomes very weak.5 Cluster 2, according to the theory of Macunovich (2002, 2012), may still expect a ‘demographic dividend’ for economic growth; a high share of 15–24 year olds and increasingly well-educated people create a high consumer demand and supply potentially highly productive members to the labour force. As Klingholz (2014) argues, these countries must be able to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 375

01/06/2017 16:51

376  Handbook on growth and sustainability

Fertility rate (births per woman)

8 7 6 5 4 3 2 1 0

$0

$20,000

$40,000

$60,000

$80,000

$100,000 $120,000 $140,000

GDP per capita (purchasing power parity) Source:  Data 2010, World Bank, http://data.worldbank.org/data-catalog/worlddevelopment-indicators.

Figure 17.2(a)  Fertility rates versus GDP per capita in purchasing power parity harvest the dividend in time, or else their population becomes old before it has been prosperous – with a detrimental effect on the quality of life in old age, in the absence of an established welfare system. Such a fate may occur to China (Klingholz 2014, p. 250).6 Finally, countries in cluster 3 are neither able to fulfill the consumer demands from their very young and fast-growing population, nor integrate them into an organized labour market. Conflicts and outbursts of violence, and states failing to establish reliable institutions, create conditions where neither continuous economic development, nor an improvement in the quality of life gain a foothold. In effect, under current conditions and under conditions to be expected for the next decades, the positive feedback from population dynamics on global economic growth will at best be weak.7 Looking at this relationship the other way round, how will prosperity impact upon population dynamics? (See Figure 17.2.) On the one hand, population dynamics results from the combined effects of mortality and fertility. Under most circumstances, people will follow the elementary interest to survive, and use the resources they have to postpone death. This is why rising prosperity – and even the little prosperity supplied by

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 376

01/06/2017 16:51

Growth and sustainability in a material world  ­377 90 85

Life expectancy (years)

80 75 70 65 60 55 50 45 40

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

GDP per capita (purchasing power parity)

Source:  Data 2010, World Bank, http://data.worldbank.org/data-catalog/worlddevelopment-indicators.

Figure 17.2(b)  Life expectancy versus GDP per capita in purchasing power parity international aid8 – will have a very direct impact on reducing mortality. This relationship holds across the full echelon of the income distribution; lifting people out of extreme poverty reduces their mortality, as much as high-income countries expand the lives of their people by high-technology health medicine. Thus a strong negative relationship between prosperity and mortality is established, securing a positive feedback of prosperity on population growth. The relationship between prosperity and fertility, though, is much more complex than the Malthusian prejudice insinuates. While it is very clear that people want to survive if they can, it is not true that they want to have as many children as they can afford. They have many children because they need them (as labour force in agriculture, for example9), and they have children because they lack the means to avoid having children. The industrial transformation draws people from rural agriculture, where children are useful and needed, into urban centres separating work from home, where children are rather a burden. To translate this into declining fertility rates, it requires additional institutional changes such as the provision of knowledge and means for contraception, and the empowerment of girls and women by education. There, politics,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 377

01/06/2017 16:51

378  Handbook on growth and sustainability culture and religion10 play a more decisive role than income levels. Thus, mitigating population growth boosted by a prosperity-related reduction of fertility may occur with great delay. On the other hand, population dynamics result from in-migration and out-migration. Migration is closely connected to the availability of gainful employment; unemployment and underemployment in the home country stimulates out-migration (often underreported in population statistics) to host countries of high labour demand. Large immigration flows are a source of strong political tensions in countries with substantial levels of unemployment, and governments make efforts to prevent them, with mixed success. According to Abel and Sander (2014), global international migration flows have remained stable across the past 20 years (1995–2015). Current events demonstrate that the global re-distribution of population, following military conflicts, environmental catastrophes, and international disparities in income and employment opportunities is already becoming an important source of population dynamics and potential political destabilization in the future. Finally, beyond influencing migration, the availability of employment constitutes an intervening variable determining the strength of the link between population and GDP; whether an available (and possibly welleducated) working-age population actually feeds into growing economic activities depends on how labour-intensive these economic activities are. Ashford et al. (2012) provide an excellent analysis on the susceptibility of this link to structural factors and policies. In the twenty-first century, the mutual reinforcement of national economic activity by population dynamics, supply expansion, consumer demand and young, creative labour power will probably be weaker than it has been in the past. However, the importance of enabling populations to achieve lower fertility rates will probably continue to be a struggle worthy of international attention, deserving a higher profile than its current place subsumed within the ‘health and well-being’ Sustainable Development Goal.

3 THE FEEDBACK LOOP BETWEEN ECONOMIC ACTIVITY AND SOCIAL METABOLISM With regard to the interrelation between economic activity and social metabolism, we will follow Figure 17.1 in discussing (1) self-reinforcing features of social metabolism, (2) the impact of economic expansion upon biophysical metabolism, and (3) the dependence of economic growth on metabolism, in particular on energy. While it is not so simple to deter-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 378

01/06/2017 16:51

Growth and sustainability in a material world  ­379 mine the direction of causality between interrelated variables, we at least can distinguish between research approaches that address the issue in one direction or the other. Our overarching question will be, do we find indications of historical change in the degree to which social metabolism reinforces economic growth, and vice versa? Does the feedback between prosperity and energy/material use become stronger or weaker? What are the most important intervening factors? 3.1  Self-reinforcing Features of Social Metabolism One of the key mechanisms for self-reinforcement of social metabolism discussed in the literature is the relationship between stocks and flows.11 For biomass use, it is apparent that the larger the livestock numbers, the larger the feed consumption (as grazed biomass and/or commercial feed). Thus societies with a large livestock population (such as Argentina, or Australia) are exceptional in terms of their high biomass use. However, livestock can quickly be reduced if it proves uneconomical; in contrast, stocks in built-up infrastructure predetermine material flows for many decades (Fishman et al. 2015; Wiedenhofer 2015), and their reduction requires substantial effort. Economically, construction activities require high investment and boost economic growth when infrastructures are being built; for the rest of the infrastructure’s lifetime, they may or may not be profitable12 but in any case require continuous maintenance flows, economically and physically. Another self-reinforcing mechanism is given by the physical relation between materials and energy. Inevitably, moving and modifying materials requires energy, roughly in proportion to the mass of materials moved. This appears evident, but is often overlooked nevertheless, for example when projections of international transport are based on GDP projections only, without taking into account possibly changing material intensities (van Veengroot et al. 2001). A reduction in the amount of materials used (for example, through a substitution of fossil fuels by solar and wind energy) would quite immediately lead to a reduction in transport volumes (and the required fuels and infrastructure demands; see Fischer-Kowalski et al. 2006). Everyday life, however trivial, abounds with cases of self-reinforcement of material needs. If we own more clothes, there is need for more suitable shoes, handbags and accessories; there is need for more storage space and thus more furniture; there is need for more space in the home, and for more heating/cooling effort to keep the home comfortable, and so on.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 379

01/06/2017 16:51

380  Handbook on growth and sustainability

120 100

60 50

GDP in $

80

40 20

Fossil energy carriers

8

10 Biomass

–

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

–

12

30 20

7000

14 10

Ores and industrial minerals

8000

16

40 Construction minerals

60

b.Global metabolic rates 1900–2010 Metabolic rate Income International dollars cap/yr t/cap/yr

6 4 2 0

Income/cap in $

6000 5000

Ores and industrial minerals

4000 Construction minerals

3000

Fossil energy carriers 2000 Biomass

1000 0

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

a.Global material extraction 1900–2010 Material extraction GDP Billion tonnes Trillion (1012) international dollars

Source:  Data from Krausmann et al. (2009); GDP (at constant international dollars) from Maddison (2008); updated according to Schaffartzik et al. (2014).

Figure 17.3  The global material metabolism of societies 1900–2009, in relation to GDP growth 3.2 How Far Is Prosperity (GDP, Income/Capita) Driving Metabolic Flows? This is one of the key issues discussed in the relevant literature, and there are a number of robust findings. On a historically descriptive level, it is apparent that the past century (1900–2000) saw a 7.3-fold increase in annual anthropogenic material flows, while global GDP (in real terms) has been rising 19-fold. If we eliminate the effects of population growth, we find material and energy metabolic rates to have increased by a factor of 2.5, and income by a factor of 5.0 (see Figure 17.3). Thus, apparently, in the long run, biophysical flows did not increase at the same pace as real GDP – this is what is usually addressed as ‘relative decoupling’ (Fischer-Kowalski et al. 2011a). The average amount of material required to generate one unit of GDP (material intensity measured as domestic material consumption per $GDP) decreased from 3.5 kilograms per dollar (kg/$) in 1900 to 1.3 kg/$ in 2000. The global picture rests on regionally diverse patterns as explained further below. A closer inspection of the global metabolic rates in Figure 17.3b reveals four phases: a phase of slow growth in metabolic rates up to the end of World War II; a phase of rapid growth from then on to the early 1970s;13 a phase of relative stability up to the year 2000; and, finally, again a rapid

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 380

01/06/2017 16:51

Growth and sustainability in a material world  ­381

DMC in tonnes per capita

25

20

Germany OECD

15

World Japan EU15

10

USA EU27

5

0 1950

1960

1970

1980

1990

2000

2010

Note:  DMC: domestic material consumption 5 DE (domestic material extraction) + imports – exports. Source:  After Wiedenhofer et al. (2013).

Figure 17.4  The 1970s’ syndrome of stabilizing materials use in major industrial economies rise in metabolic rates in the course of the beginning twenty-first century. In monetary terms of income growth, these phases are not as distinct. In particular the last two phases have received closer attention. Wiedenhofer et al. (2013) have identified a ‘1970s’ syndrome’ of stabilizing metabolic rates in most highly developed industrial economies, starting with the first oil price shock and lasting well into twenty-first century (Schaffartzik et al. 2014; see also Figure 17.4). A number of processes could work together to produce this phenomenon: a certain saturation of infrastructure investments after the period of reconstruction; an older population with already satisfied household equipment; a shift in industrial investments towards efficiency because of expected rising price levels for energy and concerns about security of resource supply (in particular after the geopolitical tensions and the resulting ‘oil price shocks’ of the 1970s); a structural shift from commodity production to services as well as to digital technologies; and more policy attention to resource efficiency and saving.14 The following period, from the late 1990s onward, is marked globally by another steep incline of material use (see Figures 17.3(a) and 17.3(b)), more or less paralleled by increasing global GDP. This global incline,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 381

01/06/2017 16:51

382  Handbook on growth and sustainability as Schaffartzik et al. (2014) are able to show, is mainly owed to a rapid increase in resource extraction and their use for production in Asia’s emerging economies, in particular China. ‘Emerging economies’ use the comparative advantage of lower wages to increasingly produce those goods that industrial countries consume but do not produce themselves any more. In effect, rising consumption levels in high-income industrial countries increasingly would rely not on domestic production but on international trade. For energy and CO2 emissions, this has been repeatedly demonstrated (Peters and Hertwich 2008; Wiedmann et al. 2015; Schaffartzik et al. 2014). A report by the United Nations Environment Program’s (UNEP’s) International Resource Panel (2016) summarizes an IPAT analysis of the contribution of the drivers of resource use: population, affluence and growth. The report shows that affluence was the most influential driver of resource use, accounting for roughly two thirds of the change. This is in agreement with the findings of Steinberger et al.’s (2013) study of development trajectories since 1970, both in terms of income and in terms of materials use. They generated country groupings into ‘mature’, ‘emerging’ and ‘developing’ by cluster analysis. While there is a diversity of possible development (and not a single dominant trajectory), they find that mature countries generally have lower economic-material coupling coefficients than developing countries. Another interesting finding of the panel analysis is a consistently negative and often significant time trend which the authors interpret as ‘autonomous technological progress’ improving material productivity. This would set the pace for economic growth consistent with absolute dematerialization (and decarbonization): as long as economic growth remains below this rate, material use could still decline. In summary, GDP and income respectively do drive countries’ material flows; in particular, the typical development trajectory from an agrarian to an industrial mode is associated with a substantial increase in social metabolism (Steinberger et al. 2013). Nobody could find a Kuznets relation in the sense that from a certain income level onwards, material or energy use would decline (Steinberger and Roberts 2010). However, in most high-income countries during the past four decades, while GDP keeps growing (although at a slower pace), domestic socio-metabolic flows largely decouple from this growth, sometimes even showing a decline, although this may be compensated by trade effects. However, the world’s current trajectory of resource use, even assuming a continuation of stable metabolic rates (domestic material consumption/ cap) for the high-income industrial countries, and a continuation of the process in the rest of the world to converge with these metabolic rates, points towards a tripling of annual global resource extraction by 2050.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 382

01/06/2017 16:51

Growth and sustainability in a material world  ­383 For UNEP (Fischer-Kowalski et al. 2011b), the ongoing process of global convergence of material use rates – welcome as it is from the point of view of international equity – can only be environmentally acceptable, and can be only viable, at roughly half the current metabolic rates of high-income industrial countries, presupposing a ‘contraction’ of their metabolism by 50 per cent (Fischer-Kowalski et al. 2011b, p. 30). This – as much as the 80 per cent reduction in greenhouse gas (GHG) emissions required by the aim to respect the 2°C level of global warming as propagated by the IPCC – will not come about by a slight decline in metabolic rates, but only through major structural change. 3.3 Does Social Metabolism Drive Economic Growth? Might Resource Scarcity Turn It Down? The most pronounced and empirically supported hypothesis in this direction comes from Ayres and Warr (2005). They claim, in contrast to standard computable general equilibrium (CGE) models that operate only with two factors of production, capital and labour, that energy (or more precisely, exergy, useful energy) must be considered a third factor of production. They claim that what has formerly been called ‘technological progress’ or the ‘Solow residual’, and currently ‘multifactor productivity’, can largely be explained by exergy input into the economy. For the USA and Japan, they find satisfactory results supporting this hypothesis (although they also find a structural break in the early 1970s). If this hypothesis is valid, and increasing scarcity of fossil fuels would lead to price volatility and possibly to supply shortages, economic growth would be at stake (see also Ayres 2014). However, we might also argue that a successful transition to solar and wind energy, after a phase of substantial investment, might lead to an energy supply cheaper than that which has been supplied by fossil fuels. To understand the possibility of an energy transition we must concern ourselves with the quality as well as the quantity of energy. EROI is the ratio of energy returned from an energy-gathering societal activity ­compared to the energy invested in that process (Hall and Klitgaard 2012, p. 310). The advocates of energy return on investment (EROI) claim that net energy analysis is a useful approach for assessing the advantages and disadvantages of a given fuel or energy source.15 The calculation of EROI very much depends on the system boundaries drawn (that is, what is considered as energy investment into an energy-gathering activity) and is not trivial. Findings for the US show that EROIs for oil and gas mining have decreased from 100:1 (in 1930) to 12:1 (in 2007) for oil imported to the US; for coal (at mine mouth) from 80:1 (in 1930) to 30:1 (in 1970); for bitumen

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 383

01/06/2017 16:51

384  Handbook on growth and sustainability from tar sands and shale oil (‘unconventional sources’), the EROI is estimated as low as 2 to 5:1 (see overview in Hall and Klitgaard 2012, p. 313). As the net energy is relevant for what can be spent on activities other than energy generation, this decline in EROI matters for disposable income and consumption levels. It also matters for finding replacements for fossil fuels. Hydropower has an EROI of over 100:1 but many of the best sites are taken (Hall et al. 2014; Chapter 11 in this volume). Solar photovoltaics have an EROI in the range of 6:1 to 12:1 and wind power has an EROI of 18:1, but variability is a concern for both energy sources (Hall et al. 2014; Chapter 11 in this volume). Bioethanol on the other hand may even have an EROI below 1, which means it needs to be subsidized by other energy sources (Hall et al. 2014). A similar discussion of the quality of our resources has emerged concerning metals and the ore grades of the mines used. It appears that ore grades of metal mines worldwide are continuously declining (see Giurco et al. 2010; Fischer-Kowalski et al. 2011). This means that ever more material needs to be moved in order to harvest the same amount of metal, an ever larger amount of waste rock is accumulated and ever larger land areas are disturbed. This may even boost economic activity, but also increases environmental impacts (Davidson et al. 2014). Outright metal scarcity, the ‘criticality’ of metals, or the economic risk of ‘running out’ of certain metals (at least from primary sources), is a highly complex and contested issue (see UNEP 2013). However, institutions such as McKinsey and Chatham House publish alarmist reports about the need of companies to reorganize their resource demand and efficiency (Chatham House 2012; McKinsey 2013). For renewable resources, overexploitation and exhaustion has occurred for fish. The global marine fish capture has been – despite increasing efforts – stagnant and declining since the late 1990s, and global fish demand is increasingly satisfied by aquaculture (Steffen et al. 2015), while local fisheries are driven out of business. For terrestrial food production, it has been shown that input factors (such as the use of mineral fertilizers) are steadily rising, while the increase of yields per hectare is slowing down and currently is exceeded by population increase. It is very difficult to say how these changes actually impact on economic activity. While environmental scientists tend to present such information as an economic threat, if not for the present, then certainly for the future, such threats typically do not figure among the economic literature. In a narrow short-term perspective, this may well be warranted: Additional efforts in accessing natural resources require additional capital investment and additional labour for the same outcome; this may lead to price increases, but not necessarily impact on economic growth. From an

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 384

01/06/2017 16:51

Growth and sustainability in a material world  ­385 environmental perspective, though, the same provisioning services for humanity may have an ever higher impact. In the long run, this can be detrimental. Concluding from these considerations and findings, we should expect the feedback between GDP and social metabolism to become weaker  – particularly for mature industrial high-income countries. That is, we could also say that the economy becomes increasingly delinked from life processes, a ‘metaphysics’ driving much of human activity, wherever this may lead to (see also Ayres 2014). A similar point is made by the economist Gordon (2012), even if he arrives at it from quite a different angle. He analyses the benefits humans received from long-term technological innovation (he mentions window panes, indoor plumbing freeing females from carrying tons of water, convenient temperatures in the house all year round, and a motor vehicle for individual mobility) and throws a sceptic glance at the comparable benefits that current innovations – such as cellphones and electronic communication networks – provide. With another twist of mind we might question whether the economy and the innovations that drive its growth might have arrived at the limitations of the needs and wants apparatus of human beings: food – health – sex – social ­recognition – fun . . . anything else? However, this concern already belongs to the next feedback relationship we need to discuss.

4 THE FEEDBACK LOOP BETWEEN POPULATION AND BIOPHYSICAL METABOLISM The question of the biophysical requirements of human populations has been addressed through the lens of the question of the carrying capacity of ecosystems or the planet, thoroughly discussed by Cohen (1995). This is a vexing question, with no clear answer and numerous variable parameters, but most clearly with trade-offs; a given carrying capacity, in terms of resource extraction (including food production, of course) and environmental impacts, may sustain a small number of people living at a high level of resource use per capita, or a much larger number living more modestly. This argument constitutes the most important aspect of the direct link between biophysical metabolism and human populations within the societal arena, where provisioning services for humans are socially generated (Figure 17.1). Crucially, there is another link; a negative feedback connection among social metabolism, the resource extractions plus concomitant wastes and emissions, via anthropogenic alterations of the natural environment. In Figure 17.1, it is pictured as external to society. This is the link referred to by environmental sciences, by climate sciences and, most recently, by

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 385

01/06/2017 16:51

386  Handbook on growth and sustainability the medical sciences. A ‘Rockefeller Foundation-Lancet Commission on planetary health’ (Whitmee et al. 2015) issued a report about safeguarding human health in the Anthropocene epoch. The concept of planetary health is based on the understanding that human health and civilization depend on ‘flourishing natural systems and the wise stewardship of those systems’ (Whitmee et al. 2015, p. 2). Environmental threats to human health and civilization will be characterized by surprise and uncertainty, dangers that ‘require urgent and transformative actions to protect present and future generations’ (Whitmee et al. 2015, p. 2). Effectively, the present level of social metabolism is so high that it disturbs the stability of key planetary functions, thereby undermining future carrying capacity. Therefore, from a sustainability perspective, the discussion cannot be limited to present populations and their resource use, but must take into account the requirements of future populations as well. We can easily summarize the current status and trends: unprecedented population growth has been accompanied by increasing resource use per capita. The average trend hides important inequalities within and between countries, closely aligned with economic inequalities. Most importantly, however, there is renewed attention to the distinction between quality of life, or well-being, and the quantity of goods and services consumed (generally known as ‘living standards’). In this context, it can been shown that the level of energy and carbon emissions associated with high life expectancies (a widely available international measure of well-being, indicating access to health care, nutrition and general social function) has been declining over time (Steinberger and Roberts 2010), suggesting that decoupling well-being from biophysical resource use is more achievable than decoupling biophysical resource use from economic activity. The limits of such decoupling need to take into account the most obvious and hard link between social metabolism and human ­population: food.16 Food (and animal feed) amount to about one-third of global metabolism (a much higher share in material than in economic terms). In many reports from the Food and Agriculture Organization of the United Nations (FAO) and various research institutions, three constraints dominate the debate. One issue is the quantitative relation between the increase in yields per area of cropland and the increase in global population. Currently, population increases faster; this means that cropland area for food would need to be extended, increasing land competition. Another issue is the changing of diets towards higher shares of animalbased food, refined sugars and oils, following rising prosperity that also raises the demand upon land resources. Finally, there is rising competition from biofuels. Currently, in the face of a global oversupply of food, distribution issues remain unresolved and leave millions undernourished.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 386

01/06/2017 16:51

Growth and sustainability in a material world  ­387 While modern transportation has made it much easier to bring relief into remote areas and to avoid local and regional food deprivation, a systematic global supply shortage presents a threat, with poor populations extremely vulnerable to large price fluctuations in international food commodities. Regarding other types of resource requirements, the debate becomes more strained. Stereotypically, natural scientists focus on the basic physical needs of human organisms (sustenance, water and thermal comfort), or simply decree that a given level of gigajoules of technical energy or tonnes of materials are required for a sufficient living standard. On the economic side, the view is often taken that the only parameter that matters is economic development status: all subsequent providing for human wellbeing should then happen through the market. On the social-science side, the debate between psychologists, who prefer subjective measures of wellbeing such as happiness or life satisfaction, and sociologists and political economists, who prefer more objective approaches, such as Amartya Sen’s capabilities (Sen 1985), Max-Neef ’s human-scale development (Max-Neef 1991) or Doyal and Gough’s theory of human need (Doyal and Gough 1991), rages on without necessarily providing constructive ways of determining the biophysical requirements of populations necessary for their well-being. We believe the objective approaches are the most promising for determining the minimum energy and material requirements of flourishing human populations. Following Max-Neef, although the needs are fixed, the ‘satisfiers’, the technologies, resources, products, services, organizations, mechanisms, by which these needs are satisfied, are much more flexible, and thus allow for decoupling. At a macro level, the challenge is clearly one of scale; the scale challenge will not be resolved by focusing on individual consumption or beliefs or happiness. Instead, it is at the society-wide level that the conundrum of fulfilling human needs at drastically lower levels of biophysical throughput than those currently enjoyed by industrialized countries needs to be defined and answered. Without going into detail how to do this, the following lines of research and action can be agreed upon: ●

The key to achieving human well-being within sustainable levels of biophysical resources lies not primarily in the usual emphasis on technical efficiency improvements, but on social processes linking production, consumption and distribution; in a rethinking of the entire economy. ● Decoupling of well-being from resource use is best conceived by considering the possible requirements of human needs (in the Doyal

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 387

01/06/2017 16:51

388  Handbook on growth and sustainability and Gough sense) on the services delivered by resource use, and how these levels of service requirements themselves may differ based on societal conditions. Setting arbitrary levels of tonnes or gigajoules is equivalent to making strong assumptions on the unchanging nature of both technological and social provisioning, which can be shown to be false. ● Upon this basis, an estimation of the resources required for universal human flourishing can be established, but this estimation is likely to require a much more equitable distribution of resources, prioritized around achieving human well-being: a marked departure from growth and profit oriented economic structures.

5 CONCLUSIONS In our contribution, we make the point that the beneficial/vicious cycle of prosperity (GDP growth), population dynamics and socioeconomic metabolism (in biophysical terms) as pictured in Figure 17.1, the cycle that has dominated over the past century of global development, has lost some of its grip. Neither population dynamics nor cheap resource access support economic growth as they did in the past. Even more so, self-reinforcing mechanisms within each of the three nodes have become weaker. Demographically, the number of offspring depends as much on female education as on the size of the population of young women. Economically, high-income countries face a number of ‘headwinds’.17 Socio-metabolically, stock-building in high-income countries runs into saturation, so maintaining stocks in the future may not require continuously rising flows. If the system is not as self-amplifying any more (see a similar presumption with Antal and van den Bergh 2014), it equally might not be as self-diminishing. Thus, for high-income countries, no or low economic growth may no longer represent such a systemic threat. However, for them, the issue at stake is higher; the departure from their (very high) fossil fuel use, as well as a substantial reduction in the use of material resources, is not a matter of no or low growth, but of substantial degrowth, at least biophysically. It is out of the question that this could be achieved by the minimal type of spontaneous ‘decoupling’ of economic and biophysical growth that could be observed in the past. Unemployment (Ashford et al. 2012; Antal 2014) and further rising social inequality (Piketty 2014; Chapter 16 in this volume) are the most threatening societal side effects of low economic growth. The only ‘need’ for economic growth derives from calming them, and it probably will not do the job (Jackson and Victor 2011).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 388

01/06/2017 16:51

Growth and sustainability in a material world  ­389 Globally the current development model is extremely unsustainable, and probably many of those on the way will not be able to successfully achieve their goals because of global environmental (and economic) feedbacks; China might just make it, but India likely will not. A departure from this mainstream development model might save countries their future and peace.

ACKNOWLEDGMENT We thank Dominik Wiedenhofer and the editors for their useful comments. Julia Kolar provided excellent support for editing text and figures. The European Project WWWforEurope (Welfare, Wealth and Work for Europe), project number 290647, contributed resources to preparatory work.

NOTES  1. These external feedbacks can however be expressed by institutions within society (Polanyi 1944; Vatn 2005).   2. With interesting exceptions: The religious leadership of Iran, after the revolution in 1979, issued an elaborate program on birth control, education and health; total fertility rates declined very rapidly (from about six children per married woman in 1974 to two children in 2000; see Vahidnia 2007). Currently, an opposite policy seeks to boost birth rates again; its success is questionable (see Newsweek 2015).  3. However, this analysis, although it dominates the mainstream discourse, omits the fact that economic growth does not always result in economic growth per capita. If economic growth does not feed into the majority’s rising household income, the impact upon demand may be low.   4. Much of this common argument holds even if we agree with Randers (2012) that the total dependency rates, that is, the share of old people plus the share of children, are not substantially changing. However, a higher share of children creates more consumer demand and a younger workforce than a higher share of aged people.   5. This is why some economists support the increase of immigration, even of unskilled people (Gordon 2012).   6. In 2015, China revised this policy by allowing two children – a move to escape this trap.   7. This conclusion is based upon the analysis of Klingholz (2014); it is also shared by Randers (2012, p. 160).  8. What is and what can be done by international aid – such as medical help – is of course also influenced by the prosperity of the donor countries. This is a so-called ‘teleconnection’.   9. In communities sustaining themselves from subsistence agriculture, it is not uncommon to find children below the age of 14 to deliver 50–60 per cent of the working hours needed on the farm (Ringhofer et al. 2014). 10. In most agrarian religions many children in marriage are considered a blessing, and contraception constitutes a sin. 11. By the standards of material flow accounting, the stocks of a socioeconomic system

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 389

01/06/2017 16:51

390  Handbook on growth and sustainability

12. 13. 14.

15. 16. 17.

consist of people, livestock and long-lived artefacts (infrastructures). All flows required to maintain these stocks belong to the ensemble of material (or energy) flows of this system (Matthews et al. 2000; Fischer-Kowalski et al. 2011a). See the role of the housing bubble in the USA, Portugal and Spain in the Global Financial Crisis in 2008. This phase was coined as ‘Fifties syndrome’ by Pfister (1995). In the USA, this phase from the early 1970s to the mid-1990s is also marked by a decline in growth rates of labour productivity (see Gordon 2012). However, this phenomenon does not equally apply to the rest of the Organisation for Economic Co-operation Development (OECD) countries. The concept of EROI is derived from Howard Odum’s work (Odum 1971); with the publication of Cleveland et al. (1984) in Science it received broader attention. Of equal importance is freshwater (usually not included in the standard indicators for resource use). Gordon (2012) names for the United States: (1) reversal of the demographic dividend, (2) plateau in educational attainment, (3) rising inequality, (4) interaction of globalization and information and communication technology (ICT) in equalizing wages internationally, (5) environmental policy imposing carbon taxes and (6) household and government deficits. Randers (2012) mainly argues with slacking productivity. Ayres (2006) builds his assumption of low growth on declining exergy. Antal (2014) discusses strategies to tackle unemployment without any need for growth, but finds they receive much too little attention.

REFERENCES Abel, G.J. and N. Sander (2014), ‘Quantifying global international migration flows’, Science, 343 (6178), 1520–22. Antal, M. (2014), ‘Green goals and full employment: are they compatible?’, Ecological Economics, 107 (December), 276–86. Antal, M. and J. van den Bergh (2014), ‘Green growth and climate change: conceptual and empirical considerations’, Climate Policy, 16 (2), 1–13. Ashford, N.A., R.P. Hall and R.H. Ashford (2012), ‘The crisis in employment and consumer demand: reconciliation with environmental sustainability’, Environmental Innovation and Societal Transitions, 2 (2), 1–22. Ayres, R.U. (2006), ‘Turning point: the end of exponential growth?’, Technological Forecasting and Social Change, 73 (9), 1188–203. Ayres, R.U. (2014), The Bubble Economy, Boston, MA: MIT Press. Ayres, R.U. and B. Warr (2005), ‘Accounting for growth: the role of physical work’, Structural Change and Economic Dynamics, 16 (2), 181–209. Chatham House (2012), Resources Futures. A Chatman House Report, London: Royal Institute of International Affairs. Cleveland, C.J. (2008), ‘Energy return on investment (EROI)’, in C.J, Cleveland (ed.), Environmental Information Coalition and National Council for Science and the Environment, Encyclopedia of Earth, Washington, DC: Environmental Information Coalition, National Council for Science and the Environment, accessed 18 September 2015 at http://www. eoearth.org/article/Energy_return_on_investment_(EROI). Cohen, J.E. (1995), How Many People Can the Earth Support? New York and London: W.W. Norton. Davidson, D., J. Andrews and D. Pauly (2014), ‘The effort factor: evaluating the increasing marginal impact of resource extraction over time’, Global Environmental Change, 25 (March), 63–8. Doyal, L. and I. Gough (1991), A Theory of Human Need, New York: Palgrave Macmillan. Fischer-Kowalski, M., V. Gaube and G. Rainer (2006), ‘MEFASPACE: a model predict-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 390

01/06/2017 16:51

Growth and sustainability in a material world  ­391 ing freight transport from material flows, and transport activity in Europe’, Journal of Industrial Ecology, 10 (4), 15–35. Fischer-Kowalski, M., H. Haberl, W. Hüttler, H. Payer, H. Schandl, V. Winiwarter and H. Zangerl-Weisz (1997), Gesellschaftlicher Stoffwechsel und Kolonisierung von Natur. Ein Versuch in Sozialer Ökologie (Social Metabolism and Colonization of Nature), Amsterdam: Gordon & Breach Fakultas. Fischer-Kowalski, M., F. Krausmann, S. Giljum, S. Lutter, A. Mayer, S. Bringezu et al. (2011a), ‘Methodology and indicators of economy wide material flow accounting. State of the art and reliability across sources’, Journal of Industrial Ecology, 15 (6), 855–76. Fischer-Kowalski, M., M. Swilling, E.U. Weizsäcker, Y. Ren, Y. Moriguchi, W. Crane et al. (2011b), ‘Decoupling natural resource use and environmental impacts from economic growth. A report of the Working Group on Decoupling to the International Resource Use Panel’, Nairobi: United Nations Environment Programme. Fishman, T., H. Schandl and H. Tanikawa (2015), ‘The socio-economic drivers of material stock accumulation in Japan’s prefectures’, Ecological Economics, 113 (May), 76–84. Giurco, D., T. Prior, G.M. Mudd, L. Mason and J. Behrisch (2010), ‘Peak minerals in Australia: a review of changing impacts and benefits’, prepared for CSIRO Minerals Down Under Flagship, University of Technology, Sydney, Institute for Sustainable Futures and Monash University, Department of Civil Engineering. Gordon, R.J. (2012), ‘Is U.S. economic growth over? Faltering innovation confronts the six headwinds’, NBER Working Paper 18315, National Bureau of Economic Research, Cambridge, MA. Greenhalgh, S. (2008), Just One Child: Science and Policy in Deng’s China, Berkeley, CA: University of California Press. Hall, C.A.S and K.A. Klitgaard (2012), Energy and the Wealth of Nations: Understanding the biophysical economy, New York, Dordrecht, Heidelberg and London: Springer. Hall, C.A.S., J.G. Lambert and S.B. Balogh (2014), ‘EROI of different fuels and the implications for society’, Energy Policy, 64 (January), 141–52. Hall, C.A.S., R. Powers and W Schoenberg (2008), ‘Peak oil, EROI, investments and the economy in an uncertain future’, in D. Pimentel (ed.), Biofuels, Solar and Wind as Renewable Energy Systems – Benefits and Risks, New York: Springer, pp. 109–32. Jackson, T. and P.A. Victor (2011), ‘Productivity and work in the “green economy”. Some theoretical reflections and empirical tests’, Environmental, Innovation and Societal Transitions, 1 (1), 101–8. Klingholz, R. (2014), Sklaven des Wachstums. Die Geschichte einer Befreiung (Slaves of Growth. The History of a Liberation), Frankfurt: Campus. Krausmann, F., S. Gingrich, N. Eisenmenger, K.H. Erb, H. Haberl and M. FischerKowalski (2009), ‘Growth in global materials use, GDP and population during the 20th century’, Ecological Economics, 68 (10), 2696–705. Luhmann, N. (1986), Ökologische Kommunikation: Kann die moderne Gesellschaft sich auf ökologische Gefährdungen einstellen? (Ecological Communication: Can Modern Society Respond to Ecological Threats?), Opladen: Westdeutscher Verlag. Lutz, W., W.P. Butz and K.C. Samir (2014a), World Population and Human Capital in the 21st Century, Oxford: Oxford University Press. Lutz, W, W.B. Butz and K.C. Samir (2014b), World Population and Human Capital in the Twenty-First Century – Executive Summary, Oxford: Oxford University Press. Macunovich, D.J. (2002), Birth Quake. The Baby Boom and its Aftermaths, Chicago, IL: University of Chicago Press. Macunovich, D.J. (2012), ‘The role of demographics in precipitating economic downturns’, Journal of Population Economics, 25 (3), 783–807. Maddison, A. (2008), ‘Historical statistics for the world economy: 1–2006 AD’, accessed 18 November 2015 at http://www.ggdc.net/maddison/. Malthus, T.R. (1803), An Essay on the Principle of Population; or, A View of its Past and Present Effects on Human Happiness; with an Inquiry into our Prospects Respecting the Future Removal or Mitigation of the Evils which it Occasions, 2nd edn, London: F. and C. Rivington.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 391

01/06/2017 16:51

392  Handbook on growth and sustainability Matthews, E., C. Amann, S. Bringezu, M. Fischer-Kowalski, W. Huettler, R. Kleijn et al. (2000), The Weight of Nations: Material Outflows from Industrial Economies, Washington, DC: World Resources Institute. Max-Neef, M. (1991), Human Scale Development – Conception, Application and Further Reflections, New York and London: Apex Press. McKinsey Global Institute (2013), ‘Resource revolution: tracking global commodity markets’, Trends Survey 2013, McKinsey Global Institute. Meadows, D.H. (1999), Leverage Points: Places to Intervene in a System, Hartland, VT: Sustainability Institute. Meadows, D.H. (2008), Thinking in Systems: A Primer, White River Junction, VT: Chelsea Green. Newsweek (2015), ‘Iran’s plan to boost declining birth rate? Block access to birth control’, Newsweek, 11 March, accessed 1 March 2017 at http://europe.newsweek.com/ irans-plan-boost-declining-birth-rate-block-access-birth-control-332223?rm5eu. Odum, E.P. (1971), Fundamentals of Ecology, Philadelphia, PA: W.B. Saunders. Oeppen, J. and J. W. Vaupel (2002), ‘Broken limits to life expectancy’, Science, 296 (5570), 1029–31. Peters, G.P. and E.G. Hertwich (2008), ‘CO2 embodied in international trade with implications for global climate policy’, Environmental Science & Technology, 42 (5), 1401–7. Pfister, C. (1995), Das 1950er Syndrom. Der Weg in die Konsumgesellschaft (The 1950s Syndrome. The Transition to the Consumer Society), Berne, Stuttgart and Vienna: Verlag Paul Haupt. Piketty, T. (2014), Capital in the Twenty-First Century, Cambridge, MA and London: Belknap Press of Harvard University Polanyi, K. (1944), The Great Transformation: The Political and Economic Origins of Our Time, Boston, MA: Beacon Press. Randers, J. (2012), 2052. A Global Forecast for the Next Forty Years. A Report to the Club of Rome, White River Junction, VT: Chelsea Green. Ringhofer, L., S.J. Singh and M. Fischer-Kowalski (2014), ‘Beyond Boserup: the role of working time in agricultural development’, in M. Fischer-Kowalski, A. Reenberg, A. Schaffartzik and A. Mayer (eds), Ester Boserup’s Legacy on Sustainability, New York and London: Springer, pp. 117–38. Sachs, W. (1993), ‘Global ecology and the shadow of “development”’, in W. Sachs (ed.), Global Ecology: Conflicts and Contradictions, London: Zen Books, pp. 3–21. Schaffartzik, A., A. Mayer, S. Gingrich, N. Eisenmenger, C. Loy and F. Krausmann (2014), ‘The global metabolic transition: regional patterns and trends of global material flows, 1950–2010’, Global Environmental Change, 26 (May), 87–97. Sen, A. (1985), Commodities and Capabilities, Amsterdam: North-Holland. Steffen, W., W. Broadgate, I. Deutsch, O. Gaffney and C. Ludwig (2015), ‘The trajectory of the Anthropocene: the great acceleration’, Anthropocene Review, 2 (1), 81–98. Steinberger, J.K. and J.T. Roberts (2010), ‘From constraint to sufficiency: the decoupling of energy and carbon from human needs, 1975-2005’, Ecological Economics, 70 (2), 425–33. Steinberger, J.K., F. Krausmann, M. Getzner, H. Schandl and J. West (2013), ‘Development and dematerialization: an international study’, PLoS One, 8 (10), e70385. United Nations Environment Program (UNEP) (2013), Metal Recycling – Opportunities, Limits, Infrastructure: A Report of UNEP’s International Resource Panel, Nairobi: United Nations Environment Programme. United Nations Environment Program (UNEP) (2016), Global Material Flows and Resource Productivity: Assessment Report for the UNEP International Resource Panel, Nairobi: United Nations Environment Programme. Vahidnia, F. (2007), ‘Case study: fertility decline in Iran’, Population & Environment, 28 (4), 259–66. Van Veen-Groot, Danielle B. and P. Nijkamp (2001), ‘International transport and the environment: an assessment of trends and driving forces’, in E. Feitelson and E.T. Verhoef

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 392

01/06/2017 16:51

Growth and sustainability in a material world  ­393 (ed.), Transport and Environment, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 255–84. Vatn, A. (2005), Institutions and the Environment, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Whitmee, S., A. Haines, C. Beyrer, F. Boltz and A.G. Capon (2015), ‘Safeguarding human health in the Anthropocene epoch: the Rockefeller Foundation–Lancet Commission on Planetary Health’, Lancet, 386 (10007), 1973–2028. Wiedenhofer, D., E. Rovenskaya, W. Haas, F. Krausmann, I. Pallua and M. FischerKowalski (2013), ‘Is there a 1970s syndrome? Analyzing structural breaks in the metabolism of industrial economies’, Energy Procedia, 40, 182–91, doi:10.1016/j.egypro.2013.08.022. Wiedenhofer, D., J.K. Steinberger, N. Eisenmenger and W. Haas (2015), ‘Maintenance and expansion: modelling material stocks and flows for residential buildings and transportation networks in the EU25’, Journal of Industrial Ecology, 19 (4), 538–51. Wiedmann, T.O., H. Schandl, M. Lenzen, D. Moran, S. Suh, J. West and K. Kanemoto (2015), ‘The material footprint of nations’, Proceedings of the National Academy of Sciences, 112 (20), 6271–6.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 393

01/06/2017 16:51

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 394

01/06/2017 16:51

PART V IS IT POSSIBLE TO MOVE BEYOND GROWTH CULTURE?

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 395

01/06/2017 16:51

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 396

01/06/2017 16:51

18  Economic growth, biophysical limits and sustainability in economics textbooks since 1948 Tom L. Green

1 INTRODUCTION This chapter is the by-product of obsessive behavior. When visiting an unfamiliar campus, I tend to make a detour to the university bookstore to inspect the principles of economics textbooks assigned to undergraduate students. I look through their indices and scan the chapters on public goods and externalities to see how much weight the authors place on economic growth and describing its side effects. I am particularly interested in whether they show qualms about potential biophysical limits to growth, and have been searching for signs that the environment–economy nexus is being addressed with increased sophistication. I hope to see concerns about biophysical limits to growth given rigorous exposition because I believe these textbooks should give students the wherewithal to participate in deliberations around limits to growth. I have harnessed this obsession to undertake a more thorough and systematic analysis of how the principles-level presentation of economic growth and its relationship to sustainability has evolved over time in mainstream textbooks used in North America, and the results are presented in this chapter. It is my hope that readers will gain insight on how principles courses have helped construct and reinforce a broad societal consensus on the desirability of growth; I also want to give a sense of how principles courses have presented biophysical limits as a concern that is either misinformed or not pressing, with the discussion and analysis of sustainability getting little attention as a result. First, my rationale for focusing on introductory-level economics textbooks. In North America, about 40 percent of undergraduates representing over a million students each year take a principles of economics course; however, most of those students do not continue studying economics at more advanced levels (Salemi and Siegfried 1999). These courses are largely shaped by the course textbook, of which a handful – modelled on Samuelson’s (1948) classic text – dominate the market (Skousen 1997; Gottesman et al. 2005). These courses – and the textbooks – offer the 397 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 397

01/06/2017 16:51

398  Handbook on growth and sustainability received view of economics, and they are an “obligatory passage point” (Latour 1987, p. 159) for the few that go on to become economists. The textbooks represent a distillation of the foundational knowledge upon which more advanced studies are to be erected. What is taught at the principles level can have a lasting impact on the beliefs of future PhDs in economics (Mackie 1998). Historian of economic thought Steven Medema argued that textbooks are an important mechanism for transferring economic theory to the population at large. He suggested that there is much that scholars can learn about past representation and understanding of theory by analyzing old economics textbooks and considering their evolution over time. Textbooks tell us what their authors thought being conversant in the subject required in their time and place (Medema 2012). Since principles courses are one of the major vehicles by which ­university graduates learn about economic theory, the textbooks used in these courses present an important opportunity to help students better understand how the economy depends on inputs extracted from the ­environment, how resultant waste streams impact the environment and how environmental change affects human well-being. Furthermore, they offer an opportunity to give students the means to navigate debates regarding biophysical limits to growth. Other researchers have examined how the environment–economy nexus has been addressed in principles textbooks. Ten years after the Brundtland Commission’s report, only two of ten texts addressed sustainable development (Folsom and Brauer 1998). After examining 17 principles texts, Reardon (2007) concluded that students were being ill prepared to understand how economic activity relates to environmental decline. Green (2012a) measured the proportion of total content focused on environment-economy topics in bestselling mainstream principles texts published circa 2008. At the low end of the range, McConnell and Brue (2008) devoted 1.8 percent of their text to environment-economy topics, while no textbook allocated more than 4 percent of total content. Most of this content was concentrated in sections on the theory of ­externalities – sections often skipped by lecturers short on time, a practice countenanced by some textbook authors (for example, Parkin and Bade 2006, p. 22). The “core” economic theory and the overarching textbook position that rising levels of consumption and gross domestic product (GDP) are desirable remained unaffected by content that took the ­environment into account.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 398

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­399 1.1 Approach The present chapter examines how the presentation of growth and sustainability has changed with the arc of time. The focus of this study is the 60-year interval between 1948 and 2008, with four distinct periods considered: (1) the appearance of Samuelson’s classic text in 1948 to the era before modern environmentalism (here dated to Rachel Carson’s Silent Spring in 1962); (2) the ensuing period that includes the first Earth Day in 1970; (3) the emergence of the modern Limits to Growth debate in 1972 until the end of the Carter presidency; (4) the renewed optimism in growth that began with Reagan in 1981 to 2009. For each of these periods, I first review a few key events that may have influenced how textbook authors or their student readers thought about growth and biophysical limits. Various editions of three competing mainstream texts published in each of those four periods are discussed in this chapter with the aim of ascertaining the relevant changes between editions. The main object of analysis is Paul Samuelson’s (1948) Economics. Samuelson crafted his text to pay attention to inequality, to take a middle-of-the-road position on policy issues, to disseminate Keynesian insights and to introduce students to macroeconomics when contemporary texts stayed focused on microeconomics and adopted a largely neoclassical perspective on policy questions wherein government interference in the economy was to be minimized (Giraud 2014). Economics is also a natural choice to use in examining the evolution of principles texts since the first edition was published in 1948 and the most recent edition was in 2009. Furthermore, during the second half of the twentieth century it was broadly considered by to be the profession’s textbook of record and was the prototype for subsequent textbooks. Other influential textbooks examined and reported below when comparison with Samuelson is relevant include the text written by Campbell McConnell and that by Richard Lipsey and their respective co-authors (for simplicity, I only refer to the lead author of a given text; co-authors and publication details are listed in Table 18.1). In 2007, Sleeper (2007) reported that the top four mainstream textbooks garnered 60 percent of sales. Together, heterodox principles textbooks that critique and present alternatives to mainstream economics – such as the political economy textbook by Bowles and Edwards (1985) or the textbook on ecological economics by Daly and Farley (2004) – likely amounted to less than 5 percent of sales, so they are not considered here. Beyond the above sample, I also assessed the February 2015 beta edition of The Economy (Carlin et al. 2015), a product of the Curriculum Open-access Resources in Economics (CORE) Project. This textbook,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 399

01/06/2017 16:51

400  Handbook on growth and sustainability Table 18.1  Selected textbooks considered in this review Short form

Full reference

Samuelson-1 1948

Samuelson, P.A. (1948), Economics, New York: McGraw-Hill "  1958, 4th edn "  1964, 6th edn "  1970, 8th edn "  1973, 9th edn "  1976, 10th edn "  1980, 11th edn Samuelson, P.A. and W.D. Nordhaus (2005), Economics, 12th edn, New York: McGraw Hill "  2005, 18th edn

Samuelson-4 1958 Samuelson-6 1964 Samuelson-8 1970 Samuelson-9 1973 Samuelson-10 1976 Samuelson-11 1980 Samuelson-12 1985 Samuelson-18 2005 Lipsey-2 1969 Lipsey-3 1972 Lipsey-4 1974 Lipsey-5 1978 Lipsey-6 1981 Lipsey-8 1984

Lipsey, R.G. and P.O. Steiner (1969), Economics, 2nd edn, New York: Harper & Row Lipsey, R.G. and G.R. Sparks (1972), Economics, 3rd edn, New York: Harper & Row "  1974, 4th edn "  1978, 5th edn "  1981, 6th edn Lipsey, R.G., G.R. Sparks and D.D. Purvis (1984), Economics, 8th edn, New York: Harper & Row

McConnell-1Cdn 1978

McConnell, C.R. and W.H. Pope (1978), Economics, 1st Canadian edn, Toronto: McGrawHill Ryerson

CORE-Econ 2015

Carlin, W. and the Curriculum Open-access Resources in Economics (CORE) writing collective (2015). The Economy, February beta edition, accessed 15 March 2015 at http://core-econ.org

which has the support of the Institute for New Economic Thinking, is written collaboratively under the leadership of Wendy Carlin with the goal of “teaching economics as if the last three decades had happened”. My aim in considering The Economy was to see whether there might be optimism for a deeper treatment of environment–economy interactions in forthcoming editions of mainstream textbooks given pressure for change such as that from the Institute for New Economic Thinking and the student-led Rethinking Economics movement.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 400

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­401

2 TEXTBOOK PERSPECTIVES ON GROWTH AND ITS LIMITS 2.1 1948–61: From Great Depression Angst to Postwar Optimism – Contemporary Influences Notwithstanding the economics profession’s time-honored interest in how the wealth of nations changes over time, earlier in the twentieth century, mainstream economists were more ambivalent about economic growth than they are at present. Indeed, during the Great Depression, many economists and some business leaders, such as steel magnates, saw the US economy from a stagnationist perspective; that is, they considered the US economy mature, believed technological innovation was unlikely to deliver major economy-reshaping breakthroughs and thought deliberate efforts to stoke growth would soon lead to overcapacity that would then trigger a recession (Collins 2000). Blyth (2002) argued that the business-sponsored Committee for Economic Development (CED) invented and propagated “growthmanship” policies partly to battle against stagnationist thinking, but mainly to ensure that the working class’ expectations for rising living standards that had built up during World War II could be managed without undermining capital’s return on investment. The major policy innovation occurred in the CED’s 1947 report, Taxes and the Budget: Program for Prosperity in a Free Economy, where the authors argued that government should focus on fostering economic growth; such growth would enable continued business profitability despite workers being paid gradually rising wages and benefits. For its part, the business sector should accept that the state has a responsibility to manage the economy to achieve a high level of employment. Government should implement automatic stabilizers (unemployment benefits help temper recessions, while economic booms are tempered by rising tax receipts), with government debt being balanced over the business cycle. Influenced by the CED’s work, by 1949 the President’s Council of Economic Advisors (CEA) had become singularly focused on growth as an overarching public policy imperative, and declared in its report to the president “the firm conviction that our business system and with it our whole economy can and should continue to grow”. Furthermore, a focus on growth would reduce “to manageable proportions the ancient conflict between social equity and economic incentives” (cited in Collins 2000, p. 20). Growthmanship was quickly embraced in policy circles because it offered something to all players, including growing markets and profits for business, a rising standard of living for workers and government

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 401

01/06/2017 16:51

402  Handbook on growth and sustainability r­evenues to fund social programs dear to progressives. This timeline of events implies that the first edition of Samuelson’s Economics (1948) was written before the economics profession had time to digest and buy into growthmanship’s ethos and the implied policy suite. Another overarching potential influence on textbook authors (that continued into subsequent periods) was astounding growth in neoliberal think tanks and in funding allocated by foundations to business schools, endowed chairs in economics and educational materials focused on economic matters. For instance, in the 1950s the Ford Foundation began supporting scientific research at a handful of business schools; by 1965, it had disbursed the equivalent of $138 million in 2011 dollars. These schools increasingly advanced a neoliberal agenda, understood here as a program of reduced state regulation, privatization of public enterprises, reduced provision of social welfare, enhanced property rights and the promotion of free trade – all of this conceptualized as a program for stoking growth (Fourcade and Khurana 2013). The fact that business interests disbursed hundreds of millions of dollars to support right-ofcenter economic think tanks – such as the Cato Institute, the Heritage Foundation and, in Canada, the Fraser Institute – as well as research carried out by economists promoting free-market policies has been extensively documented (Dobusch and Kapeller 2009, 2012; Nik-Khah 2011; McLevey 2014). Even before most of these think tanks were established, Samuelson, the Massachusetts Institute of Technology (MIT, where he was based), McGraw-Hill (the publisher of Samuelson’s Economics) and universities adopting his textbook had faced an orchestrated campaign by conservative business leaders. They considered Samuelson’s textbook overly hostile to business interests as it acknowledged that a free-market economy resulted in some social needs being left unmet and assigned an important role to government in managing the economy. Under pressure, Samuelson and McGraw-Hill massaged the wording; from the pre-publication mimeographed version that Samuelson tested on MIT students to the third edition of Economics, the free enterprise system was portrayed increasingly positively (Giraud 2014). Countering the prevailing increase in enthusiasm for growth, signs of an overburdened environment had begun to stir concern about growth’s side effects. In 1952, an acrid smog from burning coal killed over 4000 Londoners, leading to the UK’s Clean Air Act 1956. Galbraith’s (1958) argument in The Affluent Society that economics needed to shift its focus from scarcity to the problems created when rising private affluence cooccurs with degradation of the commons found a receptive audience among non-economists.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 402

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­403 2.2  The Textbooks, 1948–61 In comparing the 1948 edition of Economics with more recent principles textbooks, we are immediately struck by its limited emphasis on growth. There is much less a sense that growth is an all-encompassing public policy imperative that facilitates addressing diverse social ills. That is not to deny that the first edition presents growth as important. Indeed, Samuelson noted how, contra Marx’s analysis, there had been “a steady improvement in minimum standards of living” (Samuelson-1 1948, p. 67). He included a historical description of conditions in 1850 to show how much material progress had been made in the past century (Samuelson-1 1948, p. 68). Yet he paid much more attention to the proper measurement of gross national product (GNP) than to policies to promote growth or to documenting the benefits it delivers. Neither “growth” nor “economic growth” appear in the index, and the entry “GNP” is linked to a mere eight pages (Samuelson-1 1948, pp. 240–47). He was more focused on how the harmful consequences of the business cycle could be managed. Since Samuelsson did not address the environment–economy nexus until the eighth edition of his textbook, readers did not gain any insight on growth’s relationship to levels of resource extraction and waste emissions and consequent impacts on the environment. By the fourth edition of Economics, in 1958, Samuelson placed more emphasis on growth and its potential benefits, though still markedly less so than in later editions. The chapter on national income is now described as “the most important in any economics book” (Samuelson-4 1958, p. 181). Yet balancing enthusiasm for growth, there is an intriguing passage where the economy’s voracious appetite for energy is described, along with W.  Stanley Jevons’s prediction that the British Empire would decline as cheap coal supplies were exhausted, though Samuelson reassured readers that given continuing discoveries by geologists “we should not be too alarmist” (Samuelson-4 1958, p. 712). Natural resources merited passing attention from Samuelson, including a sentence that begs for a more sophisticated treatment of how growth and resource depletion might be related: “many underdeveloped countries are rapidly depleting their mines, their topsoil, and their irreplaceable natural resources”. Apparently to reassure his readers, this passage is married to the unsubstantiated claim that resource depletion in the global south is unlikely to impact industrialized countries: “many of the present-day resources of tropical countries are becoming obsolete in competition with scientific creation of synthetic substances found in abundance within advanced countries” (Samuelson 1958, p. 759). Samuelson concluded his text with “profound optimism” with respect to growth’s promise, characterizing the American economy as

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 403

01/06/2017 16:51

404  Handbook on growth and sustainability leaving “behind it a record of the most rapid advance of productivity and living standards ever achieved anywhere” (Samuelson-4 1958, p. 782). 2.3  1962–71: From Silent Spring to Earth Day 2.3.1  Contemporary influences, 1962–71 The promotion of growth by the CEA, by economists, by business interests and by think tanks described in the previous period continued. Emblematic of the hold that growth now commanded in policy circles around the world, the Organisation for Economic Co-operation and Development (OECD) was formed in 1960; enshrined as Article 1(a) is the aim “to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries”. President Johnson’s Great Society initiative to counter poverty was predicated on rising tax receipts delivered by a growing economy. The modern environmental movement is often dated to Rachel Carson’s (1962) Silent Spring. The book warned of the havoc being wreaked on the natural world by rising pesticide use and its toxicity. In response to growing symptoms of environmental decline and public alarm, President Johnson passed a suite of milestone environmental legislation, including the Clean Air Act 1963 and the Water Quality Act 1965. He also warned that “old values and new visions are buried under unbridled growth” (cited in Collins 2000, p. 64). British economist Erza Mishan (1967) published an influential treatise on the costs of growth. 2.3.2  Textbook data, 1962–71 With the sixth edition of Economics, Samuelson gave growth, a “cheerful” subject (Samuelson-6 1964, p. 792), center stage. Indeed, he stated that “The key word in most economic discussions these days is growth” (Samuelson-6 1964, p. 721), and growth merited inclusion in the index, with over two dozen entries. There is even an entry for growthmanship and an extended discussion on how growth can be fostered. In a passage that suggests a response to Galbraith’s (1958) critique of policies focused on further increasing production in a society of mass prosperity, Samuelson noted that some believe “we are already so affluent a society to have no great need for further growth” (Samuelson-6 1964, p. 778). Other than passing mention of externalities, “the smoke from my factory chimney which contaminates the air for all” (Samuelson-6 1964, p. 159), and the brief mention of natural resources already included in the fourth edition, environment–economy interactions did not merit attention. With the eighth edition in 1970, the focus on economic growth in Economics was further fine-tuned. More notably, and nearly a decade

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 404

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­405 after the publication of Silent Spring, Samuelson finally turned his attention to the environment in a chapter on “Economic problems of race, cities, and the polluted environment” (Samuelson-8 1970, p. 780). In a subsection called “Hard choices and the ecology of nature”, he conceded that the GNP marginally overstates the nation’s income with the statement, “When we finally pay our way in terms of conservation and of preserving the environment, perhaps we shall have left for ordinary consumption only 9/10 as much” (Samuelson-8 1970, p. 793). Around the same time, other principles authors begin to accord space to the environment. In his second edition, Lipsey linked the expanding industrial complex to the discharge of smoke into the atmosphere and noted the prodigious social cost entailed: “the billions of tons of industrial waste poured into the atmosphere over the last 150 years staggers the imagination. It has to be measured in such diverse terms as . . . extra doctor and hospital services to treat the chronic diseases caused by such air pollution” (Lipsey-2 1969, p. 219). Yet, providing an example of how textbooks fail to integrate environmental considerations into the theoretical core of the text, right after this section, Lipsey considered a case where social and private costs were identical, and gave the ill-suited example of coal, wherein the total social cost was “the value of output a ton of coal can produce in alternative uses” (Lipsey-2 1969, p. 220) – thus failing to attend to the environmental impacts of coal extraction and burning. Furthermore, Lipsey characterized the main cost associated with pursuing growth as the present generation having to forgo current consumption to enable capital formation (Lipsey-2 1969, p. 759). 2.4  1972–80: Biophysical Limits Enter Public Consciousness 2.4.1  Contemporary influences, 1972–80 President Nixon saw growth as critical to American success as market reforms led to increasingly fierce global competition, but dismissed notions that it would allow the federal government to tackle all problems. By the end of this decade, with the credibility of Keynesian demand-side approaches to growth being undermined by stagflation, policy makers had embraced supply-side economics. The supply siders saw increasing productivity and improving incentives by cutting taxes as the pathway to robust growth (Collins 2000). Even as arguments for growth evolved, they faced a growing body of counterarguments. Georgescu-Roegen’s (1971) publication of The Entropy Law and the Economic Process, coming as it did from an economist who had made substantive contributions to mainstream theory, represented an important challenge to the economics profession (Daly 1995). Samuelson

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 405

01/06/2017 16:51

406  Handbook on growth and sustainability wrote that no informed economist should “remain complacent” after considering Georgescu-Roegen’s entropy perspective (cited in Daly 1995, p. 150). His doctoral student, Herman Daly, soon followed by proposing policies to forgo growth and achieve steady state conditions (Daly 1974). Schumacher’s (1973) Small is Beautiful, which further critiqued technological progress and growth, found a wide readership. Meanwhile, mounting concern about global-scale environmental impacts of human activity led to the 1972 United Nations Conference on the Human Environment. The Club of Rome released Limits to Growth (Meadows et al. 1972) in March 1972 (hereafter Limits). This study by a team headed by Dennis and Donella Meadows was initially received as a scientific contribution deserving of urgent attention, but very quickly a series of attacks on the study were launched by economists and business commentators (Bardi 2011). Nordhaus, who was to join Samuelson as co-author for the textbook’s twelfth edition, published an influential critique (Nordhaus 1973), though his interpretation of the underlying model contained many serious errors (Forrester et al. 1974; Bardi 2011). Nordhaus’ critique appears to have strongly shaped Samuelson’s views of the Meadows study (Oltmans 1974). Hirsch (1976) opened up an ancillary debate by exploring social limits to growth, and showed that, even setting aside environmental considerations, much of the ostensible welfare gains from growth were cancelled out owing to crowding and positional consumption. When he was still Georgia’s governor, Jimmy Carter was stirred by the Club of Rome’s report and in his inauguration speech in 1977 he invoked limits, “We have learned that ‘more’ is not necessarily ‘better,’ that even our great Nation has its recognized limits” (Biven 2002, p. 259). He ordered federal agencies to study the issue of limits, which gave rise to the Global 2000 Report to the President; though more optimistic, it corroborated Limits, warning of a world that would be “more crowded, and more vulnerable to disruption than the world we live in now” (Barney 1980). Global 2000 was released at the end of Carter’s presidency, and the findings were ignored by the incoming Reagan administration. 2.4.2  Textbook data, 1972–81 In the ninth edition, Samuelson devoted over two pages to coverage of Forrester’s (1971) World Dynamics and especially Limits (Samuelson-9 1973, pp. 818–20). The Meadows team’s findings were counterbalanced by discussion of Nordhaus and Tobin’s more optimistic results. Their measure of economic welfare (MEW), which corrected GNP for some urban disamenities, showed that although MEW was less than GNP, it still tracked it, implying that further growth would be welfare enhancing (Samuelson-9 1973, pp. 195–6).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 406

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­407 It is unlikely that Samuelson’s treatment left students with a favorable impression of the Meadows study. “Here we have Malthus all over again” he commented (after earlier portraying Malthus as wrong), noting that Limits had excited attention “favourable with the lay public, much of it critical with the economics profession”. He also quoted a critic from Princeton who labelled the study as “the computer that cried Wolf”, and others who described the results as a product of “garbage in, garbage out” (Samuelson-9 1973, p. 818). In addition, Samuelson reproduced graphs from the report with the dismissive annotation: “What mixture of pseudoscience and common sense do studies like this one by the Club of Rome represent?” (Samuelson-9, 1973, p. 819). Samuelson also argued that beyond “conceptual flaws and factual inaccuracies”, the Meadows team ignored “what scarcity will do to changing relative prices, and what these differential price changes will do to encourage substitutions and to relieve these shortages” (Samuelson-9 1973, p. 819). As an additional rationale for rejecting Limits, Samuelson suggested that Americans would be unwilling to give up three-quarters of their income to meet the needs of the global poor (Samuelson-9 1973, p. 819). The eleventh edition in 1980 contains an entry on entropy economics that represents an aberration in the corpus of mainstream textbooks as it offers a thermodynamic perspective on the economic process. Samuelson explained that Georgescu-Roegen advocated replacing the pendulum metaphor of economics with “the hourglass, with its sands running down”, implying that “producing the GNP must speed up the degradation of matter and usable energy” (Samuelson-11 1980 p. 747). Yet this innovation had no impact on Samuelson’s overall assessment of growth and was dropped from the twelfth edition. Not surprisingly, Lipsey also strongly endorsed growth for its ability to raise living standards to levels where the average person finds “leisure, travel and luxury goods are within reach”. He also conceded that economic growth had resulted in “spectacular failures – perhaps most notably pollution of the air, water and land by chemicals, heat and noise”. Notwithstanding this concession, Lipsey was clear that those who questioned growth should not be taken seriously: “Few people ask, How can we stop growth? and even fewer people take those few questioning seriously” (Lipsey-5 1978, p. 789). Lipsey included sidebars contrasting fabricated letters written by the “Growth is Good” and the “Growth is Bad” schools. The Growth is Good school argument included the rather outlandish claim that it is the very rich who want to stop growth because they do not like how consumer society has eroded “their privileged consumption position . . . some complain bitterly, and it is not surprising that they find their intellectual

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 407

01/06/2017 16:51

408  Handbook on growth and sustainability a­pologists” in the “anti-growth economists” (Lipsey-5 1978, p. 792). Lipsey also mentioned Limits to Growth and the earlier World Dynamics study by Forrester, labelling them as doomsday models presenting a perspective much criticized by economists (Lipsey-5 1978, p. 804). Lipsey incorrectly claimed that the Meadows team did not allow for technical progress, for resource discoveries, for substitution of scarce resources or for efforts to mitigate pollution. Many of the textbooks offered the argument that a growing economy generates the wealth to clean up the environment; however, the fact that in most instances further growth entails greater throughput and consequent environmental impact was ignored. We see this in McConnell’s text: “Similarly, a growing economy can, for example, undertake new programs to alleviate poverty and clean up the environment without impairing existing levels of consumption, investment, and social goods production” (McConnell-1Cdn 1978, p. 398). Readers are also likely to conclude from McConnell that economists strongly endorse the pursuit of growth – he stated, “Laymen sometimes wonder why economists get so excited about seemingly miniscule changes in the rate of growth. Does it really matter very much whether our economy grows at 5% or 4%? It matters a great deal!” (McConnell-1Cdn 1978, p. 399). While McConnell also referred to Limits as a doomsday model (McConnell-1Cdn 1978, pp. 426–7), he included an unusual section where he described the materials balance approach, which has been very influential in ecological economics. That approach “is the notion that the weight of the inputs (fuels, raw materials, water, and so forth) used in the ­economy’s production processes will ultimately result in a roughly equivalent residual of wastes” (McConnell-1Cdn 1978, p. 751). He neutralized the possibility that this perspective might undermine arguments for growth by describing nature’s “self-regenerative capacity which allows it, within limits, to absorb or recycle such wastes”, and policies to make firms internalize externalities. 2.5 1981–2009: Limits Deferred: Reagan’s Optimism and a New Era of Economic Growth 2.5.1  Contemporary influences, 1981–2009 The 1981 inauguration of Ronald Reagan marked a dramatic shift in energy and environmental policy towards extractivism – represented by the scrapping of solar panels Carter had installed at the White House – and renewed commitment to vigorous growth. Indeed, Reagan pronounced in a 1980 campaign speech: “Our aim is to increase our national wealth so all have more, not just redistribute what we already have which is just a

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 408

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­409 sharing of scarcity” (Collins 2000, p. 196). Cornucopians Julian Simon and Herman Kahn published Resourceful Earth in 1984 as a counter to the Global 2000 report commissioned by Carter; it asserted limits can be transcended (Simon and Kahn 1984). International institutions increasingly reflected a neoliberal agenda focused on liberalizing global trade, promoting growth and clawing back social benefits (Rist 2003). The Brundtland Commission was convened in 1983 to investigate global environmental problems and unacceptable poverty. While the commission’s report referred to limits, it deemed them not to be absolute and called for a new era of economic growth to improve the lot of the global poor (World Commission on Environment and Development 1987). However, the commission’s report failed to substantiate that such growth would reverse rather than accelerate the environmental crisis (Rist 2003). An influential critique published by Bailey (1989) in Forbes magazine claimed that events since 1972 had demonstrated that the “predictions” by the Club of Rome had been wrong; the many writers who soon cited the article failed to note the ways Bailey misrepresented Limits (Bardi 2011). The prevailing sentiment among economists and policy makers was that the Meadows team’s analysis was fundamentally flawed. Important innovations in economic and economy–environment indicators added a new tool for scrutinizing the long-term viability and desirability of growthmanship policies. For instance, Daly and Cobb’s Index of Sustainable Economic Welfare suggested that in rich countries, human well-being had stopped rising with growth in the 1970s (see appendix in Daly and Cobb 1994). Ecological footprint analysis suggested that wealthier individuals used up resources more quickly while putting greater demands on the Earth’s assimilative capacity and that high standards of living could not be generalized across the world’s population (Wackernagel and Rees 1996). Influences that might have encouraged textbook authors to take a more nuanced perspective towards growth include accumulating evidence of accelerating environmental deterioration, such as the 1985 discovery of the Antarctic ozone hole and the first scientific assessment report published by the Intergovernmental Panel on Climate Change in 1990. The spectacular 1992 collapse of the Northern Cod fishery off Canada’s Atlantic coast provided compelling evidence that renewable resource stocks were being overexploited. To fill the void in conventional economic analysis, ­ecological economics emerged as a new transdisciplinary field of study with an explicit focus on sustainability and skepticism of the ­viability of long-run growth.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 409

01/06/2017 16:51

410  Handbook on growth and sustainability 2.5.2  Textbook data, 1981–2009 Nordhaus took the helm in revising Economics with the twelfth edition in 1985. Growth remained an overarching public policy priority for him. Nordhaus also included Limits, though more briefly, and described the pessimistic conclusions of the model as following from pessimistic assumptions; he characterized it as “largely irrelevant for advanced ­countries” (Samuelson-12 1985, p. 816). With respect to the expanding set of ecological and environment-economy indicators such as Wackernagel and Rees’ (1996) innovation of ecological footprint analysis and the accumulating data suggesting environmental disaster ahead, Economics and other mainstream textbooks were largely silent. The last edition of Economics considered here is the eighteenth edition published in 2005. Compared to the first edition, a much greater proportion is allocated to discussing growth and its benefits. It contains over 60 index entries under growth and a similar number for GDP (though part of this expanded coverage is due to more thorough indexing). Nordhaus strongly endorsed growth: “Continuing rapid economic growth enables advanced industrial countries to provide more of everything to their ­citizens . . . more resources for medical care and pollution control . . . Because economic growth is so important for living standards, it is a central objective of policy” (Samuelson-18 2005, p. 555). Furthermore, Nordhaus simplified the discussion of biophysical limits to growth, and described the Club of Rome’s study briefly: “The ghost of Malthus reappears in ‘doomsday’ economics such as a famous computer study Limits to Growth and its sequel Beyond the Limits . . . the predictions are even more dismal than the original gospel” (Samuelson-18 2005, p. 363). He also eliminated the graphs from the original study and pointed out in a more promising passage “rapid increase in the use of land and mineral resources” that must be mobilized to stoke growth with the concurrent rise “in the emissions of air and water pollution” should controls be lacking. The fact that US energy consumption rose by a factor of 300 from 1850 to 1995 was noted (Samuelson-18 2005, p. 562). Yet acknowledging such trends did not translate to caution around growth. Nordhaus also mentioned Limits in a sidebar for enrichment reading where the Club of Rome was referred to as “an ominous-sounding group”. The early positive reception of Limits was inaccurately linked to oil price shocks in 1973, and the text stated that this “first wave of anxiety subsided” as natural resource prices dropped after 1980. However, the authors described a more recent “second wave of growth pessimism” that shifted focus from non-renewable resources to “mounting scientific evidence that industrial activity is significantly changing the earth’s climate and ecosystems”. The view presented was optimistic. Just as Malthus

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 410

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­411 failed to foresee how technological innovation “could overcome the law of diminishing returns . . . if the growth pessimists of today prove wrong, it will be largely because new environmentally friendly and resourcesaving capital replaces today’s resource-intensive, polluting technologies” (Samuelson-18 2005, p. 563). The infamous resource wager that prices of five metals would rise by 1990 as a result of scarcity lost by ecologist Paul Ehrlich to cornucopian Julian Simon was described with a triumphant “Simon won hands down” (Samuelson-18 2005, p. 369). However, what Samuelson failed to report was that Simon refused Ehrlich’s challenge for a second bet to be based on ecological indicators (Lawn 2010). 2.6  Looking Forward, 2015– 2.6.1  Contemporary influences, 2010–15 The global financial crisis revived interest in Keynesian approaches to getting economies out of recession and back on the path to robust growth, putting sustainability on the backburner. International institutions embraced “inclusive green growth” without serious analysis of the underlying contradictions involved (Victor and Jackson 2012). Meanwhile, evidence that humanity is on a collision course with what the Earth can sustain became increasingly difficult to avoid (Steffen et al. 2015a). 2.6.2  Textbook data, 2015– Here we focus on just one textbook, The Economy, a collaboratively authored textbook sponsored by the Institute for New Economic Thinking to be published in 2017 (but now available online in draft form; ­ CORE-Econ 2015) that is intended to make principles courses more relevant to real-world issues. It gives some grounds for expecting a more sophisticated treatment of the environment-economy nexus. Many ecological economists would likely be pleased that the first unit of the February 2015 beta draft of this textbook contains two figures that put the economy in its ecological context. In the draft figure 15 explains that “The economy is part of society, which is part of the biosphere”. A further promising innovation for a mainstream text is the inclusion in its figure 16 of an augmented circular flow diagram with raw material inputs, energy and waste by-products with the annotation, “Households and firms are connected to each other and to the biosphere by flows of goods, services, workers, pollution, and raw materials”. In unit 18 on “Economics and the environment” we see the major innovations that portend of a potential breakthrough in the textbook presentation of growth and its environmental implications. Although students’

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 411

01/06/2017 16:51

412  Handbook on growth and sustainability limited time and attention continues to be squandered on the largely irrelevant and injudicious Ehrlich–Simon resource wager (Lawn 2010), the authors acknowledged that had the bet covered the period 2000–2010, Ehrlich would have won. More promisingly, the first and second laws are described, as well as how they “provide insight into the importance of the scale of the economy. How large, in its demands for material and energy, can the economic system become, relative to the ecosystem that sustains it?” Georgescu-Roegen and Daly’s contribution to a biophysical economics is described, as is the planetary boundaries framework (Rockström et al. 2009). The authors concluded the unit by describing humanity as engaged in a “high stakes gamble” requiring effective policies to forestall disaster. Despite such innovations, there remains a degree of theoretical incoherence to the textbook, because growth is usually associated with healthy or successful economies, as in this passage in unit 3, “the rapid economic growth in successful capitalist societies” (CORE-Econ 2015, p. 1) or in unit 12 where “economies fluctuate between good and bad times”, good equating to growth and bad recession. In this last passage, the textbook’s inconsistency comes into sharp relief. Making it “good” again likely implies more throughput and more environmental impact, but this conflict is not acknowledged.

3 DISCUSSION While a reader of the first edition of Samuelson would find growth, though not a major topic of discussion, described in positive terms, with succeeding editions far greater proportion is given over to growth, and it is placed almost exclusively in a positive light. We would not detect in Samuelson’s 1948 edition the framing of growth as a societal imperative found in more recent textbooks. In the first few editions of Samuelson and the other leading texts prior to Limits, the environment, if it is mentioned at all, is given only passing reference, largely through the frame of externalities. Links between environmental degradation and the level of resource throughput entailed by the scale of the economy are not made explicit (Daly 1991; Harris 2010; Victor 2008). The drawbacks of growth are acknowledged in brief passages that are accompanied by passages reassuring readers, and then the textbooks ignore the downsides from thereon out, a strategy Hill and Myatt (2010) have referred to as “note then ignore”. The leading textbook authors examined here appear to have felt an immediate need to respond to the publication of Limits. Criticisms of the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 412

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­413 study made in the texts are based often on misconstruing the underlying computer model used to generate scenarios and how data and assumptions were incorporated. Critical reviews of Limits are cited with little to indicate the critics’ arguments were vetted; likewise, there is no indication that rebuttals by the modelers to economists’ critiques (Forrester et al. 1974) were incorporated. At best, the textbooks concede that Limits helped draw attention to global-scale environmental problems. The authors mobilize a number of arguments often put forward by mainstream economists to imply that concerns over limits to growth are unwarranted: ●

●

● ● ● ● ● ●

Malthus was wrong, so the neo-Malthusians must be wrong as well. Limits to Growth was a flawed study; the authors lacked sufficient understanding of how the economy works and they contributed nothing original to the debate. We can grow the clean side of the economy, so further growth need not exhaust resources or cause pollution. A growing economy generates more wealth for cleaning up the environment. Technological innovation will improve resource-use efficiency and reduce waste emissions. Scarcity will lead to rising prices, spurring conservation, discovery of new ore bodies and substitution. The fact that Ehrlich lost his resource wager to Simon shows natural scientists do not understand how markets solve problems of scarcity. Natural scientists are overly concerned because they have failed to consider how economic theory shows the market mechanism overcomes resource limits.

Together, the above arguments add up to a containment strategy (Green 2012b) that reduces the likelihood that students who learn about concerns around biophysical limits will come to question the textbook’s normative commitments to growth and rising per capita consumption levels more generally. They allow authors to set aside questions of sustainability, even as these issues become increasingly urgent. Students are not presented with sophisticated counterarguments, such as the fact that economic theory does not necessarily imply that prices will warn of impending scarcities in non-renewable resources and that since complete markets for biodiversity and other global commons do not exist, there are few relevant price signals that might be monitored (Norgaard 1990; Reynolds 1999; Lawn 2004; Victor 2008). Nor are they presented with much by way of ecological indicators, or the observation that it is incongruous to declare Malthus wrong

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 413

01/06/2017 16:51

414  Handbook on growth and sustainability when there are more people going hungry today than in his time (Brander 2007; Sachs 2008). Counterintuitively given accelerating environmental decline, concerns over biophysical limits are treated less extensively in the textbooks in the 1980s and 1990s. More recent studies on the state of the global ­environment – and updates to Limits to Growth (Meadows et al. 1992, 2004) are largely ignored. What is disheartening is that despite four additional decades of environmental data and a much improved understanding of biospheric processes since Limits, the textbook discussion of the environment–economy nexus and biophysical limits has failed to evolve. The authors do not model good pedagogical practice; instead of presenting students with analytical tools to evaluate how growth might relate to demands on the biosphere, they write to convince readers to adopt a pro-growth stance and to discount concerns raised by sustainability scientists. For instance, incorporating a simple decomposition formula such as the Kaya (1990) identity1 in the discussion could help students evaluate both the challenges that further growth creates for sustainability and potential remedies, since such identities provide a tool for thinking about the relationships between growth, per capita consumption and emissions per unit of economic output (York et al. 2003). Arguments from an ecological economics perspective are not entirely absent from the textbooks, especially once the modern argument about limits debuts in the 1970s. Indeed, by reading multiple editions of the leading mainstream texts, we would encounter brief mentions of Schumacher, Georgescu-Roegen and Daly. At one point, Samuelson’s Economics describes the relevance of the first and second laws of thermodynamics. In another case, McConnell describes the materials balance approach, but he does not use it to help students appreciate that this approach warrants a much more cautious position towards growth until there is evidence GDP can be dematerialized. The analysis here lends support to Blyth (2002) and Collins’s (1981, 2000) thesis that growthmanship – societal adoption of growth as a paramount public policy objective – was deliberately constructed to support business interests by creating a business-friendly environment while countering pressures for redistribution. When Samuelson was drafting his first edition, the economics profession was more ambivalent about growth, there was less scholarship on the topic and a significant proportion of economists held stagnationist views; also lacking was societal consensus that growth should be a paramount national policy objective (Collins 2000). Likewise, Samuelson’s first edition gives the topic limited albeit sympathetic attention. As the succeeding editions rolled out, Samuelson

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 414

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­415 ramped up his advocacy for growth. The other leading textbooks were highly influenced by Samuelson’s new and wildly successful form of textbook. Authors incorporated the key elements of growthmanship policies and analysis into their texts and then, as the need arose with the modern limits debate, began to also incorporate material to counter and contain emerging critiques about the downsides of growth.

4 CONCLUSIONS Holding the scale of the economy constant to avoid further deterioration of the biosphere would call into question the viability of industrial capitalism. Likewise, since the troublesome employment implications of ongoing gains in labor productivity could no longer be solved through increasing consumption levels, either the work week would need to be shortened or some form of guaranteed income would need to be offered to those short of work. Because growth could no longer be offered as the best solution for reducing poverty, questions regarding the equitable distribution of income and wealth would take on greater urgency. Though politicians, business and labor leaders may find it convenient to keep side-stepping these issues and to avoid revisiting their uneasy consensus on growth as the keystone of economic policy, nature is deaf to our disputes and each additional year of economic growth puts further pressure on the biosphere and erodes future prospects for well-being. Given the lack of correlation between growth and well-being (Easterlin 1973, 2013) in developed economies and the accumulating evidence that the global economy is broaching planetary boundaries (Rockström et al. 2009; Steffen et al. 2015b), the fact that there is no evidence that the global economy is dematerializing in absolute terms (Cleveland and Ruth 1999; Pothen and Schymura 2015) and that the accumulating data on environmental indicators from the last 40 years closely tracks the Limits to Growth model (Turner 2012) it is high time that principles textbook authors revisit their normative commitment to growth and offer students a more sophisticated treatment of biophysical limits. A hopeful sign on this horizon is the CORE Project supported by the Institute for New Economic Thinking to produce a new textbook to shake up contemporary principles courses; at the time of writing, the draft out for review offers a more balanced and rigorous treatment of the potential implications of attending to biophysical limits, though it remains incoherent in characterizing a growing economy as a healthy economy. The events and literature discussed above and the analysis of leading mainstream textbooks substantiates that textbook authors address in an

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 415

01/06/2017 16:51

416  Handbook on growth and sustainability at best cursory way the broadening and deepening critique of economic growth; more commonly they do so in a dismissive manner. This despite an accelerating environmental crisis and its attendant humanitarian crisis, the emergence of ecological economics, the birth of the degrowth movement and the disenchantment of students of economics at leading universities with the narrow theoretical perspective and lack of real-world relevance offered on economics courses. We would hope that, should someone decades hence scrutinize the economics textbooks used in the first half of the twenty-first century, they will offer theory that addresses the biophysical prerequisites to human survival. Indeed, our future may well depend on such a shift happening quickly, given the fact that such a high proportion of university students take an introductory economics course and that students go on to become journalists, politicians, business leaders or voters whose views on growth will likely shape the realm of possible policies to address the environment–economy nexus.

NOTE 1. C 5 (C/E)(E/GDP)(GDP/P) × P where C is carbon emissions, C/E is carbon intensity per unit of energy, E/GDP is energy intensity per unit of GDP, GDP/P is per capita income and P is population.

REFERENCES Bailey, R. (1989), ‘Dr. Doom’, Forbes, 16 October, 45. Bardi, U. (2011), The Limits to Growth Revisited, New York: Springer. Barney, G.O. (1980), The Global 2000 Report to the President of the US: Entering the 21st Century, Elmsford, NY: Pergamon Press. Biven, W.C. (2002), Jimmy Carter’s Economy: Policy in an Age of Limits, Chapel Hill, NC: University of North Carolina Press. Blyth, M. (2002), Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century, New York: Cambridge University Press. Bowles, S. and R. Edwards (1985), Understanding Capitalism: Competition, Command and Change in the US Economy, New York: Harper & Row. Brander, J.A. (2007), ‘Viewpoint: sustainability: Malthus revisited?’, Canadian Journal of Economics, 40 (1), 1–38. Carlin, W., S. Bowles, A. Jayadev, K. O’Rourke, R. Naylor, D. Hojman et al. (the Curriculum Open-access Resources in Economics, CORE, writing collective) (2015), The Economy, February beta edition, Institute for New Economic Thinking, New York, accessed 15 March 2015 at http://core-econ.org. Carson, R. (1962), Silent Spring, New York: Houghton Mifflin. Cleveland, C.J. and M. Ruth (1999), ‘Indicators of dematerialization and the materials intensity of use’, Journal of Industrial Ecology, 2 (3), 15–50. Collins, R.M. (1981), The Business Response to Keynes, 1929–1964, New York: Columbia University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 416

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­417 Collins, R.M. (2000), More: The Politics of Economic Growth in Postwar America, New York: Oxford University Press. Daly, H.E. (1974), ‘The economics of the steady state’, American Economic Review, 64 (2), 15–21. Daly, H.E. (1991), ‘Towards an environmental macroeconomics’, Land Economics, 67 (2), 255–9. Daly, H.E. (1995) ‘On Nicholas Georgescu-Roegen’s contributions to economics: an ­obituary essay’, Ecological Economics, 13 (3), 149–54. Daly, H.E. and J.B. Cobb (1994), For the Common Good: Redirecting the Economy toward Community, The Environment, and a Sustainable Future, 2nd edn, updated and expanded, Boston, MA: Beacon Press. Daly, H.E. and J. Farley (2004), Ecological Economics: Principles and Applications, Washington, DC: Island Press. Dobusch, L. and J. Kapeller (2009), ‘Why is economics not an evolutionary science? New answers to Veblen’s old question’, Journal of Economic Issues, 43 (4), 867–98. Dobusch, L. and J. Kapeller (2012), ‘A guide to paradigmatic self-marginalization: lessons for post-Keynesian economists’, Review of Political Economy, 24 (3), 469–87. Easterlin, R. (1973), ‘Does money buy happiness?’, The Public Interest, 30 (Winter), 3–10. Easterlin, R. (2013), ‘Happiness, growth, and public policy’, Economic Inquiry, 51 (1), 1–15. Folsom, D. and J. Brauer (1998), ‘Sustainable development: coverage in principles of economics texts’, in Refereed Proceedings of the 40th Mountain Plains Management Conference, 14–17 October, Denver, CO, pp. 107–13. Forrester, J.W. (1971), World Dynamics, Cambridge, MA: Wright-Allen Press. Forrester, J.W., G.W. Low and N.J. Mass (1974), ‘The debate on World Dynamics: a response to Nordhaus’, Policy Sciences, 5 (2), 169–90. Fourcade, M. and R. Khurana (2013), ‘From social control to financial economics: the linked ecologies of economics and business in twentieth century America’, Theory and Society, 42 (2), 121–59. Galbraith, J.K. (1958), The Affluent Society, New York: Houghton Mifflin. Georgescu-Roegen, N. (1971), The Entropy Law and the Economic Process, Cambridge, MA: Harvard University Press. Giraud, Y. (2014), ‘Negotiating the “Middle-of-the-Road” position: Paul Samuelson, MIT, and the politics of textbook writing, 1945–55’, History of Political Economy, 46 (suppl. 1), 134–52. Gottesman, A.A., L. Ramrattan and M. Szenberg (2005), ‘Samuelson’s economics: the continuing legacy’, Quarterly Journal of Austrian Economics, 8 (2), 95–104. Green, T.L. (2012a), ‘Introductory economics textbooks: what do they teach about sustainability?’, International Journal of Pluralism and Economics Education, 3 (2), 189–223. Green, T.L. (2012b), ‘Introductory economics courses and the university’s commitments to sustainability’, doctoral dissertation, University of British Columbia, Interdisciplinary Studies Graduate Program, Vancouver, BC. Harris, J. M. (2010), The Macroeconomics of Development without Throughput Growth, in R. Hill and T. Myatt (eds), The Economics Anti-Textbook: A Critical Thinker’s Guide to Micro-Economics, London: Zed Books. Hirsch, F. (1976), The Social Limits to Growth, Cambridge, MA: Harvard University Press. Kaya, Y. (1990), ‘Impact of carbon dioxide emission control on GNP growth: interpretation of proposed scenarios’, IPCC Energy and Industry Subgroup, Response Strategies Working Group, Paris. Latour, B. (1987), Science in Action: How to Follow Scientists and Engineers through Society, Cambridge, MA: Harvard University Press. Lawn, P. (2004), ‘How well are resource prices likely to serve as indicators of natural resource scarcity?’, International Journal of Sustainable Development, 7 (4), 369–97. Lawn, P. (2010), ‘On the Ehrlich–Simon bet: both were unskilled and Simon was lucky’, Ecological Economics, 69 (11), 2045–6. Lipsey, R.G. and P.O. Steiner (1969), Economics, 2nd edn, New York: Harper & Row.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 417

01/06/2017 16:51

418  Handbook on growth and sustainability Lipsey, R.G. and G.R. Sparks (1972), Economics, 3rd edn, New York: Harper & Row. Lipsey, R.G. and G.R. Sparks (1974), Economics, 4th edn, New York: Harper & Row. Lipsey, R.G. and G.R. Sparks (1978), Economics, 5th edn, New York: Harper & Row. Lipsey, R.G. and G.R. Sparks (1981), Economics, 6th edn, New York: Harper & Row. Lipsey, R.G., G.R. Sparks and D.D. Purvis (1984), Economics, 8th edn, New York: Harper & Row. Mackie, C.D. (1998), Canonizing Economic Theory: How Theories and Ideas are Selected in Economics, M.E. Sharpe, Armonk, New York. McConnell, C.R. and W.H. Pope (1978), Economics, 1st Canadian edn, Toronto: McGrawHill Ryerson. McConnell, C.R. and S.L. Brue (2008), Economics: Principles, Problems, and Policies, New York: McGraw Hill. McLevey, J. (2014), ‘Think tanks, funding, and the politics of policy knowledge in Canada’, Canadian Review of Sociology, 51 (1), 54–75. Meadows, D.H., D.L. Meadows and J. Randers (1992), Beyond the Limits: Global Collapse or a Sustainable Future, London: Earthscan. Meadows, D.H., D.L. Meadows, J. Randers and W.W. Behrens (1972), Limits to Growth, New York: Universe Books. Meadows, D.H., J. Randers and D.L. Meadows (2004), The Limits to Growth: The 30-Year Update, White River Junction, VT: Chelsea Green. Medema, S.G. (2012), ‘Textbooks as data for the study of the history of economics: lowly beast or fruitful vineyard?’, History of Economic Thought and Policy, 2 (2), 193–207. Mishan, E.J. (1967), The Costs of Economic Growth, London: Staples. Nik-Khah, E. (2011), ‘George Stigler, the graduate school of business, and the pillars of the Chicago School’, in R. Van Horn, P. Mirowski and T.A. Stapleford (eds), Building Chicago Economics: New Perspectives on the History of America’s Most Powerful Economics Program, Cambridge: Cambridge University Press, pp. 116–47. Nordhaus, W.D. (1973), ‘World Dynamics: measurement without data’, Economic Journal, 83 (332), 1156–83. Norgaard, R.B. (1990), ‘Economic indicators of resource scarcity: a critical essay’, Journal of Environmental Economics and Management, 19 (1), 19–25. Oltmans, W.L. (ed.) (1974), On Growth, New York: Capricorn Books. Parkin, M. and R. Bade (2006), Economics: Canada in the Global Environment, 6th edn, Toronto: Pearson Education Canada. Pothen, F. and M. Schymura (2015), ‘Bigger cakes with fewer ingredients? A comparison of material use of the world economy’, Ecological Economics, 109 (January), 109–21. Reardon, J. (2007), ‘How green are principles of economics textbooks? An investigation into how mainstream economics educates students pertaining to energy, the environment and green economics’, International Journal of Green Economics, 1 (3–4), 381–93. Reynolds, D.B. (1999), ‘The mineral economy: how prices and costs can falsely signal decreasing scarcity’, Ecological Economics, 31 (1), 155–66. Rist, G. (2003), The History of Development: From Western Origins to Global Faith, London: Zed Books. Rockström, J., W. Steffen, K. Noone, A. Persson, F.S. Chapin, E.F. Lambin et al. (2009), ‘A safe operating space for humanity’, Nature, 461 (7263), 472–5. Sachs, J.D. (2008), ‘The specter of Malthus returns’, Scientific American, 299 (3), 38. Salemi, M.K. and J.J. Siegfried (1999), ‘The state of economic education’, American Economic Review, 89 (2), 355–61. Samuelson, P.A. (1948), Economics, New York: McGraw-Hill. Samuelson, P.A. (1958), Economics, 4th edn, New York: McGraw-Hill. Samuelson, P.A. (1964), Economics, 6th edn, New York: McGraw-Hill. Samuelson, P.A. (1970), Economics, 8th edn, New York: McGraw-Hill. Samuelson, P.A. (1973), Economics, 9th edn, New York: McGraw-Hill. Samuelson, P.A. (1976), Economics, 10th edn, New York: McGraw-Hill. Samuelson, P.A. (1980), Economics, 11th edn, New York: McGraw-Hill.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 418

01/06/2017 16:51

Economic growth, biophysical limits and sustainability  ­419 Samuelson, P.A. and W.D. Nordhaus (1985), Economics, 12th edn, New York: McGraw-Hill. Samuelson, P.A. and W.D. Nordhaus (2005), Economics, 18th edn, New York: McGraw-Hill. Schumacher, E.F. (1973), Small is Beautiful: Economics as if People Really Mattered, New York: Harper & Row. Simon, J.L. and H. Kahn (1984), Resourceful Earth: A Response to Global 2000, New York: Basil Blackwell. Skousen, M. (1997), ‘The perseverance of Paul Samuelson’s economics’, Journal of Economic Perspectives, 11 (2), 137–52. Sleeper, J.A. (2007), ‘Is current economic thought reflected in the principles textbook?’ doctoral dissertation, George Mason University, Community College Education, Fairfax, VA. Steffen, W., W. Broadgate, L. Deutsch, O. Gaffney and C. Ludwig (2015a), ‘The trajectory of the Anthropocene: the great acceleration’, Anthropocene Review, 2 (1), 81–98. Steffen, W., K. Richardson, J. Rockström, S.E. Cornell, I. Fetzer, E.M. Bennett et al. (2015b), ‘Planetary boundaries: guiding human development on a changing planet’, Science, 347 (6223), 736. Turner, G.M. (2012), ‘On the cusp of global collapse? Updated comparison of the Limits to Growth with historical data’, GAIA – Ecological Perspectives for Science and Society, 21 (2), 116–24. Victor, P.A. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Victor, P.A. and T. Jackson (2012), ‘A commentary on UNEP’s green economy scenarios’, Ecological Economics, 77 (May), 11–15. Wackernagel, M. and W. Rees (1996), Our Ecological Footprint: Reducing human impact on the Earth, Philadelphia, PA: New Society. World Commission on Environment and Development (1987), Our Common Future, Oxford: Oxford University Press. York, R., E.A. Rosa and T. Dietz (2003), ‘STIRPAT, IPAT and ImPACT: analytic tools for unpacking the driving forces of environmental impacts’, Ecological Economics, 46 (3), 351–65.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 419

01/06/2017 16:51

19  From growth to sustainability: cultural transition beyond consumerist lifestyles*

Halina Szejnwald Brown and Philip J. Vergragt

INTRODUCTION Since the end of the Second World War the USA has been transformed into a society where the national economy depends to a large extent on private consumption, and where mass acquisition and use of material goods is the dominant lifestyle, the centerpiece of social practices, leisure time, cultural rituals and celebrations. We refer to it as consumer society. The ecological costs of this transformation have been high. While technological improvements in resource efficiency have slowed down the relentless growth in demand for materials, water and energy, they have not outpaced the growing demand, much less attained radical reductions in demand. It is becoming increasingly apparent that technology alone will not solve the ecological unsustainability problem. The returns on energy investments in producing useful energy sources – both fossil-based and others – are much lower than in the past (Gupta and Hall 2011; Zehner 2011; Murphy 2013). The rebound effects of various types are now a widely acknowledged and quantified phenomenon (Jenkins et al. 2011; Owen 2011; IRGS 2013); and the institutional and organizational barriers for rapid technological changes are formidable (Sterman 2015). Reductions in consumption levels are necessary as well. This chapter concerns itself with a possible cultural transition beyond mass consumerism. Consumer society is a complex system of technology, culture, institutions, markets and dominant business models. It is driven by the ideology of neoliberalism and infinite growth. It has evolved through a sophisticated exploitation of the fundamental human quest for a meaningful life and well-being (Speth 2008; Skidelsky and Skidelsky 2012; Sterman 2014; Lorek and Fuchs 2013). To consider reducing its ecological costs is to question this entire complex system, and especially consumerism as the organizing principle for the economy, culture and political process. Critiques of consumer society have become increasingly frequent during the past decade, largely under the banner of ‘sustainable consumption’; scores of books, articles, special journal issues, official reports, and countless conferences and workshops have been dedicated to this theme. At 420 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 420

01/06/2017 16:51

From growth to sustainability  ­421 the same time, the contours of such alternative society remain vague, and so is the understanding of how a transition beyond mass consumerism might take place. The debate emphasizes various mechanisms and change agents: from considering the role of small scale out-of-the-mainstream social innovations and experiments (Brown and Vergragt 2008; Seyfang 2009); to more instrumental approaches, such as altering human motivations through government policies (Lorek and Fuchs 2013; Schapke and Rauschmayer 2014; Spangenberg 2014) to meso-level considerations of evolving social practices (Shove et al. 2007; Halkier 2013; Spaargaren 2013), socio-technical regimes (Geels and Schot 2007; Kemp and Van Lente 2013) and new business models not calibrated for unlimited growth (Kelly 2012), to macro-level policies such as abandoning the economic growth paradigm in national policy (Victor 2008; Jackson 2009; Kallis 2011, 2015; Harris 2013), introducing carbon tax (Parry et al. 2014), or mobilizing social movements toward a different type of economy, institutions and ethics (Raskin 2011). Unfortunately the widely accepted theories of social change have limited applicability for critical analysis of the above ideas. Since the 1980s a rich body of theories of social change has emerged in the fields of social movement studies, organizational theory, economic sociology, and historical institutionalism in political science, as well as in the most recent effort to develop a unifying synthesis of them (Fligstein and McAdam 2012). They conceptualize social change as involving intentional contestation between self-aware incumbents and challengers with specific agendas and alternative visions of the future, either through direct confrontation or through infiltration of what Olin Wright calls interstitial spaces in the dominant structures (Wright 2012). However, we must not assume that this is how the evolution beyond mass consumerism would take place. In fact, we propose that if it takes place it is more likely to start more inconspicuously, not as an intentional challenge directed at the dominant power relations, institutions and economic structures; but as a bottom-up cultural shift toward different lifestyles and conceptions of well-being. Partly, this is because of the complexity of the system, in which a target for an organized challenge of consumerism is unclear, multiple targets are interdependent, and potential incumbents and challengers have multiple interests and loyalties. Further, no plausible challenger seems to be emerging. The government is unlikely to lead any initiatives that may directly challenge economic growth. The private sector is similarly committed to growth and increased consumption. There is little evidence that major environmental organizations and even incipient movements calling for systemic change have consumerism or sustainable consumption on their agendas (The New Economy Coalition 2015; The Next System Project 2015).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 421

01/06/2017 16:51

422  Handbook on growth and sustainability This chapter considers how a change beyond mass consumerism might begin in the United States through the combined processes of (1) emerging shifting lifestyle preferences among young generations and (2) necessary adaptations to the present economic, technological and demographic realities. The transition we consider is a bottom-up cultural phenomenon. The underlying assumption of this analysis is twofold: that any change in individual and collective lifestyles must be tied to the core human striving for a meaningful life and well-being, and that the transition does not need to be driven by ecological concerns or moral imperatives (although these are by no means precluded). Both assumptions stem partly from the abundance of research findings that ecological concerns, even among the most committed and well-informed activists, produce small changes in consumption behaviors and are of significant magnitude only among the most committed tiny minority of activists (Bowerman 2014). Furthermore, we contend that only the fundamental striving for meaning and well-being in life has the kind of power and constant presence that is necessary for radical changes in people’s lifestyle choices and priorities. This chapter asks the following questions: what lessons can be drawn from the history of consumer society and from the large body of research on happiness and well-being to inform our thinking about cultural transition beyond consumerism? Can the very meaning of well-being be framed in a new way that is radically less dependent on mass consumption and materialism? What factors might play a role in such a cultural shift? Who might lead the transition? Is there evidence that such a shift is taking place? The analysis draws on the history of consumer society (its deliberate construction and its rapid emergence), the scholarly literature on human happiness and well-being, and documented contemporary societal developments. We formulate informed hypotheses and outline a scenario of how a cultural transformation might take place in the near future. We focus mainly on the United States (US). Much of what research explains about the human striving for well-being and about the forces that have created, and continue to create, consumer societies worldwide is universal. The United States, however, has been the global leader in the construction of consumer society – historically, structurally and in terms of outcomes. The low-density suburban model of well-being has been furthest developed in the US and is an aspiration of the majority of its population: sizes of homes, ownership of material possessions and driving distances greatly outpace those in rich European countries; its per-capita ecological footprint is about twice that of Europe (Global Footprint Network 2016); and the US economic model is emulated by many rapidly developing economies in the world. Finally, we write about

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 422

01/06/2017 16:51

From growth to sustainability  ­423 the United States because we live here and are concerned about its future and its global impact. At the same time we seek to stimulate scholars and practitioners in other parts of the world to reflect on the likely paths to a similar cultural transition in their own national contexts.

CONSTRUCTING THE CONSUMER SOCIETY The story of the emergence of a consumer society in the US has been told numerous times and from various angles (here, we draw on several sources: Ewens 1998; Cohen 2004; Botsman and Rogers 2010; Garon 2012; Gallagher 2013). We briefly summarize the story here in order to highlight how rapid and well-coordinated that social change was, despite the complexity involved – the economy, infrastructure, land use, institutions, lifestyles and cultural norms – and how closely linked to the moment in history in which it took place. The advent of the consumer society in the US is generally placed in the first two decades of the twentieth century, when modern marketing techniques evolved and the term ‘consumer’ was introduced while referring to the American people (Brandt 2007). The Social Security Act 1935 facilitated the transition to mass consumption by relieving Americans from the need to save for old age, but it was during the 1940s and 1950s that the massive project of creating a consumer society took off in earnest through the coordinated efforts of business, labor unions and the federal government. The corporate success in directing the enormous postwar productive capacity into massive private consumption have been extensively documented by many authors. The federal government actively promoted mass consumption, as illustrated in the Employment Act 1946, the major piece of legislation with regard to national economic planning: ‘federal government’s responsibility . . . [is to] . . . promote maximum employment, production, and purchasing power’ (Cohen 2004, p. 116). The 1944 GI Bill helped returning war veterans to get free college education and down payments and government-guaranteed loans for purchasing homes and other goods. Mortgage interest deductions and government-financed infrastructure (utilities, roads and interstate highway systems, among others) made home ownership in the newly invented suburbia a logical financial choice for families. The labor unions pushed hard for higher wages (and not, for example, extended vacations, as their European counterparts did) as the means for reducing unemployment through mass consumption. The results were astonishing. National output of goods and services doubled between 1946 and 1956, and doubled again by 1970, with private

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 423

01/06/2017 16:51

424  Handbook on growth and sustainability consumption expenditures settling at about two-thirds of the gross domestic product (today it is 71 percent of GDP in the US, as compared to, for instance, 58 percent in Germany). By 1960, 62 percent of Americans owned their homes, compared to 44 percent in 1940. The construction industry, aided by the 1926 single-use zoning law, applied new methods of mass production of cheap and comfortable single-family homes to convert large tracks of farm land and forest, increasingly removed from city centers, to suburbs that were completely dependent on car-based mobility (with the iconic 1949 Levittown on Long Island, New York, becoming its model) (Cohen 2004; Gallagher 2013). The massive demographic phenomenon of the exodus from cities to suburbs was so rapid that in 1960 suburban residents of single-family homes outnumbered both urban and rural dwellers (Cohen 2004, p. 126). Private suburban shopping malls became the public spaces, stratified by race and income. It replaced the previously more egalitarian public spaces of city streets, cafes and places of commerce. Performance of the housing construction sector became an official indicator of the national economic well-being, a practice that continues in the US to this day. At the peak of the cold war, American lifestyles of mass consumption also served as an important symbol of the superiority of the capitalist system over Soviet-style socialism, becoming ‘almost a national civil religion’ (Cohen 2004, p. 127). In the famous ‘kitchen’ debate between Vice President Nixon and Soviet Premier Khrushchev at the American Exhibition in Moscow in 1959, Nixon boasted: ‘The United States comes closest to the ideal of prosperity for all in a classless society.’ In short, a major cultural and economic transition took place in the US in the span of a single generation. This transition was not a historical inevitability, but rather occurred through simultaneous efforts of government, organized labor and the manufacturing sector, all of which shared a particular vision of prosperity in the US. These power centers understood the window of opportunity that opened at that particular historical juncture: the huge postwar industrial overcapacity, the national euphoria over uncontested political and economic power and endless possibilities, a demographic boom, the post-Depression hunger for a better life, and technological advances and industrial capacity that made material goods more accessible than ever. The transition not only changed the lifestyles of most Americans in profound ways, but also fostered a cultural shift: consumerism and suburban lifestyle became conflated with such fundamental aspirations as well-being, freedom and democracy.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 424

01/06/2017 16:51

From growth to sustainability  ­425

THE LIMITS AND DOWNSIDES OF THE CONSUMERIST PROJECT The consumerist economy has certainly created great national wealth and benefitted many. Today’s American family lives in better housing with more amenities than in the 1940s and 1950s, and even poor families have basic electric appliances and cars. However, the price of the economic growth is the ever-accelerating pace of private consumption. The size of an average new American home increased from about 950 square feet in 1950 to about 2400 square feet in 2010 (Calwell 2010); the cycle of fashion and lifespan of other material goods has rapidly decreased over time. By the 1980s, when middle-class salaries began to stagnate and the temporary boost to family income by women entering the workforce began to wear off, the American family began to support its consumerist lifestyles through ever-increasing personal debt (Schor 1992, 1998, 2004; Garon 2012). The 2008 financial collapse exposed the magnitude of that bubble. It is now well documented that the growing economy has not delivered on the promise of well-being for all. For the middle-class families supported by two salaries, the consumerist lifestyles brought declining leisure time and economic insecurity (Schor 1992, 1998); and the growing inequality in the distribution of national wealth evolved hand in hand with an array of social problems. Using a composite of 16 indicators of social health, Miringoff and Opdycke (2007) show that since 1970 US society has been losing ground. This is consistent with the findings of Wilkinson and Pickett (2009) who used a composite index of nine indicators of public health and social problems to show that in wealthy developed economies a further increase in wealth does not improve general well-being. On the other hand, they found a strong correlation between income inequality and social problems, with the US having both the highest score for social problems and the highest income inequality among the advanced economies. The happiness studies (discussed below), suggest that the sense of contentment has not increased among Americans over the past several decades (Pew 2006). Research actually shows that most Americans – regardless of their political leanings and views on the threat of global warming – think that we consume too much and would be better off with less consumption. However, that perception hardly translates into private behaviors, and policy elites are more reluctant to consider decreased consumption as desirable than is the general public (Bowerman 2014). Part of the problem is the emotionally and politically loaded nature of the idea of consuming less, which for many people conjures images of retreat and loss. Further, consumption in people’s lives is a complex phenomenon,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 425

01/06/2017 16:51

426  Handbook on growth and sustainability highly habituated, and enacted without conscious thought of its ecological cost (Shove et al. 2007; Spaargaren and Oosterveer 2010). Through technological innovations, aggressive marketing and manipulation of desires, social practices relentlessly evolve toward more complexity, more functionality and more seemingly necessary uses (such as multiple refrigerators or bathrooms in a ‘standard house’). In that process, they repeatedly redefine what is normal, basic, and necessary (Quitzau and Røpke 2008). And the cultural practices of celebrating holidays and festive occasions have become institutionalized into mass consumption social rituals. Another barrier to change is the fact that sociotechnical regimes, such as automobility, food production and consumption, and housing construction (the major determinants of the ecological impact of consumerist lifestyles) are stable complex structures, highly resistant to change (Geels and Schot 2007; Kemp and Van Lente 2013). Furthermore, the prevailing economic system and power relations (especially in this age of dominant neoliberal ideology) are so profoundly dependent on the ever-larger amounts of material and energy throughput that neither policy makers nor scholars nor activists have a vision of how to decouple the two without triggering widespread disaster. Yet, the history of emergence of mass consumerism shows that a ­society-wide radical shift in lifestyles and aspirations is possible and can be rapid, though it gives few clues as to how a move from mass consumerism to its alternative might proceed. What could initiate and maintain such an evolution? Governments have little appetite to challenge mass consumption while the economy is deeply dependent on it; we can hardly expect Walmart or Patagonia not to want to sell us more and more stuff; and there is little evidence that prominent non-governmental organizations (NGOs) have consumption on their agendas. The change would have to come from citizens in the form of changing priorities and lifestyles or pressuring governments for new politics. However, evidence accumulated over the years indicates that ethical considerations are a weak motivator of radical lifestyle changes (Bowerman 2014). We therefore hypothesize that a collective reframing of the idea of good life as less fixated on materialism and high-intensity leisure activities may be the engine of change. We acknowledge that religion has consistently framed well-being in similar terms; which could in principle open up interesting new coalitions. In the next section we consider the plausibility of such a cultural shift by drawing on the large body of research on subjective well-being and happiness.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 426

01/06/2017 16:51

From growth to sustainability  ­427

MATERIAL CONSUMPTION AND WELL-BEING During the past decade the sustainability discourse has incorporated the concepts of good life, subjective well-being, and happiness as part of the questioning the economic growth paradigm. Since the pioneering work of Easterlin (1974) and Inglehart et al. (2000), scores of books and articles have been published on this subject from various perspectives, including a focus on the relationship between material wealth and well-being (in this brief review we draw principally on the works of Layard 2011; Graham 2012; Skidelsky and Skidelsky 2012; World Happiness Report 2013, which in turn build on a very large body of relevant scholarship). Despite controversies over definitions, metrics, study design and the validity of survey data, several shared understandings about human happiness and subjective well-being have emerged to date. One key observation is the remarkable consistency and stability of certain basic determinants of happiness across very different countries and cultures, ranging from Afghanistan to Japan to the United States: a stable marriage, good health, community and friendships, social trust and autonomy. The second key research finding is that we are intensely social beings and we realize ourselves through human relationships and in relation to others. Studies consistently show that people judge the emotional value of their position in life, including (among others) material wealth, in relation to others. Once the basic subsistence needs are met, it is of greater importance to have more than others than to have more. The result is that in a society which uses income and wealth as the primary proxy for success in life (as is the case in the US), this core human attribute can lead to a limitless pursuit of wealth and material goods (Leiss 1976). A third observation from the research on well-being is that people adapt very quickly to new circumstances – better or worse – with a sense of wellbeing tending toward the pre-change status. For example, people who lost a lot of money in 2008 were very unhappy, but a year or two later their happiness level was restored (Graham 2012). This adaptability leads to insatiability and a ‘hedonic treadmill’: aspirations and wants increase with income; and the baseline of what is necessary and ‘normal’ keeps getting higher. This is the bedrock of the marketing and advertising industry. On the other hand, in a study reported by Graham (2012) the positive effects of a salary raise lasted about one year whereas the effects of a promotion lasted at least five years. This indicates that the adaptation phenomenon is much more pronounced with regard to material wealth than to inner needs such as status, meaningful work and respect. Based on the above research findings, it is easy to see that as long as success is monetized and well-being is culturally defined through the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 427

01/06/2017 16:51

428  Handbook on growth and sustainability attributes of currently dominant lifestyles – large house, suburbs, accumulation of stuff, high impact leisure time – we may be hopelessly stuck in the consumerist arms race. This race is endless and, in and of itself, does not bring life satisfaction. Some people understand it and respond by choosing a simpler life of balance between work, leisure and civic engagement. The concept of ‘voluntary simplicity’ was popularized by Elgin in the 1970s and has received renewed attention over the past two decades, both among scholars and writers of popular self-help books (Paehlke 1989; Elgin 1997; Schor 1998; De Graaf et al. 2001; Hammerslough 2001; Doherty and Etzioni 2003). The term and the idea are not new in American cultural history, but in the recent rendition it has taken a specific meaning: a reaction to the consumerist values and lifestyles dominating the contemporary culture and their human and ecological price. Despite a wide recognition of the concept and the term, there is no evidence so far that the practice of voluntary simplicity is moving into the mainstream. These findings have led some advocates of less materialistic lifestyles to embrace the idea of a mandated shorter workweek. The shorter workweek idea has been part of national economic policies in Europe for decades, driven largely by concerns about unemployment and the general well-being of populations. More recently, it has been promoted as the means of reducing the ecological footprint and improving subjective well-being (Jackson 2009; NEF 2010; Schor 2010; Coote and Franklin 2013; Rosnick 2013). The underlying logic of this proposal is that if we work less we also earn and spend less on material goods. The payoff to individuals would be to have more leisure time, which could then be spent, partly, on offsetting the decreased purchasing power through self-provisioning, and partly on engaging with family, friends, community and civic life. The ground-breaking macroeconomic modeling by Victor (2008) for the Canadian economy suggests that a shorter workweek could be achieved under certain conditions without creating unemployment, and that the ecological gains would be significant. However, the idea remains highly controversial, especially in relation to the employment and livelihoods of the financially struggling middle class, and reliable data to inform the debate is in short supply (see Kallis et al. 2013 for an economic critique). More importantly, in the US context such a policy proposal would have limited traction both on the grounds of political feasibility and as an equity issue; a relatively small segment of the population could actually afford and benefit from a shorter workweek. Alternatively, in the present post-Great Recession economy the circumstances of many middle class people impose a tighter personal budget and less consumption, thus opening an opportunity for exploring a shift beyond consumerist lifestyles. The precondition for such a shift is that the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 428

01/06/2017 16:51

From growth to sustainability  ­429 basic subsistence needs are met and the sense of well-being is not diminished. The latter is in principle possible if the reduced discretionary income is accompanied by psychologically deeply satisfying lifestyle choices. In the next section we consider one such case: the millennial generation. Our exploration centers on the notable emerging shifts in the priorities among millennials toward more urban lifestyles. The main thesis is that the lifestyle of greater inter-dependency and reciprocity within a community and more reliance on self-provisioning may in fact facilitate an evolution of a new meaning of good life: materially scaled down and grounded in lifestyle pursuits other than consumerism and accumulation of material goods. While this proposition is a hypothesis, one thing is certain: considering the society-wide nature of any cultural framing, such evolution of the meaning of well-being can occur only if it is a collective process experienced by a large and self-aware population.

MILLENNIALS AND THE CITY The millennial generation in the age bracket from early twenties to midthirties, at the time of writing comprising approximately 50 million people, is the largest demographic group in the US since the post-World War II baby boomers. If we are looking for putative signs of a cultural shift, this group is a good place to start. Based on a massive survey in 2009 by the Pew Research Center many millennials can be described as connected, open to change, and racially and ethnically more diverse than any other American generation in history. They grew up with the Internet and social media technology, and are entirely comfortable with it. Millennials are more confident and optimistic than their elders were at the same age. Despite the fact that onethird of them were not employed when the survey was taken, and claimed not to have enough money to live in the way they wanted, 90 percent of the survey respondents believed that they would eventually meet their financial goals (Pew Research Center 2010). The most notable fact about millennials is their coming of age during the era of a diminishing middle class and uncertain financial prospects. Since the mid-1970s most of the gains from sustained national economic growth went to the top earners (Traub and McGhee 2013), and this trend continues. For middle-class Americans, social and economic mobility, the very essence of the American dream, has stagnated or declined in the US since the late 1970s, and recent data show that young men are earning less in real terms than their fathers did 30 years ago (Traub and McGhee 2013). During the slow recovery from the Great Recession the incomes

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 429

01/06/2017 16:51

430  Handbook on growth and sustainability of most Americans, including those with college degrees, have been flat, whereas the top 1 percent of earners increased their incomes by 11 percent. The second notable fact among millennials is their growing interest in urban living and their frequent disdain for the suburban model of the good life. Fully 77 percent of the survey respondents indicated that they plan to live in city centers (Doherty and Leinberger 2011). Also, applications for drivers licenses – a coming-of-age ritual among the post-World War II American youths – have been declining among the 16- to 24-year-olds since 1990 (Cohen 2012). In general, large US cities, especially those with public transit, walkable streets, and strong economies, are experiencing a renaissance (Glaeser 2011; Gallagher 2013), even leading some researchers to proclaim ‘the end of the suburbs’ (Gallagher 2013). While the latter may in the short run be hyperbole, examples of the changing priorities for housing in the US abound and are not related to political ideology. In Denver, the values of homes in the car-dependent suburbs dropped by half during the Great Recession since 2008, while those in the city center have increased. In Maryland, suburban McMansions with vaulted ceilings and granite countertops are being converted into small apartments for the needy, and locally financed public transit is emerging in improbable cities such as St Louis and Salt Lake City (Doherty and Leinberger 2011). This influx into cities is driven primarily by millennials and the post-World War II baby boomers, who together comprise half of the US population. The recent interest in city life signifies a major social change in the US context, where only 4 percent of the population lives in hyper-dense areas with more than 30 housing units per acre (75 per hectare), while 82 percent of population lives in areas that have four or less units per acre (10 per hectare) (Chakrabarti 2014). It is not clear at this point how many of the currently urban millennials will stay in the cities once they form families, but those who stay will very likely have to redefine their aspirations for the good life in a way that does not depend on amassing material possessions and consumerism. A home in a desirable city neighborhood is much smaller than a suburban dwelling (which currently averages in the US at 2200 square feet, or 200 square meters). It is also expensive. These add up to less space to fill with stuff and less discretionary income available to purchase it. Also, although well-paying jobs are easier to find in the cities, the post-Great Recession economic opportunities in the wealth-polarized America are highly constrained. Young urban families will need to find new ways to create livelihoods and to provide for the basic necessities of everyday life. They will by necessity have to depend on collaborative modes of organizing housing, childcare and other types of caregiving, of procuring fresh

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 430

01/06/2017 16:51

From growth to sustainability  ­431 food and maintaining personal mobility. The currently growing popularity of food co-operatives, urban gardens and childcare co-operatives in the hip young neighborhoods of New York, San Francisco and others, may be more than minor fads among urban elites; they may be the harbingers of these new types of lifestyles. The popular systems of bartering, sharing, swapping and other forms of the sharing economy may further counterbalance tight budgets and living spaces. The more interdependent and reciprocal lifestyles may offer advantages in terms of well-being. Organizing and running collaborative living arrangements (including the unavoidable conflicts and confrontations) engages people in personal interactions, shortens distances, builds trust and develops social identity. To the extent that having a sense of belonging in a community is one of the pillars of subjective well-being, these new arrangements might richly compensate for the declining purchasing power, and might significantly contribute to the framing of well-being as less dependent on high-intensity private consumption. The shift toward urban living may have other consequences for creating the sense of wellbeing. As Agyeman et al. (2013) note, drawing on the cases from around the world, shared public spaces – the essence of most urbanites’ life – can serve as places of physical activity, social interaction, and as a social equalizer and the source of civic participation – all contributing to subjective well-being. Finally, from the ecological perspective, data show that the carbon footprint of households strongly correlates with income (in the range of poor to comfortable middle class), with most of the impacts attributable to housing and individual mobility (Weber and Matthews 2008), and that the footprint of city dwellers, especially in dense cities such as New York, is about 30 percent lower than in sprawling suburbs (Jones and Kammen 2014). It should be stressed at this point that the above scenario applies, at least in the initial stages, to the millennials with reasonable economic prospects, however diminished these may be in relation to their parents. In the general US population the professional/managerial class represents approximately 20 percent of the total (Holt 2014). Although we might dispute whether 20 percent is a major force in a society-wide cultural shift, these are exactly the middle-class young people who would, a generation or two ago, be right now embarking on the suburban life of consumerism, commuting and accumulating, and would be defining the aspirations of those who are less affluent. In summary, from the perspective of well-being, millennials’ ­attraction to urban living and the contraction of their economic opportunities converge in interesting ways. Economic constraints and small expensive living spaces constrain consumerism and encourage human ­ networks

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 431

01/06/2017 16:51

432  Handbook on growth and sustainability and interdependent collaborative arrangements. Urban density ­facilitates collaborative organization of everyday lives and creates shared public spaces. Also, the sheer size of this demographic group, as well as their ­technology-based interconnectedness, increases the probability that ­incremental individual changes in lifestyles, life priorities and the social practices of everyday life may evolve toward a shared collective consciousness. This shared consciousness, evolving from lifestyle experiences, might embrace a new framing of well-being that is different from the conventional suburban middle class model that has shaped the aspirations of the post-World War II generations.

DISCUSSION AND CONCLUSIONS Since its rapid evolution after the World War II, consumer society in the US, and the lifestyles it has engendered, has long ceased to deliver on the great promise of well-being for all, while exacting a heavy ecological toll. It runs on its own momentum, propelled by cultural meanings and symbols, social practices, institutional inertia and existing infrastructure, and by business and political interests that favor economic growth. Since technology alone cannot counteract the ecological cost of unrestrained growth and consumerism, much less address the shrinking gains in well-being, a transition beyond this dominant economic model is needed. We contend that a bottom-up cultural shift in lifestyle choices is a necessary element of that transition. While it is generally accepted that cultural change occurs very slowly, under some conditions it may actually be rapid. This was the case with consumer society, which emerged in the US (and other economies) after World War II. In the span of one generation the middle class radically changed its ‘normal’ lifestyles, consumption behaviors and its understanding of what is a good life. As discussed below, the shift beyond consumerism will most likely be slower. This chapter emphasizes the cultural dimension of a possible transition beyond consumerism, which entails a new framing of good life. We argue that if such a transition takes place, it is unlikely to be driven by either ideology, moral imperatives or persuasive campaigns, or follow the leadership of organized NGOs. Rather, the fundamental human striving for well-being and subjective happiness in everyday life is a more likely driving force. We hypothesize that shifts in lifestyle choices – from suburban to urban living – and adaptations to the current economic realities of stunted economic growth and wealth inequality may produce new social practices, interactions and meanings. These, in turn, may lead to refram-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 432

01/06/2017 16:51

From growth to sustainability  ­433 ing the understanding of well-being. In that reframing, materially scaled down life would be richer in other ways: more reciprocal and connected to others, and with a stronger sense of a community. We also hypothesize, drawing on the demographic and economic statistics, that technologically connected, educated, confident and open-to-change millennials might lead the way in the shift toward a less consumerist society. Their diminishing interest in suburban life in favor of cities, constricted economic opportunities, and the size and interconnectedness of the millennial cohort all point in that direction. As discussed earlier, the widely accepted theories of social change are ill suited to the case of a transition beyond consumerism, and especially to its cultural dimension. While this scenario does not draw on a robust theory of cultural change, neither are we navigating a totally unchartered territory. The fascinating history by Brandt (2007) of the rise and decline of cigarette smoking in the US offers instructive clues. Contrary to the general belief that the radical change in attitudes toward smoking during the 1980s was very rapid, it in fact built on the preceding three decades of accumulating scientific and legal evidence, advocacy, political fighting, growing risk-aversion in the affluent society and increasing questioning by the population of this dominant practice. Much of it took place under the radar screen of social critics and cultural observers, who made a note of the cultural change only when it entered its culminating phase: a widespread rejection of smoking. A cultural change toward a non-­consumerism-based conception of good life may follow a similar trajectory: the growing disappointment with the promise of consumer society and the happiness of suburban life, known to a small group of scholars since the early 1980s, has diffused into the general public consciousness, including millennials, only in the past decade or so. What we are seeing now as the changing lifestyle choices among millennials may be the equivalent of the beginning of the ultimate demise of smoking. The history of smoking also provides another interesting lesson, and possibly an analogy. The uptake of cigarettes entailed massive marketing campaigns that successfully constructed a meaning for cigarettes: as alluring, masculine for men and feminine for women, and a path to personal fulfillment. Several decades later this framing had essentially ran its course and lost its power. So it may be with mass consumerism, the meaning of which had been constructed during the same historical period, by the same advertising firms, in a similar manner and through similar imagery as smoking. The cultural transition we contemplate will be difficult without active policy support. Such issues as affordable housing for middle-class families in the cities, and access to quality public education, open space and mass transit are but the most obvious problems that must be tackled by

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 433

01/06/2017 16:51

434  Handbook on growth and sustainability local and state governments. Just as consumer society emerged in the US through active participation by the government, the next model of society will need facilitation as well. Is the scenario presented here compatible with capitalism and its relentless pursuit of growth? Is it compatible with various countervailing trends, such as the expansion of material consumption patterns by the super-rich in their gated communities, the pervasiveness of advertising, and the growing strength of multinational corporations and the mostly unregulated financial sector? This is an open question. One school of thought would argue that capitalism has proven to be very flexible and thus will be able to accommodate the changes describe here, at least for now (Wright 2012). Others might see the changes we describe as facilitating a transition toward a steady-state (de-growth) economy (Kallis 2015), possibly by shifting from consumer capitalism to capitalism not built on mass consumption (Raskin et al. 2002). Another perspective would see these changes as the forerunners of a post-capitalist society (Alperovitz 2011, 2013). It is outside the scope of this chapter to elaborate. The hypotheses, the future scenario, and the pathways to change we are proposing in this chapter are all open to challenge, and time may prove us wrong. In the meantime, we hope that this chapter will stimulate debate, action and research.

NOTE * This chapter is a revision of the previously published paper: H.S. Brown and P.J. Vergragt (2016), ‘From consumerism to wellbeing: toward a cultural t­ransition?’, Journal of  Cleaner Production, May, pp. 1–15, doi:http://dx.doi.org/10.1016/j.jclepro.​ 2015.04.107.

REFERENCES Agyeman, J., D. McLaren and A. Schaefer-Borrego (2013), ‘Sharing cities’, briefing written for Friends of the Earth, September, accessed 17 December 2013 at http://www.foe.co.uk/ sites/default/files/downloads/agyeman_sharing_cities.pdf. Alperovitz, G. (2011), America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy, 2nd edn, Boston, MA: Democracy Collaborative Press and Dollars and Sense. Alperovitz, G. (2013), The Next American Revolution: Beyond Corporate Capitalism and State Socialism, White River Junction, VT: Chelsea Green. Bowerman, T. (2014), ‘How much is too much? A public opinion research perspective’, Sustainability: Science, Practice, & Policy, 10 (1), 14–28, accessed 31 July 2014 at http:// sspp.proquest.com/archives/vol10iss1/1209-044.bowerman.html.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 434

01/06/2017 16:51

From growth to sustainability  ­435 Brandt, A.M. (2007), The Cigarette Century: The Rise, Fall, and Deadly Persistence of the Product that Defined America, New York: Basic Books. Brown, H.S. and P.J. Vergragt (2008), ‘Bounded socio-technical experiments as agents of systemic change: the case of a zero-energy residential building’, Technological Forecasting and Social Change, 75 (1), 107–30. Calwell, C. (2010), Is Efficient Sufficient? The Case for Shifting Our Emphasis in Energy Specifications to Progressive Efficiency and Sufficiency, Stockholm: European Council for Energy Efficient Economy, accessed 18 November 2013 at http://www.eceee.org/policyareas/sufficiency/eceee_Progressive_Efficiency.pdf. Chakrabarti, V. (2014), A Country of Cities: A Manifesto for an Urban America, New York: Metropolis Books. Cohen, L. (2004), Consumer Republic: The Politics of Mass Consumption in Postwar America, New York: Vintage Books. Cohen, M.J. (2012), ‘The future of automobile society: a socio-technical transitions perspective’, Technology Analysis and Strategic Management, 24 (4), 377–90. Coote, A. and J. Franklin (2013), Time on Our Side: Why We All Need a Shorter Working Week, London: New Economics Foundation, accessed 28 December 2013 at http://s. bsd.net/nefoundation/default/page/-/images/publications/Time_on_our_side_preview. pdf. De Graaf, J., D. Wann and T.H. Naylor (2001), Affluenza: The All-Consuming Epidemic, San Francisco, CA, USA: Berrett-Koehler. Doherty, D. and A. Etzoni (2003), Voluntary Simplicity: Responding to Consumer Culture, Lanham, MD: Rowman & Littlefield. Doherty, P.C. and C.B. Leinberger (2011), ‘The next real estate boom’, Washington Monthly, November/December, accessed 27 February 2017 at http://www.washingtonmonthly.com/ features/2010/1011.doherty-leinberger.html. Easterlin, R.A. (1974), ‘Does economic growth improve the human lot? Some empirical evidence’, in M. Abramovitz, P.A. David and M.W. Reder (eds), Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz, New York: Academic Press, pp. 89–125. Elgin, D. (1997), Voluntary Simplicity: Toward the Way of Life That Is Outwardly Simple and Inwardly Rich, New York: William Morrow. Ewens, S. (1998), PR! A Social History of Spin, New York: Basic Books. Fligstein, N. and D. McAdam (2012), A Theory of Fields, New York: Oxford University Press. Gallagher, L. (2013), The End of the Suburbs: Where the American Dream is Moving, New York: Portfolio/Penguin. Garon, S. (2012), Beyond Our Means: Why America Spends While the World Saves, Princeton, NJ: Princeton University Press. Geels, F.W. and J. Schot (2007), ‘Typology of sociotechnical transition pathways’, Research Policy, 36 (3), 399–417. Glaeser, E. (2011), Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier, New York: Penguin. Global Footprint Network (2016), ‘Footprint for nations’, Global Footprint Network: Advancing the Science of Sustainability, accessed 16 April 2015 at http://www.footprint​ network.org/en/index.php/GFN/page/footprint_for_nations/. Graham, C. (2012), The Pursuit of Happiness: An Economy of Well-Being, Washington, DC: Brookings Institution Press. Gupta, A.K. and C.A.S. Hall (2011), ‘A review of the past and current state of EROI data’, Sustainability, 3 (10), 1796–809. Halkier, B. (2013), ‘Sustainable lifestyles in a new economy: a practice theoretical perspective on change behavior campaigns and sustainability issues’, in M.J. Cohen, H.S. Brown and P.J. Vergragt (eds), Innovations in Sustainable Consumption: New Economics, Sociotechnical Transitions and Social Practices, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 209–28.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 435

01/06/2017 16:51

436  Handbook on growth and sustainability Hammerslough, J. (2001), Dematerializing: Taming the Power of Possessions, Cambridge, MA: Perseus Press. Harris, J.M. (2013), ‘The macroeconomics of development without throughput growth’, in M.J. Cohen, H.S. Brown and P.J. Vergragt (eds), Innovations in Sustainable Consumption: New Economics, Socio-technical Transitions and Social Practices, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 31–47. Holt, D. (2014), ‘Why the sustainable economy movement hasn’t scaled: toward a strategy that empowers main street’, in J.B. Schor and C.J. Thompson (eds), Sustainable Lifestyles and the Quest for Plenitude: Case studies in the New Economy, New Haven, CT: Yale University Press, pp. 202–32. Inglehart, R. and H.-D. Klingemann (2000), Genes, Culture, and Happiness, Boston, MA: MIT Press. International Risk Governance Council (IRGS) (2013), ‘The rebound effect: implications of consumer behavior for robust economy’, accessed 21 November 2013 at http://www.irgc. org/wp-content/uploads/2013/04/IRGC_ReboundEffect-FINAL.pdf. Jackson, T. (2009), Prosperity Without Growth: Economics for the Finite Planet, London: Earthscan. Jenkins, J., T. Nordhaus and M. Shellenberger (2011), ‘Energy emergence: rebound and backfire as emergent phenomena’, Breakthrough Institute, accessed 21 November 2013 at http://thebreakthrough.org/archive/new_report_how_efficiency_can. Jones, C. and D.M. Kammen (2014), ‘Spatial distribution of U.S. household carbon food prints reveals suburbanization undermines greenhouse gas benefits of urban population density’, Environmental Science & Technology, 48 (2), 895–902. Kallis, G. (2011), ‘In defense of degrowth’, Ecological Economics, 70 (5), 873–80. Kallis, G. (2015), ‘The degrowth alternative’, a Great Transition initiative viewpoint, accessed April 2015 at http://www.greattransition.org/publication/the-degrowth-alternative. Kallis, G., M. Kalush, H. O’Flynn, J. Rossiter and N. Ashford (2013), ‘“Friday off”: reducing working hours in Europe’, Sustainability, 5 (4), 1545–67. Kelly, M. (2012), Owning Our Future: The Emerging Ownership Revolution; Journey to a Generative Economy, San Francisco, CA: Berrett Koehler. Kemp, R. and H. van Lente (2013), ‘The dual challenge of sustainability transitions: different trajectories and criteria’, in M.J. Cohen, H.S. Brown and P.J. Vergragt (eds), Innovations in Sustainable Consumption: New Economics, Socio-technical Transitions, and Social Practices, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 115–32. Layard, R.G. and R. Layard (2011), Happiness: Lessons From a New Science 2nd edn, New York: Penguin Books. Leiss, W. (1976), Limits to Satisfaction: An Essay on the Problem of Needs and Commodities, Toronto: University of Toronto Press. Lorek, S. and D. Fuchs (2013), ‘Strong sustainable consumption governance – precondition for a degrowth path?’, Journal of Cleaner Production, 38 (January), 36–43. Miringoff, M.-L. and S. Opdycke (2007), America’s Social Health: Putting Social Health Back on the Public Agenda, Armonk, NY: M.E. Sharpie. Murphy, D.J. (2013), ‘The implications of the declining energy return on investment of oil production’, Philosophical Transactions of the Royal Society A, 372 (2006), accessed 9 January 2014 at http://rsta.royalsocietypublishing.org/subscriptions. New Economics Foundation (NEF) (2010), ‘21 hours: why a shorter working week can help us all to flourish in the 21st century’, New Economics Foundation, London, accessed 18 November 2013 at http://s.bsd.net/nefoundation/default/page/-/files/21_Hours.pdf. New Economy Coalition (2015), accessed 29 April 2015 at http://neweconomy.net/. Owen, D. (2011), The Conundrum: How Scientific Innovation Increased Efficiency, and Good Intentions Can Make Our Energy and Climate Problems Worse, New York: Riverhead Books. Paehlke, R.C. (1989), Environmentalism and the Future of Progressive Politics, New Haven, CT: Yale University Press. Parry, I.W.H., C. Veung and D. Heine (2014), ‘How much carbon pricing is in countries’ own

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 436

01/06/2017 16:51

From growth to sustainability  ­437 interests? The critical role of co-benefits’, IMF Working Paper, International Monetary Fund, Washington, DC, accessed 24 September 2014 at http://www.imf.org/external/pubs/ ft/wp/2014/wp14174.pdf. Pew Research Center (2006), ‘Are we happy yet? Social trends report’, Pew Research Center, Washington, DC, accessed 18 November 2013 at http://www.pewsocialtrends. org/2006/02/13/are-we-happy-yet/. Pew Research Center (2010), ‘Millennials: a portrait of generation next. Confident. Connected. Open to change’, Pew Research Center, Washington, DC, accessed at http:// www.pewsocialtrends.org/files/2010/10/millennials-confident-connected-open-to-change. pdf. Quitzau, M.-B. and I. Røpke (2008), ‘The construction of normal expectations: consumption drivers for the Danish bathroom boom’, Journal of Industrial Ecology, 12 (2), 186–206. Raskin, P. (2011), ‘Imagine all the people: advancing a global citizens movement’, Kosmos, A Journal for Global Transformation, Spring/Summer, accessed 10 September 2014 at http://www. kosmosjournal.org/article/imagine-all-the-people-advancing-a-global-citizens-movement/. Raskin, P., T. Banuri, G. Gallopin, P. Gutman, A. Hammond, R. Kates and R. Swart (2002), ‘Great transition: the promise and lure of times ahead’, Tellus Institute, Boston, MA, accessed 27 February 2017 at http://greattransition.org/gt-essay. Rosnick, D. (2013), ‘Reduced work hours as means of slowing climate change’, Center for Economic and Policy Research, Washington, DC, accessed 18 November 2013 at www. cepr.net. Schapke, N. and F. Rauschmayer (2014), ‘Going beyond efficiency: including altruistic motives in behavioral models for sustainability transition to address sufficiency’, Sustainability: Science, Practice & Policy, 10 (1) 29–44, accessed 24 September 2014 at http://sspp.proquest.com/static_content/vol10iss1/1210-051.schapke.pdf. Schor, J.B. (1992), The Overworked American: The Unexpected Decline of Leisure, New York: Basic Books. Schor, J.B. (1998), The Overspent American: Why We Want What We Don’t Need, New York: Harper Perennial. Schor, J.B. (2004), Born to Buy, New York: Scribner. Schor, J.B. (2010), True Wealth, New York: Penguin Press. Seyfang, G. (2009), The New Economics of Sustainable Consumption, New York: Palgrave Macmillan. Shove, E., M. Watson, M. Hand and J. Ingram (2007), The Design of Everyday Life, Oxford and New York: Berg. Skidelsky, R. and E. Skidelsky (2012), How Much is Enough: Money and the Good Life, New York: Other Press. Spaargaren, G. and P. Oosterveer (2010), ‘Citizen-consumers as agents of change in globalizing modernity: the case of sustainable consumption’, Sustainability, 2 (7), 1887–908. Spangenberg, J.H. (2014), ‘Institutional change for strong sustainable consumption: sustainable consumption and the degrowth economy’, Sustainability: Science, Practice & Policy, 10 (1), 62–77, accessed 10 September 2014 at http://sspp.proquest.com/archives/ vol10iss1/1210-049.spangenberg.html. Speth, J.G. (2008), The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability, New Haven, CT and London: Yale University Press. Sterman, J. (2014), ‘Cultural change to sustainable consumption: a dynamic system perspective’, paper presented at SCORAI Colloquium on Sustainable Consumption and Social Change, 4 September 2014, Tellus Institute, Boston, live video accessed 9 May 2017 at https://www.youtube.com/watch?v5c891j7lnaYk. Sterman, J. (2015), ‘Stumbling towards sustainability: why organizational learning and radical innovation are necessary to build a more sustainable world – but not sufficient’, in R. Henderson, M. Tushman and R. Gulati (eds), An Organizational Perspective, Oxford: Oxford University Press, pp. 51–80. The Next System Project (2015), accessed 29 April 2015 at http://thenextsystem.org/. Traub, A. and H. McGhee (2013), ‘State of the American dream: economic policy and the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 437

01/06/2017 16:51

438  Handbook on growth and sustainability future of the middle class’, Demos testimony, accessed 10 December 2013 at http://www. demos.org/publication/state-american-dream-economic-policy-and-future-middle-class. Victor, P. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Weber, C.L. and H.S. Matthews (2008), ‘Quantifying the global and distributional aspects of household carbon footprint’, Ecological Economics, 66 (2–3), 379–91. Wilkinson, R. and K. Pickett (2009), The Spirit Level: Why Greater Equality Makes Societies Stronger, New York: Bloomsbury Press. World Happiness Report (2013), accessed 1 April 2015 at http://unsdsn.org/wp-content/ uploads/2014/02/WorldHappinessReport2013_online.pdf. Wright, E.O. (2012), ‘Transforming capitalism through real utopias’, American Sociological Review, 78 (1), 1–25. Zehner, O. (2011), Green Illusions: The Dirty Secrets of Clean Energy and the Future of Environmentalism, Lincoln, NE: University of Nebraska Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 438

01/06/2017 16:51

20  Navigating the Anthropocene: environmental politics and complexity in an era of limits Stephen Quilley

1 INTRODUCTION In the debate about growth and sustainability, the seesaw of environmental politics has swung between Malthusian naysaying and Star Trekking optimism, and many nuanced positions in between. These contributions are best understood as discourses – cognitive and affective templates that script perception and channel commentators and activists alike towards certain ways of apprehending the world (Dryzek 2013). Because they privilege and make visible certain phenomena, relationships and processes while obscuring others, discourses embody and reproduce power relations, condition hegemonic ‘common sense’ perceptions (Gramsci 1971) and in many cases act to make individuals and groups more compliant and governable (Foucault 1980).1 Thus, for example, the ‘common sense’ notion of the ‘sovereign individual’ – that finds expression in the routine operation of the economy, processes of democracy, the law, our media, culture and the most radical of our counter-cultures – clearly corresponds to the underlying reality of our mobile, individualized, liberal society. However, at the same time it makes it very difficult to imagine the possibility of an alternative, more communitarian, more place-bound version of modernity in which such individual affiliations, identities (and perhaps rights) are more muted. Let me acknowledge, from the outset, my own ‘common sense’. This chapter is framed by and reproduces a discourse of hard ecological limits. It is predicated on the twin ideas that (1) the process of civilization is best understood in terms of the largely unplanned emergence of complexity to manage instabilities arising from energy and resource constraints, and (2) such complexity is fragile and subject to collapse (a perspective encapsulated very well by Tainter 1990). Having used the ‘c’ word I should add rather quickly, that the prospect of collapse does not exhaust or negate the potential of policy and politics – not least because a great deal depends on time horizons and the rapidity and extent of ‘simplification’. There are also difficult but potentially significant questions about the extent to 439 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 439

01/06/2017 16:51

440  Handbook on growth and sustainability which given outcomes (for example, technologies and institutions) can be achieved with an order of magnitude reduction in the associated throughput of energy and materials (more of this later) and also whether the economy can be ‘bifurcated’ reserving low entropy resource and complexity for priority areas. In short there is everything to play for. In what follows, I explore the link between environmental discourses and the ‘pre-analytical vision’ of modernity.2 It is argued that biophysical limits are effectively rendered invisible by the progressive commitments of modern society. I then go on to advance eight linked propositions elaborating the relationship between growth, sustainability, social complexity, progress and environmental politics. These propositions being rooted in a range of disciplinary literatures, the synthesis advanced here draws upon (sometimes obliquely) a range of seemingly antithetic perspectives/ problem domains. These include: ●

regulation theoretical approaches to mass production and consumer society; ● a Schumpeterian privileging of ‘creative destruction’ and evolutionary approaches to technical innovation; ● a thermodynamic understanding of social complexity; ● the ecological-economic foregrounding of economic/metabolic scale; ● an approach to environmental politics rooted in a complex systems heuristic of landscapes, path dependencies, critical thresholds and basins of attraction; ● distributive economics – recognition of the disruptive potential of new information and micro-fabrication technologies as drivers of relocalization, distributed innovation, lower overhead production systems and the re-embedding of economic life in culture; and ● a psychoanalytic account of motivation and non-rational drivers of behaviour. The crux of the argument is this. With the onset of the Anthropocene (Oldfield et al. 2014), humanity has entered into a new relationship with the biosphere. Moving forward, the strategic imperative is less to preserve or restore pristine nature and more to manage ‘novel ecosystems’ (Hobbs et al. 2009), that is, systems that are the emergent and unintended outcome of human activity. A global civilization can never achieve a ‘steady state’ or indeed any kind of low/no growth equilibrium because (1) this global level of social complexity is always fragile and technical innovation requires both growth and periodic rounds of creative destruction (endogenous instability), (2) because complexity engenders greater vulnerability

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 440

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­441 to environmental change (exogenous instability) and (3) a global society requires a level of material and energy throughput that is itself intrinsically unsustainable.3 Even if a steady state was conceivable, it is unlikely that environmental politics would be able to deliver it. The managerial hubris of would-be planetary engineers, the technical problem-solving of lowgrowth pragmatists and proselytizing campaigning of sustainability activists are all rooted in a kind of individualistic rationalism that underplays the unintended and emergent dynamics of human development as well as the significance of non-rational drivers of behaviour rooted in ontology and meaning frameworks (rather than incentives, knowledge or rationally derived norms). Finally, although the traumatic loss of social complexity is inevitable at some point, ‘collapse’ covers a very wide range of possible outcomes and timeframes. New technologies are currently opening up possibilities for a re-localization of economic life sufficiently radical as to constitute a process of simplification but without necessitating complete institutional discontinuity and the wholesale loss of knowledge and technical capacity. The pre-emptive excavation of this ‘basin of attraction’ would, however, require a very different kind of environmental politics rooted in a communitarian commitment to place and the articulation of distinctive green ‘hero projects’.4 Such a politics would by definition require a challenging reformulation of liberal commitments to social emancipation. Clearly this is an ambitious, and even presumptuous, attempt to stake out a territory. I make major claims, outline a research agenda and attempt to change the terms of the debate about growth and sustainability. I hope that the reader will suspend disbelief and consider this landscape of possibility ‘in the round’.

2 GROWTH AND SUSTAINABILITY IN ENVIRONMENTAL DISCOURSES In many ways, the historiography of environmental politics can be interpreted as the continuing intellectual fallout from the clash between the reality of biophysical limits that edged (back) into view from the late 1960s on the one hand and the normative presumptions of progress associated with liberal capitalism on the other. Davidson (2000, p. 433) has argued that the concept of limits has provided the dominant paradigm for biologists, environmentalists and ecological economists. However, it would be more accurate to say that contributions from Ehrlich (1968), Hardin (1968), Meadows et al. (1972), Boulding (1966 [1996]) and others cast a long shadow, forcing environmentalists, activists, policy makers and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 441

01/06/2017 16:51

442  Handbook on growth and sustainability Table 20.1  Classifying environmental discourses

Prosaic Imaginative

Reformist

Radical

Problem-solving Sustainability

Limits and survival Green radicalism

Source:  Dryzek (2013, p. 16).

a­ cademics to confront difficult and possibly intractable questions about the relationship between capitalism, industrialism, growth, technical innovation and liberal modernity. In his influential survey, Dryzek (2013, p. 14) classifies environmental discourses in relation to two axial dimensions: (1) the extent to which departures from industrial modernity are conceived as reformist and incremental or should involve a radical disjuncture; and (2) the extent to which such departures are conceived prosaically or imaginatively (Table 20.1). Against the backdrop of the war in Vietnam, confrontations over civil rights, political unrest on the campuses, the re-emergence of political extremism in Europe, a series of energy shocks, the end of ‘the long boom’ and the phenomenon of ‘stagflation’ – during the early 1970s the idea of ‘progress’ as an automatic concomitant of unfolding modernization was already losing traction in the popular imagination. When population biologists and ecologists began to apply the concept of ‘carrying capacity’ to human society (Hardin 1968, 1993; Meadows et al. 1972; Brown 1978; Catton 1980; Daly 1991; Rees 2000 [2001]), they hit a deeper cultural nerve and the framing narrative of ‘limits’ has been a regular feature of environmental discourse ever since (Arrow et al. 1996; Brown 2003; Ehrlich and Ehrlich 2004; Diamond 2005; Speth 2008; Nørgård et al. 2010). The most influential academic contribution in recent years has been the planetary boundaries model developed by Rockström and colleagues (2009). At the same time, between 2000 and 2009 the notion of hard resource constraints also achieved greater prominence alongside climate change, notably in relation to ongoing debates about peak oil (Kunstler 2005; Greer 2009; Heinberg 2011). However it is important to distinguish between the recognition of limits and political prescriptions. Early contributions were technocratic in nature and were tied quite explicitly to a global agenda of top-down resource planning and economic management. The original Massachusetts Institute of Technology (MIT) study commissioned by the Club of Rome was very much a product of ‘the calm authority symbolized by a com-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 442

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­443 puter and the experts who could run it’ (Dryzek 2013, p. 30). Donella Meadows was quite explicit in envisaging a steady-state global economy and a system of scientific resource management. The standpoint of positive science was also used by commentators such as Ehrlich to endorse punitive population control measures, including compulsory sterilization (Ehrlich 1968). More recently, James Lovelock has on many occasions compared the politics of climate change to the imperatives of war, requiring a suspension of democratic norms and institutions (cited in Dryzek 2013, p. 39; see also Lovelock 2007), a possibility also raised by Shearman and Wayne-Smith (2007). Similarly the capacity of the Chinese state to marshal resources for an energy transition has been compared favourably with more limited achievements in the West (Beeson 2010). The writers who perhaps most exemplified the spirit of top-down ‘survivalism’ in the 1970s were Heilbroner (1974) and Ophuls (1977), both of whom evoked the idea of ascetic, militarized societies lead by scientist-technocrats. This strain of eco-realism remains a significant subtext in environmental politics (Heilbroner 1991; Ophuls and Boyan 1992; Hardin 1993). Having said this, by far the most significant impact of limits thinking was the emergence of an entropy-based approach to economics focused resolutely on scale and throughput (Georgescu-Roegen 1971; Daly and Cobb 1990). Ecological economics has gone on to become a full-fledged (trans)discipline with a secure if marginal place in the landscape of higher education and a distinctive worldview centred on the possibility of a steady-state, no-growth but nonetheless, global, innovative and thoroughly modern market economy. A real problem with Dryzek’s typology is that it differentiates ‘limits and survival’ discourses from ‘green radicalism’. This is misleading for two reasons. First, it suggests that ‘limits thinking’ is discrete, discursively parallel and alternative to other environmental discourses. It is certainly true that the idea of biophysical limits has provided the interlocutor and foil for all of the discourses that Dryzek surveys (see Table 20.2). Perhaps most notably, the outright rejection of the concept of limits has been a small cottage industry since the 1970s with biologists (Sagoff 1995), cornucopian technologists (Simon 1981), economists (Solow 1974; Nordhaus et al. 1992; Shellenberger and Nordhaus 2009; Nordhaus et al. 2012) and political scientists (Lomborg 2002) all joining the fray at various times. Such voices have been strident but perhaps not very influential (at least directly). Mainstream approaches have been characterized by occasional, quiet acknowledgement combined with sustained obfuscation – ‘fudging’ in Table 20.2. Also, although marginal on the campus and absent from serious political and policy domains, green radicalism involves discourses and activist strategies that are explicitly predicated on limits. However it is

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 443

01/06/2017 16:51

444

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 444

01/06/2017 16:51

Barely imagined

ALTERNATIVE MODERNITY VIA DISTRUPTIVE TECH. +   DISRUPTIVE MEANING FRAMEWORKS (d) Open source distributive economy/reMaker society (E.g. Open Source Ecology 2015; Carson 2010)

MODERNITY IN THE   REARVIEW MIRROR (c) Pessimistic green radicalism [Small life rafts] (Small is unavoidable: maverick  prognoses/survivalism) [c-1] Family survivalism (Prepping – e.g. Rawles 2010) [c-2] Collapse as inexorable  de-modernization (E.g. Greer 2009; Kunstler   2008; Ophuls 2011; Dark Mountain Manifesto –   Kingsnorth and Hine 2009)

Ecological modernization  [Fudging] [Big is designable] (E.g. Huber 1982; Ekins 2002) Risk society [Fudging] [Big is uncertain but has   unavoidable momentum] (E.g. Beck 1992) Sustainability [Fudging] [Big is redeemable] (E.g. Bruntdland 1987;  EVERYONE)

Star Trek The singularity [Big is a cosmic destiny] (E.g. Kurzweil 2005)

Imaginative

(a) Optimistic green radicalism:  social movements/community resilience (Small is beautiful: activist  movements) (E.g. Schumacher 1973; Transition  Towns; degrowth; ecofeminism; Occupy?) (b) Low/no growth economics/   steady-state economy (Small is possible: academic   modelling and analysis) (E.g. Daly and Cobb 1990; Victor   2008; Jackson 2009) (c) Eco-socialism (Green is fair and rational) (E.g Löwy 2005)

Top down (authoritarian) state mitigation/state-survivalism  [Big lifeboats] [Biggish and ugly is better than small] (E.g. Meadows et al. 1972; Ophuls 1977; Paehlke 1988)

Problem-solving [Ignoring] (E.g. EPA) [Big just is]

Cornucopian/no limits [Big is beautiful] (E.g. Solow 1974; Simon  1981)

Prosaic

Accepting limits Radical

Fudging/ignoring limits

Reformist

Rejecting limits

Table 20.2  Limits as a defining foil for environmental discourses

Environmental politics and complexity in an era of limits  ­445 not hard to understand why mainstream politics and progressive left and liberal opinion was also hostile to the primacy of scale. In the West, the entire social compact underpinning post-war consensus politics depends upon growth (that is, the increase in real gross domestic product, GDP). The infrastructures of the Keynesian Welfare State depend very directly on fiscal transfers derived from healthy levels of capital accumulation in the market economy. In the global south, social justice and economic development required rapid growth (Quilley 2012).5 ‘Limits to growth’ may have been compelling to many academics and intuitive to grassroots radicals, but politically it has always been a non-starter – and will remain so as long as politicians and populace deem an individualist understanding of freedom and the material priorities of the consumer-welfare state to be non-negotiable. However, the sense that ‘something had to be done’ did generate a response in the form of the cluster of reformist policy statements, regulatory innovations and scenario exercises that came together under the broad banners of sustainability and ecological modernization. Dryzek also implies that limits thinking is coterminous with the idea of top-down, elite-led authoritarian ‘solutions’, that is, strategies that are conceived as having a chance of actually staving off collapse and salvaging the main contours of modern industrial society. However, ‘green radicalism’ (for example, the Transition Towns movement – see Quilley 2014) is also quite clearly a ‘limits discourse’ with both optimistic and pessimistic variants neither of which propose ‘solutions’ for global industrial society and both of which involve some level of collapse or loss of complexity. In both cases, scenarios involve post-industrial, low/appropriate technology, communitarian and substantially re-localized/bioregional forms of economy and society (see Table 20.2). Significantly, in a recent book, Plato’s Revenge (2011), William Ophuls promulgates a vision of smallscale Jeffersonian democracy based on a smallholding yeomanry – not dissimilar to the scenario developed by James Kunstler in his peak oil novel World Made by Hand (2008). Given that the limits to growth perspective was sponsored in the report of that name (Meadows et al. 1972) by industrialists, developed by scientific experts using state-of-the-art computer modelling and achieved an astonishing degree of visibility in both technical and vernacular milieu, it is worth asking why it achieved so little traction or failed to unseat the hegemonic commitment to growth. One reason has already been alluded to. Using the ubiquitous ‘cup and ball’ heuristic favoured in complex systems research, the expansion of the social democratic institutions in the North and the overwhelming need for development in the South in effect created an incredibly deep ‘basin of attraction’ for the political economy of growth. At least in the short term, almost everyone on the planet has

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 445

01/06/2017 16:51

446  Handbook on growth and sustainability a great deal to lose if the system of capital accumulation fails. Piketty’s (2014) Capital in the Twenty-first Century is the most recent re-statement of a neo-Marxist version of this political economic common sense (see also Brenner and Glick 1991). As well as the problem of fiscal transfers and growth, limits thinking challenged categories and a cognitive framework for understanding modernity that was subtly normative and constitutive of the wider narrative of progress and social emancipation. This resulting discursive ‘common sense’ is so ubiquitous as to be almost invisible. It centres on: ● ● ●

● ● ●

the automatic expectation of progress through science and technical innovation; scientific rationalism and the concomitant process of disenchantment (in Weber’s sense) as a prerequisite for social emancipation; the rendering invisible of dependencies and vulnerabilities arising from increasing levels of social and technical complexity (Goudsblom 2002; Wright 2004); an unquestionable commitment to the social and geographical mobility of individuals; much higher levels of psychological individuation that are understood (incorrectly) as natural and ahistorical universals; and a marked shift in the I/we balance in the direction of the former, along with the undermining of familial, community, occupational and place-bound solidarities and an increasing dependence upon the abstract functions of state and market (Elias 1991 [2010]; Beck 1992; Quilley 2012).

In the early twentieth century Marxists such as Gramsci understood the counter-hegemonic project to centre on a different pattern of ownership. In the twenty-first century, the ecological problem of growth raises much more difficult questions about industrialism per se. The practical consequence of this hegemonic worldview has been to make it very difficult to imagine or articulate an alternative to global industrial society. From the perspective of modern individuals, any curtailment of mobility or reduction in the flow of consumer durables appears deeply regressive. The reemergence of concrete, face-to-face, solidarities and patterns of mutual obligation between individuals linked by family, place, occupationalidentity or community, would all be experienced as constraint and a loss of freedom. For this reason, the radical, Romantic, communitarian impulse has remained at the margins of environmental politics (‘Optimistic green radicalism’ in Table 20.2). For the most part, the green-left has remained committed to a liberal-cosmopolitan vision of global society and a scien-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 446

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­447 tific rationalism that does not sit easily with the re-enchantment of social life through ritual, spirituality or non-rational commitments (Habermas 1996; see below). This is the main reason why, despite 40 years of environmental activism, it has proved so difficult to mount an effective challenge to the consumer society.

3 LIMITS THINKING AND THE DISCOURSE OF MODERNITY Starting from the recognition of modernity as an environmental metadiscourse (that is, involving non-negotiable and ‘common sense’, liberal, cosmopolitan, global and individualist commitments), the timeline of environmental thought and practice intimated in Table 20.2 becomes very easy to interpret. The idea of biophysical limits presented an immediate and profound challenge to any idea of modernity. ●

Reformist/prosaic: the cornucopian [Big is beautiful] and problem solving [Big just is] responses that dominated business and government during the 1970s were forms of outright denial and avoidance. ● Imaginative/reformist: the Star Trek [Big is cosmic destiny], ecological modernization [Big is designable], risk society [Big is uncertainly manageable] and sustainability [Big is redeemable] responses all recognize the problem and then redefine it such that it disappears. They are forms of practical magic – psychological and political palliatives. ● Radical/prosaic: Dryzek’s ‘radical survivalist’ response [Big lifeboats] was a form of societal salvage, with a Leviathan state preserving as much as possible of modern science, institutions and culture. ● Radical/imaginative: (a) Optimistic green radicalism [Small is beautiful] and (b) Low/no growth and steady state academic modelling [Small is possible] – both recognize the biophysical problem of scale and seeks to address it, but deny the relationship between scale, social complexity and the soft institutional/cultural/psychological dimensions of liberal societies that are a prerequisite for social emancipation. Thus for instance ‘Transition’ is premised on a catastrophic loss of complexity in the wake of peak oil and climate change but assumes the continuation of the kind of restrained personality structure and low levels of interpersonal violence that developed as a function of effective modern nation-states (Quilley 2014; cf. Rifkin 2009; Pinker 2011; Elias 1939 [2012]). The degrowth literature similarly decouples the complexity of modern states and economies from liberal culture, democratic polities and ­ psychological

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 447

01/06/2017 16:51

448  Handbook on growth and sustainability restraint see Quilley 2012). Small is possible also underestimates the link between rates of innovation, scale and the intrinsic dynamic instability of capitalist development.6 Likewise eco-socialism (c) [Small and/or planned is fair and rational] tends to underestimate either the ecological footprint of industrialism per se, or – like (a) and (b) – the impact of metabolic austerity on politics and culture. Although cornucopians have a structural electoral advantage in Western democracies (Davis 2007), there is Pollyanna dimension to all of the above discourses in that they refuse to countenance even the possibility of a zero-sum trade-off between valued forms of social complexity and the integrity of the biosphere. Of all the modes of response, only pessimistic green radicalism (c) [Small is unavoidable] both accepts the challenge of biophysical limits to growth, whilst recognizing the implications for the entire cultural and psychological fabric of civilization – which is to say that ‘smallness’ would involve a substantial element of ‘de-modernization’. Ironically, anticipating a sudden, system-wide and catastrophic collapse, the response of ‘preppers’ (c-1) tends to be highly individualist and short term, centring on the pre-fabrication of familyscale life rafts in the form of ‘bug out’ vehicles and cabins within which to ‘weather the storm’ (Rawles 2010). Invisible and largely irrelevant to mainstream environmentalism, this kind of survivalism is a significant and growing counterculture, particularly in the United States (Mitchell 2001). More visible are intellectual responses by relatively high-profile commentators who expect a longer and more drawn-out crisis – inexorable de-modernization (c-2). The ‘Small life rafts’ envisaged by people such as John Michael Greer (2009), William Ophuls (2011) and James Howard Kunstler (2005, 2008) are much more sociological and perhaps most honestly translate a systemic reduction of the metabolic scale of society into a pattern of institutional and cultural contraction. Extrapolating from premodern examples of ‘solar societies’, these writers argue that the future is likely to see many of the social processes that are definitive of modernity – individualization, social and geographical mobility and various forms of social emancipation – shift into reverse gear. Re-localization will involve the re-emergence of land-based economies, place-bound and largely faceto-face communities and, at best, some kind of Jeffersonian, small-holding democracy. At worst, we can expect the kinds of feudal exploitation and warlordism that were a frequent concomitant of traditional agrarian societies.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 448

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­449

4 BIOPHYSICAL LIMITS TO MODERNIZATION: SOME PROPOSITIONS Although their conclusions are unpalatable, pessimistic green radicals have a more accurate intuition as to the relationship between modernity and the environment. In this section I briefly elucidate a number of basic propositions, which have been elaborated at length elsewhere (Tainter 1990; Odum and Odum 2001; Greer 2009; Ophuls 2011; Quilley 2011, 2012). 1. Viewed in the long term, the current globally connected society is almost certain to suffer some degree of collapse and loss of complexity. Cycles of complexification and collapse are pervasive in the history of civilization (Tainter 1990; Diamond 2005). In the absence of compelling evidence to the contrary, we should assume that collapse is inevitable: humanity has not broken free of natural constraints. There is, however, no way of knowing when and how fast this might take place, and with what outcome. It may come sooner than we imagine (Turner 2014). 2. There are limits to growth. The flow of materials and energy in the human economy relative to the biosphere cannot exceed a maximum scale. Multiple studies are now indicating that we are probably approaching this maximum scale (Turner 2008, 2014; Rockström et al. 2009; Barnofsky and Hadly 2012; Chambers et al. 2014). 3. It is possible to imagine an incremental process of decline (Greer 2009). Davidson (2000), for instance, takes issue with the cliff/ rivets metaphors of non-linear catastrophism that pervades the limits discourse. Positing instead a continuum in the ratio of ecological damage/welfare, he argues that the slowly unravelling tapestry provides a better metaphor. However, applications of complexity theory to both ecology (for example, Barnofsky and Hadly 2012) and society provide little reason to exclude the possibility of non-linear change. 4. Building on established approaches to entropy within ecological economics (Georgescu Roegen 1971; Daly and Farley 2010; Faber et al. 1986) and especially the work of H.T. Odum (2007), complexity is both fragile and ‘expensive’ and involves zero-sum trade-offs. Complexity in society usually entails a loss of complexity and an increase in entropy elsewhere in the biosphere (pollution, loss of biodiversity and loss of ecological space). In both the biosphere and society, complexity is always associated with a metabolic footprint and more specifically a thermodynamic signature, or what Odum (2007) called a ‘transformity’. Using units of solar energy as a base currency, a

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 449

01/06/2017 16:51

450  Handbook on growth and sustainability transformity value specifies the cumulative energy transformations necessary for the emergence and maintenance of a given structure or process. The notion of an energy signature is perhaps rather clear with a cultural pattern such as, say, driving cars. It is also true of much more intangible phenomena such as the institution of democracy, gender emancipation based on labour market access, the idea of universal human rights and, even, a more restrained personality structure (Elias 1939 [2012] – see below). By allowing comparison between seemingly incommensurable, qualitative phenomena, Odum’s theory of embedded energy (‘emergy’), energy hierarchy and transformity values, illuminates the trade-offs, balances and interactions between different kinds of complexity. Demonstrating the link between rising levels of empathy, energy consumption and escalating ecological impacts, Rifkin’s (2009) account of ‘empathic civilization’ is congruent with very different studies by Norbert Elias (1939 [2012]) and Steven Pinker (2011). Empathy (Rifkin), the pacification of culture (Pinker) or the emergence of a more restrained personality structure (Elias), rather than being innate, universal and cross-cultural, are revealed as a function of social complexity and can be shown to have a transformity value or an energy signature. 5. Since every defining attribute of modern civilization is associated with such a transformity, it is an open question whether there is any room for manoeuvre between the maximum scale of economy compatible with the sustained integrity of the biosphere and the minimum scale necessary for a globally connected, science-based, cosmopolitan liberal society (Quilley 2012). 6. Historically, high rates of innovation have been associated with quantitative growth in the scale of material and energy flows associated with economic activity. As Marx (1848 [1977]) pointed out and Schumpeter (1942 [2013]) and Aglietta (1979) elaborated, the technological dynamism of capitalism is inextricably tied up with ‘creative destruction’, the wholesale writing off of capital and mechanisms to sustain demand through mass consumption (Boyer 1990). It may be that going into the future, ecological integrity may be incompatible with high rates of techno-social innovation. 7. If economic (biophysical) scale presents an absolute limit (Daly and Farley 2010), an unexplored area of the ‘possibility landscape’ for the structure of economy and society may hinge on the bifurcation of economic activity and the reservation of low-entropy, growth-related activities and associated ecological space for critical functions. That is to say, reconciling complexity with limits may require saving lowentropy resources and activities for critical functions. The most obvious

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 450

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­451 example of such directive allocation of resources is the economy of the Soviet Union, which managed to sustain a high-technology military/ space programme alongside relative simplicity and underdevelopment in the consumer economy. This system was monstrously inefficient and in the end prohibitive. A key problem for negotiating the relationship between modernity and biophysical limits is whether some kind of bifurcated, twin-track economy can be achieved without central planning. Herman Daly has long argued that setting limits on scale is perfectly compatible with efficient market allocation; and that setting such limits can drive innovation. Also, Peter Victor has pointed out (personal communication) that this is in fact what happens currently with regard to, for instance, sulphur dioxide emissions (thoughput) and land (greenbelt, wilderness protection, and so on). However, in a significantly scale-constrained world, the reservation of low-entropy resources for critical functions would imply legislating entire functions and sectors of the economy out of the free market. 8. The most productive and influential outcome of the 1970s limits to growth debate has been the emergence of ecological economics as a trans-discipline (for example, Daly and Farley 2010; Constanza et al. 2014). Over several decades Herman Daly has advanced the idea of the steady state economy as a correction of the ‘pre-analytical vision’ of neo-classical economics, which is blind to the ecological and thermodynamic foundations of all human activity. Having established the regulatory mechanisms to restrict physical growth and limit the scale of economic activity, Daly’s vision would allow the market to effect the efficient allocation of resources and continuing processes of innovation and technological development. However, any idea of an economic equilibrium, although central to mainstream economic theory, makes no sense when seen through the lens of either ecology or political economy. Equilibrium models rooted in normative notions of natural balance or harmony were the mainstay of ecological science for much of the twentieth century, and were implicit in notions of succession and the climax community. But since the 1970s simplistic ideas of equilibrium have been thoroughly rejected. At all spatial and temporal scales, it has been recognized that both exogenous shocks and the emergence of internal instabilities are regular and decisive in creating dynamic and developing systems that do not come to rest (Botkin 1990). As well as non-linear dynamism, the development of complex adaptive systems is characterized by path dependency (Levin 1998). One of the most influential treatments of non-linear dynamics in complex adaptive systems, was provided by Buzz Holling in his theory of panarchy and the adaptive cycle (Gunderson and Holling 2002;

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 451

01/06/2017 16:51

452  Handbook on growth and sustainability Allen and Holling 2008). Significantly, Holling borrowed his mechanism of non-linearity directly from the economist Joseph Schumpeter (1942 [2013]). Schumpeter elaborated Marx’s insight that processes of technological innovation and competition in capitalist systems generate endogenous pressures, which periodically release gales of ‘creative destruction’. Any long-term perspective on the history of capitalism reveals a very clear pattern of uneven development, disruptive innovation, long waves of development, spatial divisions of labour, successive rounds of accumulation – that is, endemic change and instability (Kondratieff 1979; Massey 1995). In short, it has been well established in both evolutionary economics (Malerba 2013) and ecology that the evolution of complex adaptive systems (CAS) exhibits both path dependency, periodic crises, moments of collapse and non-linearity. Complex adaptive systems are highly unlikely to settle into steady states.

5 TOWARDS AN ALTERNATIVE MODERNITY: STARTING POINTS FOR AN ENVIRONMENTAL POLITICS AND POLITICAL ECONOMY FOR THE ANTHROPOCENE Over the past two centuries, guild socialists, Romantics, anarchists, libertarians and bioregionalists have envisioned an alternative modernity. Visions of ‘small and beautiful’ have typically sought to reconcile modern science and technology with artisanal craft production; familial cohesion with individual mobility; cosmopolitan diversity and vitality of the city with the organic community of rural life; and the allocative efficiency of abstract market forces with the groundedness of production for use, in particular places. The roll call of visionaries includes a litany of familiar names: William Morris, John Ruskin, Peter Kropotkin, G.D.H. Cole, Mahatma Gandhi, Leon Tolstoy, Patrick Geddes, Lewis Mumford, Elisée Reclus, Ebenezer Howard and G.K. Chesterton. This tradition continues to resonate in the vernacular of the environmental movement, not least with ideas of bioregionalism and permaculture, and in the proliferation of the Transition Towns approach to re-localization. This appeal speaks very obviously to long-standing Romantic ambivalence about the impact of industrialism on community, the aesthetic and ontological value of craftwork, problems of alienation and disenchantment, and so on. However, although attractive to generations of intellectuals, the visions of smallscale, organic community have never been compelling at the level of politics and social movements. India sided with Nehru for the ‘five year plan’

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 452

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­453 and against Gandhi’s vision of village development, because hitherto, modern development has been understood as a package. ‘Small is beautiful’ required dispensing with the kind of industrial production and technological innovation that could deliver modern dentistry, mass housing and antibiotics. During the twentieth century a truly ecological economy seemed to require the wearing of a hair shirt. It seemed to require abandoning modernity. Now, as limits to growth begin to impinge on the global economy, it is perhaps a good time to work out if we have any room for manoeuvre at all. We can specify the problem quite precisely. The vision of modernity as inevitable and largely progressive has provided the ‘pre-analytical vision’ for most environmentalists for good reasons. Adapting to an era of limits requires that we elucidate those aspects of modernity that we might retain, those that are transformable in principle and those that we may have to relinquish more or less gracefully. It is useful to pose this as a wicked dilemma: How is it possible to reconcile a cosmopolitan, globally integrated, technologically progressive, science-based and liberal-democratic society which places an absolute value on the sanctity of individual human lives, with a more place-bound and communitarian society operating with long time horizons and within ecological limits? What then might be the starting points for an environmental politics and political economy that might help humanity begin to navigate the Anthropocene? 1. Technology, political economy and ecological space: From an economic perspective the choices that we face boil down to a problem of allocation and technique. The biosphere has a limited energy budget and there are also limits to the ecological space that humanity can occupy in terms of land, ecosystem disruption and the capacity of the natural ecosystems to absorb the metabolic waste of civilization. The room for manoeuvre between the maximum scale of economy that the biosphere can support and the minimum scale required for ‘modern civilization’ will increase to the extent that novel technologies and forms of political economy can lower the ecological and energetic overhead costs (that is, the ‘transformity values’) of social complexity. 2. Cultural-political choices and ecological space: Some fundamental values that are constitutive of the pre-analytical vision of modernity are more mutable than they might appear. Thus for instance, since the 1970s feminism has equated gender emancipation to a great extent with equal access to the labour market as a means to further independence of women from men. This has been accompanied by an equal emphasis on state provisions in the form of schooling,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 453

01/06/2017 16:51

454  Handbook on growth and sustainability ­ re-schooling, support for single mothers, and so on. However, both p market and state vehicles for emancipation depend on growth. One option eschewed by mainstream feminism during the 1970s was to focus on drawing men out of the formal labour market and emphasizing a more equal relationship within an expanding embedded domestic/community economy – a rebalancing of economic life to favour reciprocity over both redistribution (via the state) and market exchange (Quilley 2012; cf. Polanyi 1957a, 1957b). This is conceivable but it would mean completely redefining the project of gender emancipation. However, reducing the weight of the formal economy and institutions of state relative to family and community would certainly also entail a reduction in personal autonomy. For instance, welfare benefits combined with no fault divorce laws have freed millions of women and many men from economic dependence on unhappy and sometimes abusive marriages. The ‘re-embedding’ of economic life in culture, and the shifting of the I–We balance (Elias 1991 [2010]) in favour of the latter, would certainly be experienced as constraint – at least by those individuals who grew up at the apex of capitalist consumer society. But it is at least conceivable that levels of neurosis and ontological insecurity (Laing 2010), death anxiety (Becker 1973) and narcissism (Lasch 1991; Twenge and Campbell 2009) might dissipate as life becomes more meaningful and socially integrated. The key dilemma is the extent to which values and priorities that emerged in mobile high-energy societies could be sustained during a period of retrenchment. 3. Non-linear politics: Using the landscape heuristics of complexity theory, consumer capitalism is understood as a deep and resilient ‘basin of attraction’ in which all of the dominant institutions, ideologies and common sense ideas tend to impede movement towards a new system (cf. Scheffer 2009, ch. 2). Thus, for instance, social democratic parties and, even more problematically, green parties evincing support for health systems find themselves quickly dependent on growth and the expanding levels of consumption that generate the fiscal transfers necessary to pay for nurses, doctors and hospitals. It is for this reason that even the most sophisticated critiques from the left, such as Piketty’s (2014) Capital in the Twenty First Century, focus on the need to reignite economic growth. Gramsci (1971) referred to the ideological dimensions of this inertia in terms of ‘hegemony’, but hegemony has an enormous anchor in the material, institutional and psychological structures (‘mentalities’ – Burke 1997) of everyday life. Any shift from this system to an alternative, non-growth based and significantly contracted version of modernity would face enormous systemic obsta-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 454

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­455 cles. It is difficult to imagine such a degrowth transition, taking place incrementally. Rather, as a complex adaptive system we would expect a non-linear transformation involving ‘tipping points’ and exogenous shocks. Counter-cultural politics is likely to remain highly marginal and probably ridiculous from any mainstream perspective, just as long as the economy continues to avoid sustained contraction. The problem is that if and when growth fails, the system could tip rapidly in any direction towards a range of more or less desirable states (see Jackson 2009). A key consideration for environmental politics is the extent to which shallow ‘pre-figurative basins of attraction’ can be hollowed out in such a way as, in the context of destabilizing exogenous shocks, to pre-dispose system change in a desired direction. Such pre-figurative basins might combine novel belief systems and practices, institutional innovations (for example, the development of a welfare system based upon a partial universal basic income), novel technologies and production systems (for example, Maker culture, open hardware and peer-to-peer sharing – see Anderson 2010; Doctorow 2010) and new cultural arrangements (for example, the reemergence of the extended family in the context of pressures arising from an aging society). 4. Ontology, meaning frameworks and non-rational drivers of behaviour: Environmentalism developed in the tradition of the Enlightenment and was formed by the pre-analytical vision of modernity. From Rachel Carson’s (2002) Silent Spring, through to the Limits to Growth report (Meadows et al. 1972) and in recent decades the work of the Intergovernmental Panel on Climate Change (IPCC), environmental concern has played out as a function of scientific understanding and an, albeit high-minded, instrumental rationalism. In the fields of academia, business, third sector and government, debates about sustainability appeal to rational individuals (that is, voters, concerned citizens and consumers). Although environmentalists routinely attack the reductive implications of Homo economicus, in fact the idea of the sovereign individual saturates the pre-analytical vision of modernity. Echoing the social psychology of Erving Goffman and GH Mead, Elias (1991 [2010]) referred to this vision of self-contained, rational individuals as ‘thinking statues’ and compared Homo clausus (the ‘closed’ individual) to the reality of Homines aperti that is, pluralities of interdependent people. However, imbued with the presumption of rational individualism, environmentalism has tended to focus exclusively on the idea that people will respond to data, knowledge, education or economic incentives.7 For this reason, the thousands of academics working in the hundreds of dedicated environment faculties

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 455

01/06/2017 16:51

456  Handbook on growth and sustainability that have appeared on university campuses since the 1970s, focus all of their research time and funding on extending data-sets, improving knowledge and investigating incentives – all in the hope of generating changes at the level of policy and regulation, new kinds of markets, suites of eco-technologies and, more recently, sophisticated communication tools with which to inform the public. However, after 40 years, any reasonable assessment would conclude that this enormous cross-disciplinary effort to change behaviour and values has failed. Per-capita ecological footprints have increased steadily over that time, keeping step with increasingly frantic public discourse about the need for sustainable behaviour (Wackernagel and Rees 1998). Clearly there are gargantuan systemic obstacles to behavioural change,8 but there is also a great deal of evidence that human beings are much less rational than progressive, Enlightenment philosophers would have us believe (for example, Geertz and Markússon 2010; Shermer 2010). At the very least, environmentalists, both on and off campus, should start to take non-rational drivers of behaviour seriously (see Rees 2010; Chapter 22 in this volume). Building on Ernest’s book The Denial of Death (1973), over 200 studies in ‘terror management theory’ (TMT) have demonstrated that fear of death is a powerful and counter-intuitive driver of behaviour. Terror management theorists argue that people ameliorate death anxiety by engaging in culturally sanctioned hero/immortality projects which act to bolster self-esteem, provide a source of cosmological meaning and ontological security, and guarantee literal or symbolic immortality. Solomon et al. (2004) show that in a largely disenchanted and secular world bereft of meaning, consumerism has become a powerful source of both hero and immortality projects. Building on this Dickinson (2009) has shown that since the 1970s environmentalist messages about the environment are likely to have acted as ‘death primes’ (subconscious mortality cues), re-enforcing prevalent hero/immortality projects and so paradoxically bolstering the psychological drivers of hyper consumption. Also, it is true that environmentalism as a social movement has coincided with the greatest consumption binge in human history. This should be depressing, but as Dickinson points out, it does point the way to a much more effective kind of politics. Greens should embrace non-rational drivers of behaviour and concentrate on creating distinctively green hero/immortality projects. In summary, any meaningful environmental politics for the Anthropocene would need to focus on the political and cultural dynamics that might engender cross-scale change in behaviour, attitudes, belief systems and social norms affecting millions of ordinary people. Such a

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 456

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­457 politics would need to (1) develop a technics that reduces the transformity overhead cost of material and institutional complexity, (2) explore ways to transform and sustain liberal values and priorities in an era of permanent metabolic austerity, (3) conceive a version of what Gramsci referred to as the ‘war of position’ – pre-figurative experiments at the level of culture, technology and political economy that might become attractors in the wake of any exogenous shocks to the growth system, and (4) selfconsciously and deliberately embrace psycho-analytical, religious/spiritual and ritualistic drivers of social behaviour (including mechanisms of shame and embarrassment) as the basis for ecological conscience formation and the ‘re-imagination of community’ around particular places, bio-regions and to include non-human nature (cf. Anderson 2006; Quilley 2009).

6 VIGNETTE OF A POSSIBLE FUTURE: AN OPENARCHITECTURE REMAKER SOCIETY Building on those points of departure, I conclude by sketching one route for environmental politics and one possible destination. Lewis Mumford (1934 [2010]) used the term ‘technics’ to refer to the complex of technology, cultural patterns and forms of organization. He sketched the process of human development through three phases: ●

The Eotechnic (1000–1700 CE) – solar powered agrarianism, in which scientific understanding and technologies such as the clock allowed gradual improvement in what remained a human-scaled, distributed civilization. ● The Palaeotechic (1700–1900 CE) – the ‘barbaric’ first phase of industrialism marked by the conquest of nature, fossil fuels and the emergence of a centralized, inhuman form of economic and social life. ● The Neo-technic (1900– CE) – clean electric power allowing the possible re-emergence of a more humane, human-scaled, high technology form of civilization. Mumford’s scheme has inspired a continuing debate (for example, Williams 2002). The potential of neo-technics has widely been seen to have been subverted by monopoly corporate power and the state (Carson 2010). Greer (2009) goes further, arguing that a systemic collapse will bury any possibility of a clean, sophisticated, neo-technic future. Rather, retaining aspects of early modern scientific knowledge and method, civilization will settle down in an agrarian-solar regime that he dubs ‘eco-technic’. Greer’s

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 457

01/06/2017 16:51

458  Handbook on growth and sustainability sombre realism notwithstanding, thus far, a distributed, decentralized and ecologically restrained form of industrialism, rooted in a more organic community (an ‘electrified medievalism’ to use Ophul’s phrase) has proved to be a receding dream – resurrected periodically by utopians and futurists (for example, Toffler 1981). However, the last two decades have seen the emergence, in embryo, of a new technics that may yet deliver on this dream. Internet-mediated, peerto-peer collaboration has engendered an open source revolution, which undermines intellectual property and, at least potentially, strips monopoly power away from large corporations. Although the commentary has been predictably hyperbolic (Raymond 2001; Tapscott 2010; Steel 2012; Rifkin 2014), there is certainly reason to believe that open architecture forms of organization and collaboration are a significantly disruptive innovation (Quilley et al. 2016). In a related set of developments, the miniaturization and declining cost of manufacturing equipment (such as computer-aided design) and the development of new micro-fabrication processes, most notably with three-dimensional (3D) printing, have re-ignited the dream of micro-production for need by polyvalent artisans located firmly in their communities. These developments have been given momentum by highprofile ‘fab-lab’ experiments on campus (Gershenfeld 2008; Lipson and Kurman 2013) and utopian visions of the ‘Internet of things’ (Gershenfeld et al. 2004), as well as growing academic interest (for example, the Journal of Peer Production). However, they have also fuelled popular engagement with the culture of making, and specifically peer-to-peer collaboration in the design and construction of relatively high technology. Once a counterculture, the community maker workshops and ‘hacking spaces’ celebrated by the ever-moving Maker Faire (‘the greatest show on Earth’), are springing up in most cities (Frauenfelder 2010). There is also a concerted process of experimentation by social entrepreneurs looking to ‘hack civilization’. A good example of this movement is the Open Source Ecology (OSE) established by Marcin Jakubowski in Missouri. The OSE definition of distributive economics refers to: an economic paradigm which promotes the equitable distribution of wealth through a combination of: open design (of products, processes, services, and other economically significant information), Flexible Fabrication, and Open Business Models, towards replicability. This means that replication is promoted to as many economic players as possible. Here at OSE, an apolitical approach is taken where design is improved by local solutions without invoking the context of centralized power. (OSE 2015; see also Johansson et al. 2005)

This vision of distributive economics, in fact borrows from the early twentieth-century distributism associated with social catholicism (G.K.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 458

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­459 Chesterton and Hillaire Belloc) as well as the Medievalist ‘de-centrism’ of Lewis Mumford and the English guild socialism of G.D.H. Cole and William Morris. What these traditions share is a commitment to family and community self-reliance, an emphasis on mutualism rather than bureaucratic state welfare, hostility to corporate capital and monopoly, and an aesthetic vision of skilled, artisanal craftsmen providing the backbone for a more integrated society of equals. So distributism is an old vision, but leavened with new technology. The first question is whether open-source, micro-production can resolve the question of metabolic cost. The answer is that nobody knows, and nobody will until after the fact. Kevin Carson argues in the affirmative. Developing a case that he elaborated at length in The Homebrew Industrial Revolution (2010), Carson essentially argues that open-source, micro-­fabrication can rescue Mumford’s neo-technical society by radically reducing the capital overhead costs of production: The old infrastructures . . . are extremely capital-intensive, high-overhead, batch-and-queue systems that devote 80% of their total capacity – idle most of the time – to handling 20% of the total load at peak hours. This grossly overbuilt, capital-intensive infrastructure, to pay for itself, requires organizing the rest of society to maximize utilization of the infrastructure’s capacity – even if it means doing everything in an extremely inefficient way . . . [But] At the opposite pole is distributed infrastructure, in which most of the infrastructural goods are distributed among the endpoints, relations are directly between endpoints without passing through a central hub, and volume is driven entirely by user demand at the endpoints. Since the capital goods possessed by the endpoints is a miniscule fraction of the cost of a centralized infrastructure, there is no incentive to subordinate end-users to the needs of the infrastructure. (Carson 2013)

Carson argues that technology is progressing so fast that the capital intensiveness of successor infrastructures is collapsing faster than the existing infrastructure itself. He is referring to phenomena such as the plummeting cost of solar power (approaching $1 per watt). Should the buoyant expectations in relation to solar storage technologies prove justified, the massive utilities companies could find themselves left high and dry by a crescendo of off-grid energy solutions. Unwisely however, Carson (2013) uses an example from Buckminster Fuller to make his point: ‘The classic example, from Buckminster Fuller, is replacing a transoceanic cable system embodying God only knows how many thousand tons of metal with a few dozen communications satellites weighing a few tons each’. As Greer (2013) points out, this is not a well-chosen example: Putting those satellites up, keeping them in orbit, and replacing them requires an entire space program, with all its subsidiary infrastructure; getting signals to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 459

01/06/2017 16:51

460  Handbook on growth and sustainability and from the satellites requires a great deal more infrastructure. Pile all those launch gantries, mission control centers, satellite dishes, and other pieces of hardware onto the satellite side, and the total weight on that end of the balance starts looking considerably less ephemeral than it did. Even if you add a couple of old-fashioned freighters on the cable side – that’s the modest technology needed to lay and maintain cables – it’s far from clear that replacing cables with satellites involves any reduction in capital intensity at all.

With regard to this example, Greer is clearly right. It is just not true that satellite communications have resulted in a reduction in the overall energy and material flows associated with the function of transatlantic communication. Rather the opposite is the case. Richard Heinberg (2011) raises the same objection by asking a rhetorical question: is it possible to build a wind turbine using energy from only wind turbines? The answer is absolutely not . . . or at least not at the moment. What this comes down to is the question of transformity or embedded energy (‘eMergy’). Carson is claiming that open-architecture peer production facilitated by new communications and fabrication technology will allow small, artisanal niche producers to produce for local needs and immediate consumption. This will strip unnecessary complexity and reduce the expenditure of scarce low entropy resources mainly by eliminating overhead costs of storage, transportation and grid infrastructures. In addition, by reducing or eliminating economies of scale, it will remove the incentive for mass advertising, mass marketing and artificial mass consumption. With regard to material flows, mimicking the fractal quality of production and maintenance in biology, such a system would in theory allow for a much more efficient, immediate and comprehensive closedloop recycling. With regard to ephemeralization, Carson will be right only if the miniaturization and localization of production transforms products and processes across the entire manufacturing landscape. At the point when a satellite can be produced more or less from scratch in a cluster of regional workshops, then the transformity associated with global communications systems will have fallen by several orders of magnitude. At this point civilization will have shed a significant layer of complexity without loss of function. In metabolic terms, civilization will have got cheaper and humanity will have increased the room for manoeuvre between the maximum scale for ecological integrity and the minimum scale for ­civilization – the latter having dropped a few notches. It has not happened yet. One of the defining technological barriers will be the production of micro-chips. But 3D printed micro-circuits are at least thinkable. So let us just say that Carson is right and that home-brewed, peerproduction will shortly allow us to reduce the cost of social complexity and the metabolic footprint of our high-technology society. How would

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 460

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­461 this play out in terms of non-linear politics? The first thing to recognize is that, other things being equal, any gains in efficiency might easily result in greater consumption – what economists refer to as the Jevons paradox. This paradox is apparent in the much-hyped sharing economy (Botsman and Rogers 2011). Social media technologies have opened new ways of accessing services and products, but have not lead to a seismic shift towards lower per-capita levels of consumption. A political economy of participatory, community-based, distributed fabrication would only result in a contraction in scale if linked to a paradigm shift at the level of ontology and motivation, that is, the dissolution of consumerism and material consumption as the defining social metric of success and happiness. Such a change in the meaning and motivational frameworks of a more embedded, face-to-face pattern of social life, would also make it possible to take advantage of the degrowth possibilities of collaborative consumption (see Figure 20.1). It is in relation to this problem that the issue of green hero/ immortality projects and possibilities for re-enchantment through the mobilization of collective joy or ‘communitas’ and group ritual, come to the fore (see Turner, V. 1969 [2011]; Turner, E. 2011). Secondly, 3D printing and micro-fabrication are potentially extremely disruptive innovations (Quilley et al. 2016). Any significant return of manufacture to the domestic, community or black economies would represent the informalization of economic activity on an enormous scale. Such a process would effectively throw the process of disembedding of economic activity described by Polanyi (1944) in The Great Transformation into reverse. As Polanyi understood, the creation of a formal economic sphere with separate institutions (office, factory) was linked to the consolidation of the modern state mainly because it allowed for the regularization and legitimization of taxation. The nation state is nothing if not the twin monopolies of taxation and violence. Informalization on this scale, making economic activity invisible and untaxable, would create a systemic fiscal crisis and cause massive unemployment while undermining the state’s capacity to provide welfare, health and public infrastructure. The immediate result would be a corrosive legitimation crisis entailing all sorts of dangerous and unwelcome political possibilities (see Figure 20.1). Alternatively, such developments may open the way to significant innovations in relation to basic income or new kinds of money (Eisenstein 2011; Jackson and Dyson 2012). On the positive side, if open-source, maker culture were to take off in this way, it could represent the hollowing out a novel ‘basin of ­attraction’ – and in this case with a radically different political economy at the centre. In destabilizing the state, pre-figurative ‘reMaker society’ might also engender its own endogenous shock or window of opportunity.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 461

01/06/2017 16:51

462

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 462

01/06/2017 16:51

Consumption

Community needs

Alienation

Internet

Collective knowledge

Collabrative consumption

Intentional alternative lifestyles

Green localism/ communitarian

DIY-Culture

Micro-fab 3D printing

Place & space making

Makers

Open source P2P

High tech

Figure 20.1  Disruptive innovation and the reMaker Society

Source:  Figure 20.1 developed with Katie Kish.

Crisis of meaning

Innovation & global growth

Ecological crisis

Radical sustainability politics

Reduced demand \ informalization

Political crisis

‘Business as usual’

Poverty Inequality Class conflict Social disorder - Racism - [Facism?]

Degrowth opportunities - Experiments with new care & gender roles - Shorter work week/basic income - Value housework & volunteerism

-

Fiscal/legitimation crisis

Economic crisis

Increased demand for redesigned long life, repairable, upgradeable, recyclable goods

Environmental politics and complexity in an era of limits  ­463 However, by radically undermining all those public institutions dependent on fiscal transfers, this societal vision presents an immediate threat to all those groups who have benefited from state-centred processes of social emancipation – from disability benefits designed to facilitate autonomous living, to liberal divorce laws or support for unmarried, single mums. Very quickly liberals, feminists and social democrats would find themselves having to come up with a politics that delivered the same values and freedoms but through the more embedded and unregulated spaces of family, community and civil society. Finally, for those environmentalists and radicals who find such visions compelling if not always comfortable, even if new technologies and their associated counter-cultural petri dishes contain the potential for an alternative way of ‘doing modernity’, it is not at all clear that it will happen. Rather than a distributive world of artisan fabricators, it is possibly more likely that the technologies will be hijacked by large corporations, with companies such as Amazon printing and fabricating on demand in local or regional centres. Maker counter-culture, though growing rapidly, is hardly revolutionary nor, strictly speaking, popular. There are sometimes formidable psychological and educational barriers to entry even as a leisure activity. It is difficult to imagine hundreds of thousands of people embracing a productive life below the radar and spending significant amounts of time making, repairing, recycling, sharing and swapping their own material culture. Certainly mass unemployment could create momentum, but it seems likely that any such cross-scale transformation of behaviour, values and institutional affiliations would need to draw upon non-rational drivers and motivations. This implies a movement that is spiritual, possibly faith-based and generative of the compelling social pressures associated with processes of shame and embarrassment (Quilley 2004). For the peer-to-peer counter-culture of open-architecture design and embedded fabrication to start challenging mainstream corporate manufacture, making would have to be developed as a powerful ‘hero/immortality project’ – perhaps linked overtly to mythologies, communitarian rituals, earth-centred ethics/spirituality and an overtly anti-consumerist, anti-capitalist form of bio-regionalism. Whether the counter-hegemonic meaning frameworks are rooted in Christianity (for example, the social catholicism of G.K. Chesterton), neo-paganism (Taylor 2001), the revitalization of indigenous worldviews (Simpson 2008) or a scientific cosmology focusing on humanity’s place in ‘big history’ (Chaisson 2002; Christian 2011) matters much less than the recognition that without attending to the aesthetic, spiritual and familial meaning of life, environmentalists will never gain traction on human behaviour.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 463

01/06/2017 16:51

464  Handbook on growth and sustainability

NOTES 1. Because all observation and cognition is mediated by language, it is impossible to achieve a vantage point outside of discourse. This is not the place for an extended consideration of epistemology. For the purposes of this chapter it is sufficient to acknowledge that the scientific method has allowed progressively more ‘detached’ models of the natural world (and to a much lesser extent the social world) to become more reality congruent, without arriving at the ‘truth’ or a position of absolute ‘objectivity’. This chapter starts from a broadly critical-realist position (Spash 2012; Bhaskar 2013) and the grounding assumption that processes of ‘involvement and detachment’ are best understood in terms of a balance or ratio that is highly variable and context dependent (Elias 2007). In the area of environmental politics the involvement/detachment balance is skewed heavily towards the former and competing discourses make it difficult to avoid talking at cross-purposes. 2. In the sense of Daly and Farley (2010). 3. I use growth in the same way as Herman Daly to refer to increase in the material and energy throughput associated with economic activity (see CASSE 2015). In his incisive comments on this chapter, Peter Victor suggested that the steady-state economy was perfectly compatible with a trajectory of innovation. My scepticism relates to two factors. First, in the absence of impossibly high rates of recycling, holding material throughput steady at any level would eventually engender systemic problems as a result of resource depletion. Secondly, because since the Second World War high product turnover has been the main driver of innovation in consumer societies, a steady-state innovation system would imply high (if not necessarily growing) levels of throughput. Even without growth in Western economies, the generalization of existing levels of per capita throughput to a population of 8 to 10 billion would very clearly place an unsupportable load on the biosphere (Rockström et al. 2009). 4. Life projects and commitments through which human beings create meaning and mitigate the existential anxieties generated by awareness of mortality (Becker 1973; Solomon et al. 2004) – see below. 5. Regulation theory (Boyer 1990; Brenner and Glick 1991; Aglietta 1979) has developed the most sophisticated programme exploring these linkages. 6. Peter Victor points out that ‘no growth’ is best understood as ‘smaller than’ rather than small (personal communication). In his own simulations of a non-growing Canadian economy (Victor 2008) GDP per capita ceases to grow after it has risen about 30 per cent higher than its level in 2005. This is clearly not small – but if this stable and non-growing level of per-capita material and energetic throughput was generalized across countries in the Global South, ecological collapse would be guaranteed (Rockström et al. 2009; Ehrlich and Ehrlich 2013). 7. Although offering starkly contrary diagnoses and prescriptions, ostensibly contending environmental discourses – limits to growth, cornucopian economics, sustainable development, ecological modernization, resilience-thinking, low/no growth (Victor 2008), degrowth (Martinez-Alier et al. 2010) and, even, ‘agrowth’ (van den Bergh 2011) – for the most part share a commitment to the rationality of sovereign individuals as the significant units of both moral consideration and political action. This is true of even ostensibly radical ecological-economic perspectives that emphasize the scale of human activity as a binding constraint, and human endeavour as an aspect of the unfolding ‘big history’ of the biosphere (Victor 2008; Jackson 2009; Daly and Farley 2010). What is obscured by the pre-analytical vision of modernity is that the sociological basis for this epistemological and ontological individualism has been produced by very concrete historical processes (Tonnies 1887 [2001]; Polanyi 1944, 1957a, 1957b; Elias 1991 [2010]) in the context of equally contingent flows of cheap energy (Odum and Odum 2001). 8. Arguably there have been small local successes and things would have been worse without sustainability education and research in academia, but given the likely consequences of business as usual, failure seems to be an appropriate verdict.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 464

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­465

REFERENCES Aglietta, M. (1979), A Theory of Capitalist Regulation: The US Experience, London: Verso. Allen, C.R. and C.S. Holling (eds) (2008), Discontinuities in Ecosystems and Other Complex Systems, New York: Columbia University Press. Anderson, B. (2006), Imagined Communities: Reflections on the Origin and Spread of Nationalism, London: Verso Books. Anderson, C. (2012), Makers: The New Industrial Revolution, London: Random House. Arrow, K., B. Bolin, R. Costanza, P. Dasgupta, C. Folke, C.S. Holling et al. (1996), ‘Economic growth, carrying capacity, and the environment’, Ecological Applications, 6 (1), 13–15. Barnofsky A.D. and E.A. Hadly et al. (2012), ‘Approaching a state shift in Earth’s biosphere’, Nature, 486 (7401), 52–8. Beck, U. (1992), Risk Society, London: Sage. Becker, E. (1973), The Denial of Death, New York: Free Press. Beeson, M. (2010), ‘The coming of environmental authoritarianism’, Environmental Politics, 19 (2), 276–94. Bhaskar, R. (2013), A Realist Theory of Science, London: Routledge. Botkin, D.B. (1990), Discordant Harmonies: A New Ecology for the Twenty-First Century, New York: Oxford University Press. Botsman, R. and R. Rogers (2011), What’s Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live, London: Collins. Boulding, K.E. (1996[1966]), ‘The economics of the coming spaceship Earth’, in V. Lippit (ed.), Radical Political Economy: Explorations in Alternative Economic Analysis, Armonk, NY: M.E. Sharp, pp. 357–67. Boyer, R. (1990), The Regulation School: A Critical Introduction, New York: Columbia University Press. Brenner, R. and M. Glick (1991), ‘The regulation approach: theory and history’, New Left Review, 188 (July–August), 45–119. Brown, L.R. (1978), The Twenty-Ninth Day: Accommodating Human Needs and Numbers to the Earth’s Resources, New York: Norton. Brown, L.R. (2003), Plan B: Rescuing a Planet Under Stress and a Civilization in Trouble, New York: W.W. Norton. Brundtland, G. (United Nations World Commission on Environment and Development) (1987), Our Common Future, Oxford: Oxford University Press. Burke, P. (1997), ‘Strengths and weaknesses in the history of mentalities’, in P. Burke, Varieties of Cultural History, Cambridge: Polity Press, pp. 162–82. Carson, K. (2013), ‘When ephemeralization is hard to tell from catabolic collapse’, P2P Foundation, 19 September, accessed 4 January 2015 at http://blog.p2pfoundation.net/ when-ephemeralization-is-hard-to-tell-from-catabolic-collapse/2013/09/19. Carson, K.A. (2010), The Homebrew Industrial Revolution: A Low-Overhead Manifesto, North Charleston, SC: BookSurge, PDF also available at https://homebrewindustrialrevolution.wordpress.com. Carson, R. (2002), Silent Spring, Boston, MA: Houghton Mifflin Harcourt. Catton, W.R. (1980), Overshoot: The Ecological Basis of Revolutionary Change, Urbana, IL: University of Illinois Press. Center for the Advancement of the Steady State Economy (CASSE) (2015), ‘What is a steady state economy?’, Center for the Advancement of the Steady State Economy, accessed 2 January 2015 at http://steadystate.org/wp-content/uploads/CASSE_Brief_SSE.pdf. Chaisson, E. (2002), Cosmic Evolution: The Rise of Complexity in Nature, Cambridge, MA: Harvard University Press. Chambers, N., C. Simmons and M. Wackernagel (2014), Sharing Nature’s Interest: Ecological Footprints as an Indicator of Sustainability, London: Routledge. Chesterton, G. K. (1912), What’s Wrong with the World, London: Cassell. Christian, D. (2011), Maps of Time: An Introduction to Big History, Berkeley, CA: University of California Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 465

01/06/2017 16:51

466  Handbook on growth and sustainability Daly, H. (1991), Steady-State Economics, 2nd edn, Washington, DC: Island Press. Daly, H. and J.J. Cobb (1990), For the Common Good, Boston, MA: Beacon Press. Daly, H.E. and J. Farley (2010), Ecological Economics: Principles and Applications, Washington, DC: Island Press. Davidson, C. (2000), ‘Economic growth and the environment: alternatives to the limits paradigm’, BioScience, 50 (5), 433–40. Davis, D.H. (2007), Ignoring the Apocalypse: Why Planning to Prevent Environmental Catastrophe Goes Astray, Santa Barbara, CA: Praeger. Diamond, J. (2005), Collapse: How Societies Choose to Fail or Succeed, London: Penguin. Dickinson, J.L. (2009), ‘The people paradox: self-esteem striving, immortality ideologies, and human response to climate change’, Ecology and Society, 14 (1), 34. Doctorow, C. (2010), Makers, New York: Tom Doherty Associates. Dryzek, J. (2013), The Politics of the Earth: Environmental discourses, Oxford: Oxford University Press. Ehrlich P.R. (1968), The Population Bomb, New York: Ballantine. Ehrlich, P.R. and A.H. Ehrlich (2004), One with Nineveh: Politics, Consumption, and the Human Future, Washington, DC: Island Press. Ehrlich, P.R. and A.H. Ehrlich (2013), ‘Can a collapse of global civilization be avoided?’, Proceedings of the Royal Society of London B: Biological Sciences, 280 (1754), 1–9. Eisenstein, C. (2011), Sacred Economics: Money, Gift, and Society in the Age of Transition, Berkeley, CA: North Atlantic Books. Ekins, P. (2002), Economic Growth and Environmental Sustainability: The Prospects for Green Growth, London: Routledge. Elias, N. (1939), On the Process of Civilization: Sociogenetic and Psychogenetic Investigations, trans. E. Jephcott, reprinted in S. Mennell, E. Dunning, J. Goudsblom and R. Kilminster (eds) (2012), The Collected Works of Norbert Elias, Dublin: UCD Press. Elias, N. (1991), The Society of Individuals, reprinted in R. van Krieken (ed.) (2010), The Collected Works of Norbert Elias, vol. 10, Dublin: UCD Press. Elias, N. (2007), The Collected Works of Norbert Elias, vol. 8, Involvement and Detachment, Dublin: UCD Press. Faber, M., R. Manstetten and J. Proops (1986), Ecological Economics: Concepts and Methods, Aldershot, UK and Brookfield, VT, USA: Edward Elgar. Foucault, M. (1980), Power/Knowledge: Selected Interviews and Other Writings, 1972-1977, Brighton: Harvester. Frauenfelder, M. (2010), Made by Hand. Searching for Meaning in a Throwaway World, New York: Portfolio (Penguin). Geertz, A.W. and G.I. Markússon (2010), ‘Religion is natural, atheism is not: on why everybody is both right and wrong’, Religion, 40 (3), 152–65. Georgescu-Roegen, N. (1971), The Entropy Law and the Economic Process, Cambridge, MA: Harvard University Press. Gershenfeld, N. (2008), Fab: The Coming Revolution on Your Desktop – from Personal Computers to Personal Fabrication, New York: Basic Books. Gershenfeld, N., R. Krikorian and D. Cohen (2004), ‘The Internet of things’, Scientific American, 291 (4), 76. Goudsblom, J. (2002) ‘Introductory overview: the expanding anthroposphere’, in J. Goudsblom and B. de Vries (2002) Mappae Mundi, Humans and their Habitats in a Long-term Socio-ecological Perspective, Amsterdam: Amsterdam University Press, pp. 21–46. Gramsci, A. (1971), Selections from Prison Notebook of Antonio Gramsci, Q. Hoare and G.N. Smith (eds), London: Lawrence & Wishart. Greer, J.M. (2009), The Ecotechnic Future: Envisioning a Post-Peak World, Gabriola Island, BC: New Society Publishers. Greer, J.M. (2013), ‘Flight to the ephemeral’, The Arch Druid Report, 2 October 2013, accessed 3rd January 2015 at http://thearchdruidreport.blogspot.ca/2013/10/the-flight-toephemeral.html.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 466

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­467 Gunderson, L.H. and C.S. Holling (2002), Panarchy: Understanding Transformations in Systems of Humans and Nature, Washington, DC: Island Press. Habermas, J. (1996), ‘Modernity: an unfinished project’, in M.P. d’Entreves and S. Benhabib (eds), Habermas and the Unfinished Project of Modernity: Critical Essays on The Philosophical Discourse of Modernity, trans. N. Walker, Cambridge: Polity Press, pp. 44–6. Hardin, G. (1968), ‘The tragedy of the commons’, Science, 162 (3859), 1243–8. Hardin, G. (1993), Living within Limits: Ecology, Economics, and Population Taboos, New York: Oxford University Press. Heilbroner, R. (1974), An Inquiry into the Human Prospect, New York: W.W. Norton. Heilbroner, R. (1991), An Inquiry into the Human Prospect: Looked at Again for the 1990s, New York: W.W. Norton. Heinberg, R. (2011), The End of Growth: Adapting to Our New Economic Reality, Gabriola Island, BC: New Society. Hobbs, R.J., E. Higgs and J.A. Harris (2009), ‘Novel ecosystems: implications for conservation and restoration’, Trends in Ecology & Evolution, 24 (11), 599–605. Huber, J. (1982), The Lost Innocence of Ecology: New Technologies and Superindustrial Development, Frankfurt am Main: Fisher. Jackson, A. and B. Dyson (2012), Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed, London: Positive Money. Jackson, T. (2009), Prosperity without Growth: Economics for a Finite Planet, London: Routledge. Johansson A., P. Kisch and M. Mirata (2005), ‘Distributed economies – a new engine for innovation’, Journal of Cleaner Production, 13 (10–11), 971–9. Kingsnorth, P. and D. Hine (2009), ‘The dark mountain manifesto’, accessed 3 March 2017 at http://dark-mountain.net/about/manifesto/. Kingsnorth, P. and D. Hine (2012), ‘Uncivilisation: the Dark Mountain Manifesto’, accessed 23 August 2012 at http://dark-mountain. net/about/manifesto/. Kondratieff, N.D. (1979), ‘The long waves in economic life’, Review (Fernand Braudel Center), 2 (1), 519–62. Kunstler, J. (2005), The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century, New York: Grove/Atlantic. Kunstler, J. (2008), World Made By Hand: A Novel, New York: Grove/Atlantic. Kurzweil, R. (2005), The Singularity is Near: When Humans Transcend Biology, London: Penguin. Laing, R. (2010), The Divided Self: An Existential Study in Sanity and Madness, London: Penguin. Lasch, C. (1991), The Culture of Narcissism: American Life in an Age of Diminishing Expectations, New York: W.W. Norton. Levin, S.A. (1998), ‘Ecosystems and the biosphere as complex adaptive systems’, Ecosystems, 1 (5), 431–6. Lipson, H. and M. Kurman (2013), Fabricated: The New World of 3D Printing, New York: John Wiley & Sons. Lomborg, B. (2002), The Skeptical Environmentalist: Measuring the Real State of the World, Cambridge, MA: Cambridge University Press. Lovelock, J. (2007), The Revenge of Gaia: Earth’s Climate in Crisis and the Fate of Humanity, New York: Basic Books. Löwy, M. (2005), ‘What is ecosocialism?’, Capitalism Nature Socialism, 16 (2), 15–24. Malerba, F. (2013), ‘A tribute to Stan Metcalfe and his contributions to evolutionary theory, Schumpeterian dynamics and innovation systems’, Economics of Innovation and New Technology, 22 (7), 623–30. Martinez-Alier, J., U. Pascual, F.-D. Vivien and E. Zaccai (2010), ‘Sustainable de-growth: mapping the context, criticisms and future prospects of an emergent paradigm’, Ecological Economics, 69 (9), 1741–7. Marx, K. (1848] 1977) ‘The Communist Manifesto’, in D. McLellan (ed.) (1977), Karl Marx Selected Writings, Oxford: Oxford University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 467

01/06/2017 16:51

468  Handbook on growth and sustainability Massey, D.B. (1995), Spatial Divisions of Labor: Social Structures and the Geography of Production, London: Psychology Press (Routledge). Meadows, D., D. Meadows, J. Randers and W. Behrens (1972), The Limits to Growth, New York: Potomac Associates. Mitchell, R. (2001), Dancing at Armageddon: Survivalism and Chaos in Modern Times, Chicago, IL: University of Chicago Press. Mol, A.P.J. and G. Spaargaren (2000), ‘Ecological modernization theory in debate: a review’, Environmental Politics, 9 (1), 17–49. Mumford, L. (1934), Technics and Civilization, reprinted 2010, New York: Harcourt, Brace. Nordhaus, T., M. Shellenberger and L. Blomqvist (2012), The Planetary Boundaries Hypothesis: A Review of the Evidence, Oakland, CA: Breakthrough Institute. Nordhaus, W.D., R.N. Stavins and M.L. Weitzman (1992), ‘Lethal model 2: the limits to growth revisited’, Brookings Papers on Economic Activity (2), 1–59. Nørgård, J.S., J. Peet and K.V. Ragnarsdóttir (2010), ‘The history of the limits to growth’, Solutions Journal, 1 (2), 59–63. Odum, H.T. (2007), Environment, Power, and Society for the Twenty-first Century: The Hierarchy of Energy, New York: Columbia University Press. Odum, H.T. and E.C. Odum (2001), A Prosperous Way Down: Principles and Policies, Boulder, CO: University Press of Colorado. Oldfield, F., A.D. Barnosky, J. Dearing, M. Fischer-Kowalski, J. McNeill, W. Steffen and J. Zalasiewicz (2014), ‘The Anthropocene Review: its significance, implications and the rationale for a new transdisciplinary journal’, The Anthropocene Review, 1 (1), 3–7. Open Source Ecology (2015), ‘Distributive economics’, accessed 1 January 2015 at http:// opensourceecology.org/wiki/Distributive_Economics. Ophuls, W. (1973), ‘Leviathan or oblivion’, in H. Daly (ed.), Toward a Steady State Economy, San Francisco, CA: W.H. Freeman, pp. 214–19. Ophuls, W. (1977), Ecology and the Politics of Scarcity: Prologue to a Political Theory of the Steady State, San Francisco, CA: W.H. Freeman. Ophuls, W. (2011), Plato’s Revenge: Politics in the Age of Ecology, Cambridge, MA: MIT Press. Ophuls, W. and A.S. Boyan (1992), Ecology and the Politics of Scarcity Revisited: The Unraveling of the American Dream, San Francisco, CA: W.H. Freeman. Paehlke, R. (1988), ‘Democracy, bureaucracy, and environmentalism’, Environmental Ethics, 10 (4), 291–308. Piketty, T. (2014), Capital in the Twenty-first Century, Cambridge, MA: Belknap Press of Harvard University Press. Pinker, S. (2011), The Better Angels of our Nature: Why Violence Has Declined, New York: Viking. Polanyi, K. (1944), The Great Transformation: The Political and Economic Origins of Our Time, Boston, MA: Beacon Press. Polanyi, K. (1957a), ‘The economy as instituted economic process’, in K. Polanyi, C.M. Arensberg and H.W. Pearson (eds), Trade and Market in the Early Empires: Economies in History and Theory, vol. 89. Glencoe, IL: Free Press, pp. 243–70. Polanyi, K. (1957b), ‘Aristotle discovers the economy’, in K. Polanyi, C.M. Arensberg and H.W. Pearson (eds), Trade and Market in the Early Empires: Economies in History and Theory, vol. 89, Glencoe, IL: Free Press, pp. 64–94. Polanyi, K., C.M. Arensberg and H.W. Pearson (eds) (1957), Trade and Market in the Early Empires: Economies in History and Theory, Glencoe, IL: Free Press. Quilley, S. (2004), ‘Ecology, “human nature” and civilizing processes: biology and sociology in the work of Norbert Elias’, in S. Loyal and S. Quilley (eds), The Sociology of Norbert Elias, Cambridge and New York: Cambridge University Press, pp. 42–58. Quilley, S. (2009), ‘The land ethic as an ecological civilizing process’, Environmental Ethics, 31 (2), 115–34. Quilley, S. (2011), ‘Entropy, the anthroposphere and the ecology of civilization: an essay on the problem of “liberalism in one village” in the long view’, Sociological Review, 59 (June), 65–90.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 468

01/06/2017 16:51

Environmental politics and complexity in an era of limits  ­469 Quilley, S. (2012), ‘System innovation and a new “great transformation”: re-embedding ­economic life in the context of “de-growth”, Journal of Social Entrepreneurship, 3 (2), 206–29. Quilley, S. (2013), ‘De-growth is not a liberal agenda: relocalisation and the limits to low energy cosmopolitanism’, Environmental Values, 22 (2), 261–85. Quilley, S. (2014), ‘Resilience through relocalization: ecocultures of transition’, in S. Böhm, Z.P. Bharucha and J. Pretty (eds), Ecocultures: Blueprints for Sustainable Communities, London: Routledge. Quilley, S, Hawreliak, J. and K. Kish (2016), ‘Finding An Alternate Route: Towards Open, Eco-Cyclical, And Distributed Production’, Journal of Peer Production, No. 9, Sept 2016, Special Issue. Eds Félix Tréguer, Panayotis Antoniadis, Johan Söderberg. Available at http://peerproduction.net/issues/issue-9-alternative-internets/peer-reviewed-papers/find​ ing-an-alternate-route-towards-open-eco-cyclical-and-distributed-production/. Rawles, J.W. (2010), How to Survive the End of the World as We Know It: Tactics, Techniques and Technologies for Uncertain Times, London: Penguin. Raymond, E.S. (ed.) (2001), The Cathedral & the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary, Beijing and Cambridge, MA: O’Reilly Media. Rees, W. (2000), ‘Ecological footprints and the Pathology of consumption’, in R.F. Woollard and A.S. Ostry (eds) (2001), Fatal Consumption: Rethinking Sustainable Development, vol. 5, Vancouver: UBC Press, pp. 21–51. Rees, W. (2010), ‘What’s blocking sustainability? Human nature, cognition, and denial’, Sustainability: Science, Practice, & Policy, 6 (2), 13–25. Rifkin, J. (2009), The Empathic Civilization: The Race to Global Consciousness in a World in Crisis, London: Penguin. Rifkin, J. (2014), The Zero Marginal Cost Society, London: Palgrave Macmillan. Rockström, J., W. Steffen, K. Noone, Å. Persson, F.S. Chapin, E.F. Lambin et al. (2009), ‘A safe operating space for humanity’, Nature, 461 (7263), 472–5. Sagoff, M. (1995), ‘Carrying capacity and ecological economics’, BioScience, 45 (9), 610–20. Scheffer, M. (2009), Critical Transitions in Nature and Society, Princeton, NJ: Princeton University Press. Schumacher, E.F. (1973), Small is Beautiful: Economics as if People Really Mattered, London: Abacus. Schumpeter, J.A. (1942), Capitalism, Socialism and Democracy, reprinted 2013, London: Routledge. Shearman, D.J.C. and J. Wayne-Smith (2007), The Climate Change Challenge and the Failure of Democracy, Portsmouth, NH: Greenwood. Shellenberger, M. and T. Nordhaus (2009), Break Through: Why We Can’t Leave Saving the Planet to Environmentalists, Wilmington, MA: Mariner Books. Shermer, M (2010), ‘Why belief in God is innate’, Wall Street Journal, accessed 1 January 2014 at http://www.wsj.com/articles/SB10001424052702304198004575172233981688208. Simon, J. (1981), The Ultimate Resource, Princeton, NJ: Princeton University Press. Simpson, L. (2008), Lighting the Eighth Fire: The Liberation, Resurgence, and Protection of Indigenous Nations, Winnipeg: Arbeiter Ring. Solomon, S., J. Greenberg and T.A. Pyszczynski. (2004), ‘Lethal consumption: deathdenying materialism’, in T.E. Kasser and A.D. Kanner (eds), Psychology and Consumer Culture: The Struggle for a Good Life in a Materialistic World, Washington, DC: American Psychological Association, pp. 127–46. Solow, R.M. (1974), ‘The economics of resources or the resources of economics’, American Economic Review, 64 (2), 1–14. Spash, C.L. (2012), ‘New foundations for ecological economics’, Ecological Economics, 77 (May), 36–47. Speth, J.G. (2008), The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability, New Haven, CT: Yale University Press. Steel, R. (2012), The Open-Source Everything Manifesto: Transparency, Truth, and Trust, Berkeley, CA: North Atlantic Books (Evolver).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 469

01/06/2017 16:51

470  Handbook on growth and sustainability Tainter, J. (1990), The Collapse of Complex Societies, Cambridge: Cambridge University Press. Tapscott, D. (2010), Macrowikinomics, Toronto: Penguin Canada. Tapscott, D. and A.D. Williams (2008), Wikinomics: How Mass Collaboration Changes Everything, New York: Penguin. Taylor, B. (2001), ‘Earth and nature-based spirituality (part I): from deep ecology to radical environmentalism’, Religion, 31 (2), 175–93. Toffler, A. (1981), The Third Wave, New York: Bantam Books. Tönnies, F. (2001[1887]), Tönnies: Community and Civil Society, Cambridge: Cambridge University Press. Turner, E. (2011), Communitas: The Anthropology of Collective Joy, New York: Palgrave Macmillan. Turner, G. (2008), ‘A comparison of “The Limits to Growth” with 30 years of reality’, Global Environmental Change, 18 (3), 397–411. Turner, G. (2014), ‘Is global collapse imminent?’, MSSI Research Paper No. 4, Melbourne Sustainable Society Institute, University of Melbourne. Turner, V. (1969), The Ritual Process. Structure and Anti-structure, reprinted 2011, Hawthorn, NY: Walter De Gruyter. Twenge, J.M. and W.K. Campbell (2009), The Narcissism Epidemic: Living in the Age of Entitlement, New York: Simon and Schuster. Van den Bergh, J. (2011), ‘Environment versus growth – a criticism of “degrowth” and a plea for “a-growth”’, Ecological Economics, 70 (5), 881–90. Victor, P. (2008), Managing without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Wackernagel, M. and W. Rees (1998), Our Ecological Footprint: Reducing Human Impact on the Earth, Gabriola Island, BC: New Society. Williams, R.H. (2002), ‘Lewis Mumford’s technics and civilization’, Technology and Culture, 43 (1), 139–49. Wright, R. (2004), A Short History of Progress, Toronto: House of Anansi.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 470

01/06/2017 16:51

21  Questioning sustainability in Latin America María Páez Victor

Today we cannot avoid stating that a true ecological approach must always become a social approach, integrating justice in the debate around environment, so we listen to the cry of the Earth as much as we listen to the one of the poor. (Pope Francis, Laudato Si)

HISTORY-BASED CRITIQUE OF DEVELOPMENT On 18 June 2015 Pope Francis issued a historic encyclical, Laudato Si (Pope Francis 2015b) that decries climate change, the despoiling of the Earth and the sorrows that this brings upon the poor. It is no coincidence that the very first Pope from Latin American would link offenses against the poor with the offenses against nature. The encyclical highlights “integral ecology”, the connection of humans to the natural environment, intrinsically linking ecological integrity, social justice and economic inequality (Tucker and Grim 2015). His view that environmental degradation and social degradation are brought about by poverty and inequality is the crux of the discourse in Latin America and the Caribbean, not just among environmentalists, thinkers, and academics but, more importantly, among diverse social grassroots movements, progressive governments, indigenous peoples, politicians, and is indeed a majority view in the Global South itself. Bolivian President Evo Morales, the first indigenous president in the Americas, in his famous speech to the Conference of the Parties (COP) 20 Climate Summit in Lima in 2015, succinctly stated: the developing countries continue to be the countries that most suffer the adverse effects of climate change and the growing frequency and intensity of extreme natural disasters, although they are historically the countries that are least responsible for climate change . . . There are countries pursuing . . . predatory and insatiable capitalism, accumulating and concentrating wealth in the hands of a few with a fondness for opulence – generators of poverty and marginalization.

In Latin America, there is a widespread view that what is nature and what is social are strongly intermingled and therefore it is necessary to 471 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 471

01/06/2017 16:51

472  Handbook on growth and sustainability ­ nderstand that all environmental problems, and the ecological crisis in u general, have social roots and cannot be dealt with in a technical way as much of the discourse on sustainability and green economy in the North contends (Velasco Páez 2014). Development, economic growth, progress and even sustainability itself are questioned quite openly and even rejected as neo-colonial instruments of the ecological and social maladies that have befallen the region. Along these lines, Spanish philosopher Adela Cortina contends that what is sustainable is not always just and that it is better to substitute the discourse of sustainable development with that of justice, human development and environmental sustainability. She proposes that instead of insisting on constructing a sustainable economy, focused on pensions or sustainable welfare, we should fight so that these are just (Cortina 2014). Spanish ecological economist Juan Martínez-Alier is an exponent of what he calls the environmentalism of the poor referring to the social conflicts that arise with the unequal distribution of wealth and ecological goods resulting from a focus on pure economic growth (Martínez-Alier 2002). Impoverished populations then struggle for social justice against state or private companies that adversely affect their lives (Martínez-Alier 2002). This approach is echoed by other analysts, such as Peet and Watts (2004) who consider that all sorts of environmental degradation are first and foremost suffered as a consequence of an unjust society and unequal economy wherein marginalized and/or less powerful groups in a society bear the brunt of such circumstances. The concept of sustainability arose initially as an environmental criticism of development as it was understood, so any discussion of sustainability involves an intense analysis of the idea of development and the idea of progress (Gudynas 2012). Hence Darío Machado Rodríguez contends that the concept of progress is associated with those of prosperity and development but our paradigm of prosperity should resemble our idiosyncrasies and our culture and we should elaborate a concept of progress oriented to a humanistic solidarity, a just perspective that is friendly towards nature (Machado Rodríguez 2014). As Eduardo Gudynas points out, development is perceived as a concept that is too western, whether it be capitalist (Keynesian or neo-liberal), socialist (Soviet or Chinese), it always comes down to the same fundamental ideas of a belief in linear progress, infinite economic growth, appropriation of nature, aims of materialist comfort and widespread consumerism. Whereas, a true alternative model of development needs to abandon the western influences of Eurocentrism and anthropocentrism (Gudynas 2012). The Latin American lands bear the wounds and baggage of past colonization, and more recent neo-liberal economic policies that

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 472

01/06/2017 16:51

Questioning sustainability in Latin America  ­473 have failed to bring about a promised development. As the eminent Uruguayan writer, Eduardo Galeano stated: “The history of Latin America’s ­underdevelopment . . . is an integral part of the history of world ­capitalism’s development . . . our wealth has always generated our poverty by nourishing the prosperity of others – the empires and their native overseers” (Galeano 1973, p. 2). From the moment of the fatal “discovery” by Europeans, Latin America and the Caribbean became an unequal link in the chain of world commerce. The history of the region is the history of the exploitation of its natural resources by foreign nations and world corporations and of nations too weak to withstand them (Galeano 1973). We cannot examine the present state of natural resource exploitation and the prospects of environmental sustainability without considering the national and international political and economic context in which this exploitation has taken place and continues to do so. As the world capitalist system passed through different phases, so Latin America was a passive partner as purveyor of gold and silver during the period of mercantilism in the sixteenth and seventeenth centuries, of rubber, cotton, coffee and cocoa during European industrialization, and of minerals, gas and oil in the present era of corporate capitalism. Indeed, John Maynard Keynes observed that “The modern age opened . . . with the accumulation of capital which began in the 16th century . . . which resulted from the treasure of gold and silver which Spain brought from the New World into the Old . . . I trace the beginnings of British foreign investment to the treasure which Drake stole from Spain in 1580” (Keynes 1963, pp. 361–2). Europe and its former colonies in North America, have viewed the southern half of the continent as being poor in socioeconomic development yet rich in natural resources, ripe for exploitation. The two however, were not independent of each other. With the cooperation and acquiescence of foreign-oriented Latin American governing elites, the region has acted as a natural resource “breadbasket”. The weakness of its nation states has been an asset in the subjugation of its enormous population necessary for the extraction of its resources. It is not a coincidence that every dictatorship in the region has been backed by the United States, and every social reformer or nationalist politician has been opposed, deposed and or assassinated by or with the collusion of the United States. (Blum 1999, 2014; Malley-Morrison et al. 2012; Rivas Alvarado 2015; Olivera Evia 2015). In 1975, under the excuse of the Cold War, the Central Intelligence Agency (CIA) united the dictatorships that prevailed in Latin America at the time (in Chile, Argentina, Uruguay, Paraguay, Bolivia, Brazil, Ecuador and Peru) in the infamous Operation Condor. This entailed the torture, murdering and disappearance of 60 000 progressive reformers, socialist or

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 473

01/06/2017 16:51

474  Handbook on growth and sustainability c­ ommunists of the region. “Rendition” was introduced whereby people were snatched off the streets of one country and disposed of in another without leaving a trace (Diges 2005). No challenge to the market-based economy of the region would be tolerated.

NATURE’S VALUE AS RESOURCE EXTRACTION Natural resources in Latin America have been exploited for international markets – rather than principally for building up a domestic market to satisfy people’s needs or encourage regional industrialization. This is also referred to as “extractivism” and has been linked to the despoiling of natural habitats, and the displacement and injury to indigenous and rural communities. The harmful extractive processes and practices, with impacts that are cumulative socially, environmentally and culturally, are destroying the unique life rhythms and communities of indigenous and traditional peoples that have a symbiotic relationship between their cultures and the ecosystems in which they live (Kernan 2015). Extractivism supposes that countries should allow the extraction of increasingly more natural resources, especially intensifying mining and monoculture agroindustry, to sell them in international markets and thus obtain the monetary dividends with which to buy the goods they need in the world market. Nature is relegated to a means of obtaining financing. Foreign investors and corporations have exerted real political power over the nation states to ensure their cooperation, and today, even governments that have a strong progressive social agenda are not free from extractivist projects and agendas (Terán Mantovani 2014). Nowhere was the power of foreign corporations more blatant and successful as in Venezuela, the location of the richest deposit in the Hemisphere of that most coveted natural resource – petroleum. Venezuela is an emblematic example of the regions’ history of exploitation. During the first stage of oil exploitation in Venezuela in the second decade of the twentieth century, Nelson Rockefeller, son of John D., cheaply acquired an inordinate amount of Venezuelan land. He handed over as a concession 2.3 million hectares to his oil company Standard Oil (the future Exxon Mobil), thus that company became one of the first to install itself in that country in 1921. Private ownership of this land involved the ousting and displacement of thousands of small landowners and renters, taking over a national sanctuary park and a ranch of historical significance that had belonged to Simón Bolívar (Cabiese Donoso 2008). This set the tone that marked the beginning of the decline of that country’s agriculture and lost hopes for a diversified and balanced economy.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 474

01/06/2017 16:51

Questioning sustainability in Latin America  ­475 Venezuela was turned into a gigantic oil camp, under a false, supposed development model, which in fact, was an anti-development model. Campesinos (rural workers) felt that the oil companies had robbed them of their future (Jaimes 2013). They flocked to the cities fleeing abandoned and destitute rural areas to form the poor urban slums or “barrios”. The economic function of Venezuela in the scope of the world markets was to be a supplier of oil, and nothing else: it need not develop agriculture or industries as it could import anything needed with its oil revenues (thus giving back to the world markets its oil revenue). The ruling elites bought this premise that so favored their interests since they were the receivers of the largess of all oil income through their control of the government. As the philosopher Enrique Dussel indicates, Latin American ruling elites have governed for 500 years in the interests of the dominant metropolis of the time (Spain, Portugal, France, England, and today, USA) (Dussel 2008). The power of the transnational oil companies was a determining factor in the economic and political life of Venezuela. For 60 years big oil paid only 1 percent royalties and non-oil tax of 34 percent. They influenced elections, lawmakers and government at all levels, until the democratic election of Hugo Chávez as president in 1999 (Prensa Web Radio Nacional de Venezuela 2015). In the heyday of “Washington Consensus” policies,1 from about 1980 to 2002, the Venezuelan state oil company (PDVSA) was in the hands of neo-liberal ideologues. In that period alone, the Venezuelan state and people were robbed of US$5000 million through unscrupulous practices and out and out fraud by PDVSA (Jaimes 2014). From 1960 to 1998, an equivalent amount of 15 Marshall Plans was wasted by the corrupt governments (Ramonet 2002). During the mid-twentieth century, Latin American governments pursued “economic development” with strategies ranging from import substitution to open door policies for foreign investment. The struggle for “modernization” or “industrialization” or “development” brought many changes in varying degrees such as the increase of the working class, worker organizations, and implementation of some measure of public welfare state services. However, by far, the measure of success was always in gross domestic product (GDP), not human development of the population. The political and economic power of transnational corporations that explored, exploited and marketed the region’s natural resources had not waned. Scarce attention was given to environmental impacts (Fishwick 2015). During the 1980s to 1990s whatever small development advances that had been made were severely affected, even lost owing to the neo-liberal “Washington Consensus” policies that were dominant in most countries

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 475

01/06/2017 16:51

476  Handbook on growth and sustainability – except Cuba. These policies included privatization of public services, the shrinking of the sphere of action of the state, the unrestricted access of foreign corporations to resources and investment, and impediments to environmental regulations. The benefits of this neo-liberal model of development would supposedly “trickle down” to the wider population, but this did not happen. Frei Betto, Brazilian scholar, refers to this model as an “export-extortion” process that includes energy, minerals, agriculture, with progressive destruction of biodiversity and ceding of lands to monocultures that are full of agro-toxics and transgenic substances (Betto 2014). The Washington Consensus policies benefitted the multinational corporations and the local elites and their agents, but they amounted to an assault on the nascent welfare states. The International Monetary Fund (IMF) and the World Bank were the main instruments that offered a poisoned apple of international loans. These turned into immense debts for the developing countries, incurred by them to pursue an “economic development” model based on economic growth measured in terms of the GDP. Huge international loans tied to strings of privatization and deregulation policies failed to create wealth or social development and when due, these institutions imposed austerity measures on the governments regardless of any social and political consequences. The governments lost the ability to service their debts because of the dramatic fall in the prices received for and the quantity of their primary goods exports, and this triggered the 1980s debt crisis (Pradella and Marois 2015). The real results for the region of this model were massive increase in poverty, malnutrition, illiteracy, inequality and widespread social misery. The 1980s are referred to as “the lost decade”. Some economies were near bankruptcy, as privatization shrank the sphere of the state’s functions and de-regulation meant globalization – opening markets to international firms that wiped out the competition of the weaker domestic enterprises. The by-word was “austerity” the justification given for the shrinking of public services that were made scapegoats for the crisis. These policies also resulted in the weakening of the nation states vis-á-vis the international corporations. During this lost decade, there was an unprecedented expansion of poverty and social inequality, poverty that increased from 40.5 percent in 1980 to nearly one-half of the regional population by 1990. A new pauperization occurred among the working class; as globalization induced stagnation and impoverishment of working people, their salaries plummeted. The average income in Venezuela fell by 40 percent, in Argentina by 30 percent, and in Brazil by 21 percent. The minimum wage in Argentina was 40 percent that of 1980 and in Peru it was 23 percent. The

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 476

01/06/2017 16:51

Questioning sustainability in Latin America  ­477 descent of the working population was more precipitous in Latin America than elsewhere in the world (Ocampo 1998; Robinson 2008). The governments were ill equipped to counter the frantic pursuit of economic growth without effective environmental regulations. Arturo Escobar, one of the leading academics rethinking development and one of the main critics of developmentalism (that is, the pursuit of neo-liberal development) points out that in the regions of the South a series of domination measures were taken: Balkanization, iron trade rules, and “a multiplicity of small cruel wars from Colombia, Central America, Argelia, Northern Africa and the Middle East in a paleo-micro colonization process supposedly to favour a ‘peaceful’ expansion of the market” (Escobar 2005, p. 29). This entire model of supposed development under the tenets of privatization and globalization was not only a question of redistribution. Wealth was generated simultaneously as poverty, both being two sides of the same coin. According to William Robinson (2008), poverty and inequality are social relationships of unequal power between the dominant and the subordinate. Poverty is a social relationship of power and powerlessness, it is a class relationship between poor and rich (Robinson 2008). Hence the issue of political power and who wields it, and the question of national sovereignty as opposed to international corporations that seek to undermine it became starkly visible and of open debate. The unsustainable and destructive developmental model brought about environmental damage, such as massive deforestation, loss of biodiversity, spoiling of land and waters. As well, related dislodgement of indigenous peoples and campesino (rural) communities occurred to make way for unfettered mineral exploitation and agro-industry on a massive scale (La Via Campesina 2014). The struggle for water in Bolivia was the emblematic example of the private interest–public interest struggle whereby a foreign corporation, under the guise of efficiency, obtained legal control of all water, even rainfall. The “Cochabamba Water War” of 1999 started with the World Bank proposing to the Bolivian government that it privatize water supply of the 1 million inhabitants of Cochabamba. Local water associations were excluded and rights given by law to a foreign US/ Spanish corporation. The huge popular rebellion that ensued was so fierce that it forced the government to reverse the privatization. During the 1980s and 1990s the widespread acceptance of the economic development model of the IMF and World Bank and transnational corporations, was backed by US military and intelligence might. For example, between 1980 and 1992, the USA sent on average $1.5 million a day to the El Salvador military government to finance its war against the Farabundo Marti Liberation Front (FMLN), an internal conflict in which 75 000 people were massacred (Kane 2002; Santiago 2009). In order to overthrow

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 477

01/06/2017 16:51

478  Handbook on growth and sustainability the legitimate Sandinista government in Nicaragua, the USA blocked its ports and bombed the country.2 In Guatemala, soldiers trained in torture at the nefarious US School of the Americas were burning entire villages and US marines invaded both Panama and Grenada under dubious excuses. Political domination and development seemed to go hand in hand (Dwyer 1999). In effect, what now is being articulated in the region is a communal critique of an extractive development model, in as much as it is an ethical and political defense of the commons, of the public good. As Pope Francis aptly put it in his speech to the United Nations, “The misuse and destruction of the environment are also accompanied by a relentless process of exclusion” (Pope Francis 2015a). This model takes place in the geopolitical context of a worldwide struggle for possession of natural resources, as István Mészáros has so clearly pointed out (Terán Mantovani 2015). An indication of the violence that extractive development unleashes is the fact that in 2014 alone 88 defenders of the environment were killed in Latin America according to a study of Global Witness, and 40 percent were indigenous peoples. Each week at least two people are killed because they took a position against the destruction of the natural resources. In Brazil 29 activists were killed, in Colombia 25, in Honduras 12, in Peru 9, in Guatemala 5, in Paraguay 3, and one each in Ecuador and Costa Rica. It is not a risk-less endeavor to oppose great corporations and rich rural landowners in defense of the environment (teleSUR 2015b). Therefore, in Latin America and the Caribbean, the environmental issue of development and sustainability cannot be separated from the issues of politics and foreign domination. Development is not accepted as simply economic growth, since the experience of the 1980s and 1990s is still fresh in human memory. Also, environmental protection and the defense of communities’ human rights are intrinsically linked to the issue of national sovereignty vis-à-vis international corporations and powerful Northern nations. These tragic results brought about ample disenchantment in the belief of “progress” as it had been touted. The deconstruction of development, a questioning of the concept itself and its desirability, occurred not just among academics but, more importantly, among social movements as well as political parties. The largest rural social movement in the region, the international peasants movement representing more than 200 million small farmers around the world, Via Campesina, has denounced false capitalist solutions to the climate crisis stating that the utilization of the climate negotiations to legitimize the continuation of business as usual at the expense of humanity and the planet and the inaction in the climate

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 478

01/06/2017 16:51

Questioning sustainability in Latin America  ­479 negotiations is a reflection of the corporate capture of governments by big business who want to continue exploiting nature to gain as much profit as possible (La Via Campesina 2012). They decry the developed countries’ open inaction on adaptation, technology development, finance, capacity building and economic and social consequences of response measures at the climate negotiations. It is no surprise that according to the UN Food and Agriculture Organization (FAO), agroindustry is responsible for between 70 percent and 90 percent of the world deforestation, which represents 15 percent to 18 percent of greenhouse gasses worldwide (Larsen 2014). The campesino and indigenous communities continue to produce the largest part of the world’s food, 80 percent in the developing countries according to FAO, yet their share of the land is not in proportion to its yield. In Peru, for example, farms of less than 5 hectares represent 78 percent of all the farms in the country. In Brazil, small farms occupy only one-fourth of arable land yet produce 87 percent of yucca, 69 percent of beans, 59 percent of pork, 58 percent of dairy products, 50 percent of chickens, 46 percent of corn, 33.8 percent of rice and 30 percent of cattle (La Via Campesina 2014). The mining industry, with its large-scale exportation of hydrocarbons and metals is, in effect, mega-mining as its widespread method of operation is through open pit methods. It has been generating high incidences of conflict with rural communities, which, Kernan (2015) calls a slow cultural genocide. The extractive, productive and financial transnational corporations, including those producing bio-combustibles, leave entire populations without the future resources to reproduce their own lives, which pits Latin America in a struggle to defend their natural resources against the advance of these powerful entities (Dussel 2008). Enrique Viale, an Argentinian social scientist, considers megamining to be a new form of neo-colonialism, of looting, pollution and environmental degradation and refers to this extractivism as “baddevelopment” (maldesarrollo) that yields transitory “bonanzas” but along with profound perversions such as trampling on the fundamental rights of communities, hurting democracies, provoking violence, promoting corruption, despoiling nature, subordinating the economy to primary sources, and the income generated does not jumpstart national ­ economies (Svampa and Viale 2014; Arellano Ortiz 2015). Environmental lawyer Fernando Arellano Ortiz further contends that mega-mining makes the economy foreign based, replacing old national bourgeoisies with new exporting groups which become a real barrier to limiting the abuses of speculative and depredator capitalism (Arellano Ortiz 2015).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 479

01/06/2017 16:51

480  Handbook on growth and sustainability

DECONSTRUCTING DEVELOPMENT This questioning is referred to as “post-developmentalism” which interprets global history from the perspective of local histories in order to “decolonize” the concept of development, seeking an “alternative to modernity” and imagining a future after capitalism. This approach also includes the ethical issue of the rights of nature itself – of the living planet and its flora and fauna’s right to coexist with humankind. Arturo Escobar is one of the main theorists of post-developmentalism but this questioning has not remained in academic milieu, and is widespread as the effects of the failed neo-liberal development were felt in the daily lives of the populations (de Vries 2013). Escobar points out that in the past 50 years, the social sciences has seen three theoretical orientations on development: ●

the neo-liberal theory of modernization (1950–70) with its concepts of growth and development; ● the Marxist theory of dependency (1960–70) with its emphasis on center and periphery and class structures; and ● the cultural critique of development of the post-structural approach (late 1980–90) that sees development as a construct of the North to the detriment of the self-identity of the South. The post-structural approach asked the key question: why were Asia, Africa and Latin America deemed “underdeveloped”? This led especially to the deconstruction of the main ideas of development, growth, and sustainability, whereby the underlying and overt aim was simply to extend corporate markets to these regions. Post-development is not an era per se but an approach where the western concept of development is not considered the central organizing principal of society. It leads also to a lesser reliance on “experts” and a greater importance given to the social movements and grassroots organizations. Neo-liberal policies had the effect of strengthening popular opposition forces to the point that democratic, popular, left of center governments predominate in Latin America (often called by the media “the pink tide”), as a result of partially successful grassroots rebellions, specifically in Venezuela, Bolivia, Argentina, Nicaragua and Ecuador. Fifty-four percent of the population of Latin America and the Caribbean lives in countries with these progressive governments.3 In fact, the heads of state in Brazil, Uruguay, Nicaragua, El Salvador and Cuba are or were all former guerrilla members of the 1980s. Brazilian Frei Betto remarks that it is a singular fact in the history of the continent (Betto 2014). They

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 480

01/06/2017 16:51

Questioning sustainability in Latin America  ­481 were all elected in opposition to the neo-liberal development model and reflect various concepts of alternative societies to capitalism. They all have their own idiosyncratic experiences and political cultures but they have a shared vision of their problems and the way in which their societies should take. The progressive governments welcomed and championed Cuba, and together they form the backbone of this new geopolitical reality with a critical stance towards the neo-liberal model of development.4 They strive, even in the midst of their continued insertion in the global markets, to find alternative models of development that do not injure their rights as nations and despoil their environments. Cuba is the only nation to have forged a very different path to development, perhaps because of the vicious economic blockade by the USA. Cuba has the rare distinction among nations of rating very high in the United Nations (UN) Human Development Index5 and at the same time having a very small ecological footprint (Cabello et al. 2012). The ecological footprint being a measurement that compares human consumption of natural resources with the planet’s ecological capacity to generate them. In 2013, the World Bank concluded that the period led by left-wing government made a fundamental revolution in distribution to the enormous benefit of their peoples as for the first time ever, a decade of strong economic growth within the region saw employment increase and wage inequality drop contributing to an unprecedented reduction in poverty and an increase in prosperity for all levels of society, real incomes having risen by 25 percent since 2000 (Ross 2016). It has not just been political leaders, but social movements, political parties, and popular organizations that have revitalized a progressive force that has a more social and humane dimension that has changed the way of making politics and more socially responsive democratic governance. The knowledge that has been produced by these social actors has become the basic ingredient to re-think development, sustainability, growth, nature, and globalization. These concepts are no longer the exclusivity of “experts” in the debate. Old political institutions and dynamics have been transformed to promote projects to confront the structural problems of the regions: extreme poverty, social exclusion, injustice, political and administrative corruption, unemployment, agricultural and food productivity, economic recuperation and assertion of sovereignty over natural and energetic resources (Mendoza Márquez 2005). The achievement of the progressive governments, particularly Cuba, Venezuela, Ecuador, Bolivia, and Nicaragua, are impressive and have had effect also on the overall regional well-being statistics. These governments have virtually eliminated illiteracy, dramatically reduced infant mortality and malnutrition, and carried out successful anti-poverty measures.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 481

01/06/2017 16:51

482  Handbook on growth and sustainability According to the World Bank (Ferreira et al. 2013) in Latin America and the Caribbean between 2003 and 2011 more than 70 million people have been lifted out of poverty, infant mortality for the under five years of age has been reduced by 69 percent and chronic children’s malnutrition was halved, reduced from 12.5 million (1990) to 6 million in 2011, and primary school enrollment increased to 95 percent in 2011. As Katz and Fidler point out, in this decade of the predominance of progressive governments and democratic victories, there were no Greek-style adjustments and that Chavismo rescued the socialist project.6 For all these reasons South America became a point of reference for social movements throughout the world (Katz and Fidler 2015). Poverty and inequality continue to exist, but the advances have been concrete and significant, without relying on “trickle down” theories of development. All this within the context of active opposition by the USA and multinational corporations that continue to use their political and economic power to influence the political processes in these countries. The Venezuelan transformation has been of crucial importance, both because of its evident achievements in elevating the quality of life of its population and because it sets an example for a different path to development. A prime venue for this transformation has been the misiones, a slew of anti-poverty programs rooted in popular participation that have tackled health, education, housing, infrastructure, security, unemployment, sports, homelessness. These programs circumvented red tape and bureaucracy and have been the key to the struggle against poverty and exclusion. The Venezuelan government in the past 17 years has been able to reduced poverty from 66 percent (1999) to 5.5 percent (2014), and reduced extreme poverty from 21 percent (1999) to 4.5 percent (Robertson 2014; teleSUR 2015c; Venezuelanalysis 2015). Inequality has sharply been reduced as the Gini coefficient that measures inequality went from 0.465 to 0.382 in one decade. Illiteracy has been all but eliminated and malnutrition and hunger dramatically reduced. Infant malnutrition was reduced from 8 percent to 2.9 percent (Muntaner et al. 2012; Schiavoni 2014). The innovative Barrio Adentro program brings health services to a multitude of neighborhood and village, and with the help of Cuba, provides access to first class medical services to 84 percent of the population. In 15 years it has established 7284 popular clinics and built new hospitals. Infant mortality has dropped from 25 per 1000 to 13 per 1000 (Muntaner et al. 2008; Carballo 2015). In short, Venezuela has met many of the UN Millennium Goals: hunger, safe water, and education (Venezuelanalysis 2009; Muntaner et al. 2013; Gobierno Bolivariano de Venezuela 2015; Saltrón Negreti 2015). For the first time in its history, oil revenues have

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 482

01/06/2017 16:51

Questioning sustainability in Latin America  ­483 been applied to the most pressing social needs of the majority of the population and not simply to bolster the interests of the elites. However, the truly innovative aspect of the Bolivarian Revolution of Venezuela has been not simply in the improvement of the daily lives and prospects of its population, but in the wide-scale popular participation in a new configuration of socio-economic life with Communal Councils and Communes. These have allowed communities and neighborhoods across the country to make key decisions on the local matters that most affect them and are at the front of what is being called the communal economy. There are 46 000 Communal Councils in Venezuela that send representatives to the 931 Communes, and these in turn have representatives in the Presidential Council of Communes that advises President Maduro (Toledo 2015). These councils and communes have legal constitutional rights and direct financing, and are integral to local government since municipal and state authorities must necessarily work with their cooperation. Communal Councils grow food, distribute it in local markets, produce textiles, manufacturing, foodstuffs and most importantly they coordinate local services. They run local radio stations, coordinate different social groups such as cultural committees, youth and women’s groups. For example, in March 2015, the Communal councils in the states of Lara and Portuguesa raised 500 acres of corn and ran a corn-processing plant (Pearson 2009, 2013). Communal Councils are not isolated quaint “farmers markets” or “handicraft fairs”; they are a sophisticated network, that has done away with the idea of a “population mass”. They embody a highly organized, politically conscious people who are defending their rights, stimulating their local economy and exerting pressure at the highest level of policy. What has surprised many is that poverty levels in Venezuela have continued to drop even in the hard years of 2009 and 2014 with the fall of oil prices and the world financial crisis. This is a result of the Venezuelan government not being fixated on GDP and sheer economic growth. Instead it has given priority to its social aims, and the working classes have not been made the scapegoats of the situation. Venezuelan social policies form part of the new concept of the state itself that guarantees social rights for all. The misiones do not depend excessively on economic growth. As Laura Bécquer Paseiro states, this relationship with economic growth must be considered the other way around, that is, the state of the misiones has to serve as an engine of economic development and growth (Bécquer Paseiro 2015). It is not by chance that the 2015 UN Happiness Report rates Venezuela as the fourth happiest country in the region and the twentythird worldwide, beating countries such as Germany and France (Helliwell et al. 2015). However, much of the advancements in social investments in Venezuela have been possible because of the elevated price of oil, and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 483

01/06/2017 16:51

484  Handbook on growth and sustainability the drop of oil prices necessarily impacted the degrees of freedom of the state to meet public necessities. Forces adverse to the government take advantage of the weakness due to the fall in oil prices, forcing the government to counteract the effects of black markets, sabotage, hoarding, and smuggling. Nevertheless, contrast these uplifting trends with what has been happening, in the same decade, in Europe whose European Union (EU) was supposed to have brought prosperity. A recent Red Cross (2013) report states that while other continents successfully reduced poverty, Europe adds to it. Income inequality in the EU is growing as the rich are getting richer and the rest falling behind (European Commission 2014). In 2010 a poverty reduction strategy was adapted by the EU, but 7.8 million more people were plunged into poverty (Andor 2014). Currently, 24 percent of the EU population lives at risk of poverty – that is 120 million people including 27 percent of children. This is occurring within an alliance between the richest, most “developed” parts of the world.

ECO-SOCIALISM, BUEN VIVIR, VIVIR BIEN It is not then surprising that this combination of poverty, affront to national sovereignty by multinationals, and the degradation of natural habitats has spurred fierce criticism of capitalism and the appearance of alternative views of society such as eco-socialism, in Venezuela, and Buen Vivir and Vivir Bien (Live Well) in Bolivia and Ecuador. Eco-socialism is a view that retains socialist class analysis but includes what had hitherto had been latent in most socialist and Marxist ­perspectives: the environmental focus. Which is not to say that Karl Marx himself ignored the natural environment; for example, he stated that man lives on nature – meaning that nature is his body, with which he must remain in continuous interchange if he is not to die and that man’s physical and spiritual life is linked to nature which means simply that nature is linked to itself, for man is a part of nature (Jasper 2013; Schmidt 2014). Also, Marx analyzed profoundly the relationships between capital, power, land and resources. Eco-socialism does not consider environmental degradation as a secondary or circumstantial effect of the developmental model, but as an intrinsic characteristic of the same. It is placed in its broad context of capitalism as critics, such as Francisco Javier Velasco Páez, who assert that capitalism will continue to insatiably devour nature until it has removed all the organic preconditions for human life. The ecological crisis is closely associated with the essence of capitalism (Velasco Páez 2008).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 484

01/06/2017 16:51

Questioning sustainability in Latin America  ­485 As an indicator of just how seriously this view is taken, the Venezuelan government has recently renamed its environmental ministry, the Ministry of Eco-socialism. There was no greater example of the failure of neo-liberal economic policies to deliver economic or human development to the region than in Venezuela, where despite its immense oil richness, in 1999 between 50 and 70 percent of its population lived in poverty, over a third in extreme poverty, there was widespread malnourishment, and its educational indicators were very low (Paullier 2012). It was perhaps the country where foreign interests and the power of the USA had the most inroads, and wielded the strongest political power both directly and indirectly through local elites whose interests were indistinguishable from those of its foreign partners; a situation unchanged since the very beginning of the petroleum exploitation (Jaimes 2013). In 2002, the USA orchestrated a coup d’état against democratically elected President Hugo Chávez, which failed owing to an unprecedented popular uprising and support from the military loyal to the Constitution (Golinger 2007). After the failed attempt it continues trying to destabilize the government (James 2006). However, the new century brought new circumstances altogether. The catalyst was the landslide democratic election of Hugo Chávez in Venezuela backed by diverse popular movements. A new constitution was enacted that enshrined human rights, and for the first time in the continent a constitution enshrined environmental rights: it was the first in the region to proclaim as a human right the access to a clean environment and obligating the state to ensure it. The Constitution’s Article 127 proclaims: “It is a right and a duty of every generation to protect and maintain the environment for the benefit of themselves and of the future generations.” The Constitution also enshrined indigenous rights, and ample rights of women and it gave a legal framework for sovereignty over all natural resources. It is now recognized as one of the most progressive constitutions in the hemisphere (Wilpert 2003; teleSUR 2014b). The Venezuelan government implemented a wide range of social justice policy initiatives – the misiones among them – aimed at elevating the quality of life of the population, dedicating about 60 percent of GDP to social investment. In just a decade Venezuela rose nine places in the UN Human Development Index (Datosmacro 2015; teleSUR 2015d; UNDP 2015). That is, the government effectively took control of the oil industry from the transnational corporations and their elitist local agents, and oil revenues were at last significantly invested in education, health, housing, land reform, microcredits, and community participation venues (Wagner 2015). President Chávez’ popularity was solidified inside his country as

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 485

01/06/2017 16:51

486  Handbook on growth and sustainability a leader who clearly used the rich Venezuelan natural resources for the needs and aspirations of the majority of the citizens, not those of the wealthy elites, and provided a powerful example to the region that another way was possible. For the first time since the discovery of oil, the Venezuelan government recognizes the finite condition of the petroleum industry and has set out a long-term aim of diversifying its economy and creating what it calls, eco-socialism, that is, the creation of a system that is both socially responsive and environmentally responsible. This is a formidable task for an economy that depends on petroleum, withstands the environmental impacts of normal oil operations, and suffers the antagonism of the USA and the transnational corporations towards anything that favors socialism of any kind. Nevertheless, at the Climate Change Summit in Copenhagen in 2009, President Hugo Chávez warned that “60% of ecosystems of the planet have been harmed” and that “climate change is, without a doubt, the most devastating environmental problem of this century” (Chávez 2009) and later further stated that Venezuela must transition itself “towards a post-oil era . . . searching and developing new sources of energy” (Chávez 2012). No other president had envisioned a post-oil Venezuela, and the Constitution he ushered in asserts the right to a clean environment and obliges the government towards sustainable development (Constitution of the Bolivarian Republic of Venezuala 2000). In Bolivia, the historic election of Evo Morales in 2005, the first indigenous president of a Latin American country, was significant for indigenous peoples and the environment. Morales’s government has enshrined constitutionally the rights of the indigenous Bolivian population, traditionally marginalized, and it has a strong environmental focus. President Morales has become the foremost environmental spokesman for the region; at the UN COP20 meeting in Lima, December 2014 he urged: “I ask for a climate accord based on the protection of life and Mother Earth and not on the market, profits and capitalism” (Morales 2014). In the new Bolivian Constitution that Morales facilitated, the indigenous (Aymara) concept of Suma Quamaña – Vivir Bien, to Live Well – is recognized as an ethical principle for its plural society. In Ecuador, President Rafael Correa, elected in 2006, also promoted a new constitution that postulates a similar indigenous concept, Sumak Kawsay (Kichwa), or Buen Vivir, Good Life. Both concepts are very similar, indicating that the fullness of a good life in a broad sense can only be understood in a community and is in a peaceful relationship not only with others in community but also with Nature. Within this relationship with nature, the economy should be geared not to endless consumption but towards “the good life”. These concepts are not about an individual, but about individuals in their

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 486

01/06/2017 16:51

Questioning sustainability in Latin America  ­487 social context and natural context: community and environment intrinsically linked. Indigenous peoples all over the world see their lives as bound to their land, and in these concepts there is an uppermost fusion of community and nature. Buen Vivir and Vivir Bien are conceived as alternatives to the Eurocentric idea of development and economic progress, where happiness is individualistic, very much in terms of possessions, or endless consuming. Buen Vivir and Vivir Bien are rooted in being in harmony. Nature is not a possession, not “natural” capital; it escapes monetary value and mercantilism.7 Discussion of how to apply these concepts have included: the idea of production with low levels of raw materials and energy, the concentration on local markets instead of exports, lower levels of consumption, greater sharing innovations, and true pricing of environmental and social costs, and the changing of corporate legal framework (Balch 2013). Buen Vivir or Vivir Bien, are pluri-cultural concepts, that is, they are not exclusive, centered on ethnicity. They have been embraced in two contemporary constitutions – those of Bolivia and Ecuador – that acknowledge and proclaim the multiplicity of cultures among their people and reject the dominant Eurocentric cultural idea of what a good life is and are linked to the economic organization of the State. The Bolivian is more of an ethical principle for a plural economic model. The Ecuadorian sees Sumac Kawsay (Buen Vivir) linked to a set of rights, which include rights to health, shelter, education, food and the environment, and most originally, the Ecuadorean Constitution proclaims the rights of Nature, per se (Gudynas 2011). The Ecuadorean Constitution states: “Nature or Pachamama, where life is reproduced and exists, has the right to exist, persist, maintain and regenerate its vital cycles, structures, functions and its processes in evolution” (Constitution of the Republic of Ecuador, title II, ch. 7). There is a growing movement in the region advocating animal rights. The inclusion of environment in the three Latin American new constitutions indicates a clear recognition of the ecological crisis that the planet now confronts. The desire for a different model presented in these progressive constitutions is an indication of the critical stance towards the routine concepts of development and progress as have been defined by industrialized nations. Buen Vivir and Vivir Bien are concepts rooted in indigenous knowledge, but their application is an ongoing political and economic process. They are not concepts of ancient lore, but quite contemporary; they are indigenous assessments of their experiences in modern times and of their ecological and political struggles. Also, the reorganization of an environment ministry into an Eco-socialist Ministry in Venezuela shows a commitment to both environmental protection

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 487

01/06/2017 16:51

488  Handbook on growth and sustainability and social justice. The Venezuelan government places an emphasis on “endogenous development”, meaning looking inside, not outside, to meet the country’s needs. As Camacaro et al. (2016) indicate, it includes building upon the unique knowledge and experience of women, indigenous peoples, Afro-descendants and other typically marginalized, campesino farming methods as fundamental to food sovereignty, including banning GMOs and preserving native seeds. These concepts (Buen Vivir, Vivir Bien and Eco-socialism) have renewed the thinking of the traditional left inside and outside the region, and have spurred a critique of the socio-economic model of a culture that stresses progress preferentially in materialistic, economic terms. As Le Quang and Vercoutere (2013) indicate, nature demands the search for an alternative to the crisis of today’s civilization, a crisis in which being global needs multidimensional solutions and cannot be reduced to western recipes.

UNITY ON SOCIAL JUSTICE AND ENVIRONMENT The progressive governments have led the path towards strengthening the sovereignty of Latin American countries by facilitating the integration of the region in order to face their common economic and social problems. The desire for such political integration, regardless of ideological differences, has long been the dream of Latin American leaders, particularly Simón Bolívar, however the new integration of Latin America and the Caribbean also includes a vision of sustainability that aims for both social justice and protection of the region’s plentiful natural ecosystems. The key institutions of regional integration are the Bolivarian Alliance for the Peoples of Our America (ALBA), the Community of Latin American and Caribbean States (CELAC), the Union of South American Nations (UNASUR), the energy alliances of PETROCARIBE and PETROSUR, the commercial alliance of Mercado Común del Sur (MERCOSUR), and the regional television communication network teleSUR. Not surprisingly, the neo-liberal forces attempt to undermine this regional integration. James Petras (2015) argues that Venezuela’s foreign policy success with regard to Latin American integration, is the main reason that Washington has persisted in its efforts to overthrow the Venezuelan government. The ALBA, aimed at overcoming poverty, also has as one of its main objectives the promotion of sustainable development8 and has successfully acted as a block in international climate change forums (teleSUR 2014a). The CELAC with 33 member nations, representing nearly 600 million people, is the main forum for political dialogue in the Americas, without

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 488

01/06/2017 16:51

Questioning sustainability in Latin America  ­489 the presence of the USA or Canada.9 The CELAC is the third largest economic bloc in the world, with a GDP of $7 trillion, and is perceived as one of the most important integration mechanisms owing to its credibility and efficiency. As a venue for resolving regional conflicts, it has in effect, reduced the once overwhelming political influence of the USA. As a bloc it has called attention to climate change and adopted polices to combat it. The UNASUR’s special focus is the defense and security of the region and its natural resources.10 It also aims to promote social justice and a sustainable development in harmony with nature (UNASUR 2011). The Organization of American States (OAS), notoriously an instrument by which, historically, the USA has been able to politically dominate the region, has been sidestepped. Its influence has been greatly diminished by this palpable integration of the Latin American countries. At the April 2015 OAS Summit it was forced to accept the inclusion of Cuba which had been opposed by the USA for 40 years, but which the Latin American and Caribbean nations unanimously demanded. Also, the OAS had to accept the unanimous condemnation of President Obama’s executive order declaring Venezuela a threat to USA’s national security, a ridiculous order if it were not for its potential consequences. It was clear at this summit that there was the will, at the highest level, for mutual cooperation between the Latin American and Caribbean nations who are looking to themselves for solutions to their collective problems, including the search for sustainable development that eradicates poverty but does not at the same time destroy the rich, diverse and unique natural ecosystems of the sub-continent.

FUTURE PROSPECTS Despite the recognition of the failure of the “trickle down” theory of prosperity assumed by neo-liberal policies, in terms of the environment there is still a trend towards large-scale development projects such as oil and gas exploitation and agribusiness and monoculture. These may have state oversight or even ownership, but still can and do have ­detrimental environmental effects. There is still a dependency on the mono-­cultivation of soya, and hydrocarbons, and mineral extraction, and one of the main problems is the persistence of the extractive model of development, that is, the continuing exploitation of natural resources, especially mining (ore, gas and oil) and monoculture agribusiness for the world markets. These are important sources of income for governments that need to satisfy their population needs while not yet achieving a balanced, fully diversified economy. Eduardo Gudynas is a strong critic especially of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 489

01/06/2017 16:51

490  Handbook on growth and sustainability Bolivia and Ecuador because, despite the ideal of protecting the Pacha Mama (Mother Earth), governments fail to fully listen to indigenous populations whose lands are affected by the broader nation-wide plans for development (Gudynas 2015). Venezuela’s efforts to diversify its economy have not yet been able to free the country from its dependency on petroleum exports. The Latin American governments face the growing needs of their populations. Having lived through the inadequacies of the neo-liberal model of development that caused extensive impoverishment in the region during the 1980s and 1990s, there is political resistance to it, but as yet, strong, workable, efficient alternative models of development that allow the safeguard of the nations’ sovereignty and of the natural environment for future generations have not yet been established. Economically, the region remains linked to world capitals, markets and the extractive model of development, although the progressive governments have managed policies to mitigate impacts as much as they are able. While progressive governments have acted to try to meet the needs of their populations, and redistributing wealth, they have not changed the economic system, that is, the essential model of accumulation, which continues to have capitalist characteristics. Monopolies still exist in the commercial sector, the financial sector has not been strongly regulated and links to international capitalist markets remains strong (Houtart 2015). However, progressive governments, grassroots social movements of rural workers, environmentalists, scientists, and the regional institutions that are the tools of integration, have expressed aims that show a deep regard and concern over both social justice and well-being of their people and the need for development that is environmentally sustainable. These voices may lead to greater investment in alternative energy to put a stop to deforestation, and to promote more ecologically sound agriculture as well to promote internal markets to satisfy real population needs rather than international markets. The domestic and international political forces defending the neo-liberal economic system have united and increased their political opposition to Latin American progressive governments. The neo-liberal opposition tries to blame these governments for poorer economic situations, overlooking the falling international prices and the world financial crisis. Their opposition is fierce and powerfully backed: in the 2015 election year alone, the USA illegally distributed $18 million to the Venezuelan opposition parties (Golinger 2015). In December 2015, they obtained two important victories with the presidential election of Mauricio Macri in Argentina and a clear majority in Venezuela’s National Assembly. When the new president of the National Assembly took up his post, he arrived in the automobile of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 490

01/06/2017 16:51

Questioning sustainability in Latin America  ­491 the US embassy with the acting ambassador of the USA at his side.11 It was more than just a symbolic gesture. As for Macri, his cabinet ministers include former chief executive officers (CEOs) of international corporations such as Monsanto, Shell, General Motors and J.P. Morgan (Aporrea 2015). However, two of the most promising signs are the consciousness and mobilization of the popular organizations that stands to defend their hard won political and social rights, and the political will and capacity of the integration institutions to act with each other in a coordinated fashion. The people and the governments understand that it is their unity that can protect their rights and future welfare. In conclusion, while Latin America and the Caribbean continue to battle poverty, inequality, rapacious foreign corporations, unscrupulous concentration of economic power of domestic elites and the subversive power of the United States, a new dawn has certainly arrived. The region now asserts the sovereignty of its nations, the democratic rights of its people, and is conscious of the dire need to attain sustainable development in a different way, that does not destroy their ecosystems, the climate and the planet itself. There is an expectation that there will not be one single alternative model, but various models, to suit the historic trajectory and economic culture of each country, and as yet solid alternatives to the neo-liberal economic model is still a quest. However, at least, it is being sought. The future of the region, its people and nature, depends on the articulation of organized and determined popular power as it confronts a depredatory economic system. Noam Chomsky (teleSUR 2015a) has stated that Latin America is an example to the rest of the developing world: first, by advancing their independence from the USA, by advancing social justice and genuine democratic governments, reclaiming control over natural resources from multinational corporations, and successfully investing in social programs. Furthermore, their awareness of the dangers to the planet is such that countries such as Bolivia and Ecuador are assuming leadership on a global level in relation to the most pressing problem that exists today: the environmental crisis. This is an example other nations would be wise to follow. The first task is to put the economy at the service of peoples. Human beings and nature must not be at the service of money. Let us say NO to an economy of exclusion and inequality, where money rules, rather than service. That economy kills. That economy excludes. That economy destroys Mother Earth. (Pope Francis, speech at the World Meeting of Popular Movements, Santa Cruz, Bolivia, July 2015)

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 491

01/06/2017 16:51

492  Handbook on growth and sustainability

NOTES  1. The Washington Consensus refers to the neo-liberal policies of privatization, deregulation, minimizing state involvement in the economy, openings towards foreign investment, priority of external debt payments and enforcement of austerity measures with respect to social services.   2. On 27 June 1986, the International Court of Justice ruled in favor of Nicaragua and against the USA for having blocked and mined Nicaragua’s harbors.   3. This percentage has now changed with the 2015 election of right-winger Macri to the presidency of Argentina.   4. It is remarkable that socialist Cuba has become the peacemaking intermediary in the civil war between guerrillas and the right-wing Colombian government.   5. The UN Human Development Index measures the standard/quality of living, knowledge/education and GDP.   6. Chavismo refers to the supporters of the leadership and achievements of Hugo Chávez.   7. It is worth noting that an Argentinian court recognized a captive orangutan as a “nonhuman person” having the right to freedom (BBC 2014). Three countries, Bolivia, Peru and Colombia have banned animals in circuses, and there is a growing opposition to bull fighting and to farm animal cruelty (One Green Planet 2014).   8. The Bolivarian Alliance for the Peoples of Our America and the People’s Trade Treaty; in Spanish: Alianza Bolivariana para los Pueblos de Nuestra Merica – Tratado de Comercio de los Pueblo (ALBA), includes Cuba, Venezuela, Antigua and Barbuda, Bolivia, Dominica, Ecuador, Nicaragua, St Lucia, St Vincent and Grenadines.   9. The CELAC’s members are: Antigua and Barbuda, Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Dominica, Ecuador, El Salvador, Grenada, Guatemala, Co-operative Republic of Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Santa Lucia, federation of Saint Kitts and Nevis, Saint Vincent and the Grenadines, Surinam, Trinidad and Tobago, Uruguay, and Venezuela. 10. The UNASUR’s members are Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam, Uruguay, and Venezuela. 11. At the time of writing there was no US ambassador in Venezuela; he is represented by the commercial attaché.

REFERENCES Andor, L. (2014), ‘The Europe 2020 poverty target: lessons learned and way forward’, European Commission: Employment, Social Affairs & Inclusion, News and Multimedia – Events, 10 October, accessed 14 March 2014 at http://ec.europa.eu/social/main.jsp?langId 5en&catId588&eventsId5994&furtherEvents5yes. Aporrea (2015), ‘Argentina: gerentes de grandes empresas dominan el gabinete de ministros de Macri’ (‘Argentina: managers of large companies dominate Macri’s Cabinet of Ministers’), Aporrea, 8 December, accessed 26 February 2017 at www.aporrea.org/inter​ nacionales/n282399.html. Arellano Ortiz, F. (2015), ‘En America Latina la megaminería constituye una nueva forma de neocolonialismo, saqueo, dominación territorial y degradación ambiental’ (‘In Latin America mega-mining is a new form of neo-colonialism, looting, land grabbing and environmental degradation’), Rebelión, accessed 14 March 2014 at http://www.rebelion.org/ noticia.php?id5199726. Balch, O. (2013), ‘Buen Vivir: the social philosophy inspiring movements in South America’, Guardian, 4 February, accessed 14 March 2014 at http://www.theguardian.com/ sustainable-business/blog/buen-vivir-philosophy-south-america-eduardo-gudynas.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 492

01/06/2017 16:51

Questioning sustainability in Latin America  ­493 BBC (2014) ‘Court in Argentina grants basic rights to orangutan’, BBC News Online, accessed January 2016 at http://www.bbc.com/news/world-latin-america-30571577. Bécquer Paseiro, L. (2015), ‘Venezuela: the economic battle’, Marxism-Leninism Today, 18 May 2015, accessed 14 March 2014 at http://mltoday.com/article/2210-venezuela-the-eco​ nomic-battle/24. Betto, F. (2014), ‘Impases de los gobiernos progresistas’ (‘Impasses of the progressive governments’), Agencia Latinamericana de informacion and America Latina en Movimiento, accessed 14 March 2014 at http://www.alainet.org/es/active/79519. Blum, W. (1999), ‘A brief history of US interventions 1945 to present’, Third World Traveller, June, accessed 14 March 2014 at http://www.thirdworldtraveler.com/Blum/ US_Interventions_WBlumZ.html. Blum, W. (2014), ‘Overthrowing other people’s governments: the master list’, Information Clearinghouse, 9 September, accessed 14 March 2014 at http://www.informationclearing​ house.info/article39625.htm. Cabello, J.J., D. García, A. Sagastumo, R. Priego, L. Hens and C. Vandecasteele (2012), ‘An approach to sustainable development: the case of Cuba’, Environment, Development and Sustainability, 14 (4), 573–91. Camacaro, W., F.B. Mills and C.M. Schiaroni (2016), ‘Venezuela passed law banning GMOs by Popular Demand’, Counterpunch, 1 January, accessed 14 March 2014 at http://www.coun​ terpunch.org/2016/01/01/venezuela-passes-law-banning-gmos-by-popular-demand-2/. Carballo, R. (2015), ‘Misión Barrio Adentro: Creación Heróica’, Apporea, 27 April, accessed 14 March 2014 at www.rebelion.org/noticia.php?id5198114&titular5creaci%F3n-heroica. Chávez, H. (2009), Speech in Copenhagen, 17 December, citing the study of the United Nations, Ecosystems and Human Wellbeing – Millennium Ecosystem Assessment, 2005, accessed 14 March 2017 at www.millennium assessmemnt.org/documents/document.356.aspx.pdf. Chávez, H. (2012), ‘Venezuelan President Hugo Chávez on climate change: “We Must Go from Capitalism to Socialism”’, DEMOCRACY NOW, 12 December, accessed 14 March 2014 at www.democracynow.org/2012/12/12video-Venezuelan-president-Hugo-Chavez. Constitution of the Bolivarian Republic of Venezuela (2000), articles 127, 128 and 129. Constitution of the Republic of Ecuador (2008), title II, chapter 7, ‘Rights of nature’. Cortina, A. (2014), ‘Lo sostenible no es siempre lo justo’, El País, 23 September, accessed 14 March 2014 at www.elpais.com/elpais/2014/09/23/opinion/1411493461_920733.html. Datosmacro (2014), ‘Venezuela: Indice de Derechos Humanos’ (‘Venezuala: Human Development Indicators’), accessed 14 March 2014 at http://www.datosmacro.com/idh/ venezuela. De Vries, P. (2013), ‘Comunidad y desarrollo en los Andes Peruanos: una crítica etnográfica al programa de modernidad/colonialidad’, Sociologias, 15 (33), doi.org/10.1590/ S1517-45222013000200009. Diges, J. (2005), The Condor Years: How Pinochet and his Allies Brought Terrorism to Three Countries, New York: New Press. Dussel, E. (2008), Twenty Theses on Politics, Durham, NC: Duke University Press. Dwyer, K. (1999), ‘School of the assassins’, International Socialist Review, 9 (Fall), accessed 14 March 2014 at http://isreview.org/issues/09/school_of_americas.shtml. Escobar, A. (2005), ‘El “postdesarrollo” como concepto y práctica social’ (‘“Postdevelopmentalism” as a concept and a social practice’), in D. Mato (ed.), Políticas de economía, ambiente y sociedad en tiempos de globalización (‘Economic, Environmental and Social Policies during Globalization’), Caracas: Facultad de Ciencias Económicas y Sociales, Universidad Central de Venezuela, pp. 17–31, accessed 14 March 2014 at www. unc.edu/~aescobar/text/esp/El%20postdesarrollo%20como%20concepto.pdf. European Commission (2014), ‘What to do about rising inequality’, Horizon 2020: The EU Framework Programme for Research and Innovation, accessed 14 March 2014 at https:// ec.europa.eu/programmes/horizon2020/en/news/what-do-about-rising-inequality. Ferreira, Francisco H.G., J. Messina, J. Rigolini, L.-F. López-Calva, M.A. Lugo and R.  Vakis (2013), ‘Economic mobility and the rise of the Latin American middle class’, World Bank, Washington, DC, doi: 10.1596/978-0-8213-9634-6.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 493

01/06/2017 16:51

494  Handbook on growth and sustainability Fishwick, A. (2015), ‘Latin America goes bottom up, rejecting the neoliberal consensus’, Le Monde Diplomatique, accessed 14 March 2014 at http://mondediplo.com/blogs/ latin-america-goes-bottom-up. Galeano, E. (1973), Open Veins of Latin America, New York: Monthly Review Press. Gobierno Bolivariano de Venezuela (2015), ‘Venezuela cumple los objetivos de Desarrollo del Milenio 2015’ (‘Venezuela Reaches the Millennium Development Goals 2015’), accessed 14 March 2014 at http://www.minci.gob.ve/2015/09/venezuela-cumple-los-obje​ tivos-de-de​sarrollo-del-milenio-2015/. Golinger, E. (2007), The Chávez Code: Cracking U.S. Intervention in Venezuela, London: Pluto Press. Golinger, E. (2015), ‘EE. UU.: la emboscada contra Venezuela’, RT News, 12 November, accessed 14 March 2014 at https://actualidad.rt.com/opinion/eva_golinger/191296-eeuuembo​scada-venezuela. Gudynas, E. (2011), ‘Buen Vivir: today’s tomorrow’, Development, 54 (4), 441–7, doi:10.1057/ dev.2011.86. Gudynas, E. (2012), ‘Is doughnut economics too Western?’, Oxfam Policy & Practice, 15 February, accessed 14 March 2014 at http://policy-practice.oxfam.org.uk/blog/2012/02/ is-doughnut-economics-too-western. Gudynas, E. (2015), ‘La tenaza política y ecológica del cambio climático oprime a los pueblos indígenas sudamericanos’ (‘The squeeze of climate change oppresses the South American indigenous peoples’), accessed 14 March 2014 at http://www.servindi.org/ actualidad/139439. Helliwell, J.F., R. Layard and J. Sachs (eds) (2015), World Happiness Report 2015, New York: Sustainable Development Solutions Network. Houtart, F. (2015), ‘El porvenir del post-neoliberalismo en América Latina’ (‘The future of post-developmentalism in Latin America’), accessed 14 March 2015 at www.telesurtv.net/ opinion/El-porvenir-del-post-neoliberalismo-en-America5Latina-20160103-0042.html. Jaimes, N. and A. Miguel (2013), ‘El oculto poder petrolero’ (‘The hidden power of oil’), Gobernación del estado de Mérida, Museo de Ciencia y Tecnología, Venezuela. James, D. (2006), ‘US intervention in Venezuela: a clear and present danger; strategies and tactics used by the U.S. government to undermine democracy, sovereignty, and social progress in Venezuela during the Chávez Era – and what U.S. citizens can do to stop it’, Global Exchange, accessed 14 March 2014 at http://www.globalexchange.org/sites/default/ files/USVZrelations1.pdf. Jasper, P. (2013), ‘Karl Marx, radical environmentalist’ cites Karl Marx’s Economic and Philosophical Manuscripts (1844), Internationalist Socialist Review, 4 June, accessed 14 March 2017 at http://socialistworker.org/2013/06/04/karl-marxs-environmentalism. Kane, M. (2002), ‘The Salvadorean Civil War’, accessed 14 March 2014 at http://novaonline. nvcc.edu/eli/evans/his135/events/elsalvador80/salvador80.html. Katz, C. and Fidler, R. (2015), ‘A new political situation in Latin America: what lies ahead? Interview with Claudio Katz’, The Bullet: Socialist Project, 5 January 2016, E-Bullet No. 1205, accessed 14 March 2014 at www.socialistproject.ca/bullet/1205.php#continue. Kernan, M. (2015), ‘The economics of exploitation: indigenous peoples and the impact of resource extraction’, 20 August, accessed 14 March 2014 at http://www.counterpunch. org/2015/08/20/the-economics-of-exploitation-indigenous-peoples-and-the-impact-of-res​ ource-extraction/. Keynes, J.M. (1963), Essays in Persuasion, New York: Norton. La Via Campesina (2012), ‘A call to reject false capitalist solutions to climate crisis’, 7 December, accessed 14 March 2014 at http://www.commondreams.org/views/2012/12/07/ call-reject-false-capitalist-solutions-climate-crisis. La Via Campesina (2014), ‘La solución al cambio climático está en nuestras tierras’ (‘The solution to climate change is in our lands’), 5 December, accessed 14 March 2014 at http:// viacampesina.org/es/index.php/acciones-y-eventos-mainmenu-26/cambios-climcos-yagro-combustibles-mainmenu-79/2303-la-solucion-al-cambio-climatico-esta-en-nuestrastierras.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 494

01/06/2017 16:51

Questioning sustainability in Latin America  ­495 Larsen, F. (2014), ‘Mucho más que el clima’ (‘Much more than the weather’), Rebelión, accessed 14 March 2014 at http://www.rebelion.org/noticia.php?id5193036. Le Quang, M. and T. Vercoutere (2013), Ecosocialismo y Buen Vivir: diálogo entre dos alternativas al capitalism (Eco-socialism and Good Living: Dialogue between Two Alternatives to Capitalism) Quito: Instituto de Altos Estudios Nacionales. Machado Rodríguez, D. (2014), ‘Qué entender por progreso?’, Cubadebate, 3 June, accessed 14 March 2014 at http://www.cubadebate.cu/opinion/2014/06/03/que-entender-por-pro​ greso/#.VrJK4NCxH0A. Malley-Morrison, K., S. McCarthy and D.A. Hines (eds) (2012), International Handbook of War, Torture and Terrorism, New York: Springer. Martínez-Alier, J. (2002), The Environmentalism of the Poor: A Study of Ecological Conflicts and Valuation, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Mendoza Márquez, J.R. (2005), ‘La Integración Latinoamericana es possible’ (‘Latin American integration is possible’), Organo del Grupo Parlamentario Venezolano del Parlamento Latinoamericano, monograph, 5 (18). Morales, E. (2014), Speech in Lima, 9 December, UN Summit on Climate Change COP20, accessed 14 March 2014 at ufccc.int/files/meetings/lima_dec_2014/statements/application/ pdf/cop20_his_bolivia_sp_pdf. Muntaner, C., F. Armada, H. Chung, M. Rosicar, L. Williams-Brennan and J. Benach (2008), ‘Venezuela’s Barrio Adentro: participatory democracy, south-south cooperation and health for all’, Social Medicine, 3 (4), accessed 14 March 2014 at http://www.social​ medicine.info/index.php/socialmedicine/article/view/250. Muntaner, C., J. Benach and M. Páez Victor (2012), ‘The achievements of Hugo Chávez, update on the social determinants of health in Venezuela’, Counterpunch, 14 December, accessed 14 March 2014 at http://www.counterpunch.org/2012/12/14/the-achievementsof-hu​go-chavez/. Muntaner, C., J. Benach and M. Páez Victor (2013), ‘Los Logros de Hugo Chávez y la Revolución Bolivariana’, Rebelión, accessed 14 March 2014 at www.rebelion.org/noticia. php?id5162019. Ocampo, J.A. (1998), ‘Income distribution, poverty and social expenditure in Latin America’, ECLAC/CEPAL (the UN Economic Commission for Latin America), March, accessed 14 March 2014 at www.cepal.org/publicaciones/xml/6/19546/ocampo​ 65.htm. Olivera Evia, D. (2015), ‘El Intervencionismo de EEUU en Sud América en la mitad del Siglo XX’, Rebelión, accessed 14 March 2014 at http://rebelion.org/noticia.php?id5199065. One Green Planet (2014), ‘These 8 countries have banned wild animals in circuses . . . why can’t we do it?’, accessed January 2016 at http://www.onegreenplanet.org/animalsandna​ ture/10-countries-that-have-banned-wild-animals-in-circuses/. Paullier, J. (2012), ‘El Secreto de Venezuela en su lucha contra la pobreza’ (‘The secret of Venezuela in its fight against poverty’), BBC World, 6 January, accessed 15 March 2014 at http://llarocafm.wordpress.com/tag/venezuela. Pearson, T. (2009), ‘Venezuela’s reformed Communal Council Law: when laws aren’t just for lawyers and power is public’, Venezuelanalysisi.com, accessed 14 March 2014 at http:// venezuelanalysis.com/analysis/4980. Pearson, T. (2013), ‘The communes are the antidote to Venezuela’s economic problems’, Venezuelanalysisi.com, accessed 14 March 2014 at http://venezuelanalysis.com/analysis/10​ 173. Peet, R. and M. Watts (2004), Liberation Ecologies: Environment, Development, and Social Movements, London and New York: Routledge. Petras, J. (2015), ‘US and Venezuela: decades of defeat and destabilization’, accessed 14 March 2017 at petras.lahaine.org/?p52023. Pope Francis (2015a), ‘Meeting with the Members of the General Assembly of the United Nations Organization’, United Nations Headquarters, New York, 25 September, accessed 14 March 2014 at Pixll.COM2015/09/25/read-full-transcript-of-pope-franceis-powerfulspeech-to-united-nations-general-assembly/.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 495

01/06/2017 16:51

496  Handbook on growth and sustainability Pope Francis (2015b), ‘Encyclical letter Laudato Si’ of the Holy Father Francis on care for our common home’, accessed 14 March 2014 at laudatosi.com. Pradella, L. and T. Marois (2015), Polarizing Development: Alternatives to Neoliberalism and the Crisis, London: Pluto Press. Prensa Web Radio Nacional de Venezuela (2015), ‘Today, the Orinoco Oil Belt meets eight years in the hands of Venezuelans’, Apporeta: Principal, 30 April, accessed 14 March 2014 at www.aporrea.org/energia/n269608. Ramonet, I. (2002), ‘La conspiración contra Chávez’ (‘The conspiracy against Chavez’), El País, 17 April, accessed 14 March 2014 at http://elpais.com/diario/2002/04/17/ opinion/1018994408_850215.html. Red Cross (2013), ‘EU economic crisis causing massive rise in poverty’, RT News, 10 October, accessed 14 March 2014 at www.rt.com/news/europe-crisis-red-cross-981/. Rivas Alvarado, J.F. (2015), ‘El Museo de la Intervención Imperialista’ (‘The Museum of Imperialist Intervention’), Agencia Latinamericana de informacion and America Latina en Movimiento, accessed 14 March 2014 at http://www.alainet.org/es/articulo/168340. Robertson, E. (2014), ‘Is poverty still falling in Venezuela?’, Venezuelanalysis, 17 June, accessed 14 March 2014 at http://venezuelanalysis.com/analysis/10749. Robinson, W. (2008), Latin America and Global Capitalism, Baltimore, MD: Johns Hopkins University Press. Ross, J. (2016), ‘Lessons for Latin America from China’s economic success’, teleSUR Opinion: Articles, 26 January, accessed 14 March 2014 at http://www.telesurtv.net/english/ opinion/Lessons-for-Latin-America-from-Chinas-Economic-Success-20160126-0014. html. Saltrón Negreti, G. (2015), ‘Venezuela: ejemplo de derechos humanos’ (‘Venezuela, example of human rights’), Apporea: Principal, 20 April, accessed 14 March 2014 at www.aporrea. org/ddhh/a206474.html. Santiago, J. (2009), ‘Revisiting American involvement in El Salvador: the massacre at El Mozote’, World Post: Huffington Post and Berggruen Institute, accessed 14 March 2014 at http://www.huffingtonpost.com/jon-santiago/revisiting-american-invol_b_177841.html. Schiavoni, C. (2014), ‘Venezuela’s food revolution’, Solutions, 5 (6), 46–53. Schmidt, A. (2014), The Concept of Nature in Marx, New York: Verso. Svampa, M. and E. Viale (2014), Maldesarrollo: la Argentina del extractivismo y el despojo (Bad Development: The Argentina of Extractivism and Dispossession), Buenos Aires: Katz. teleSUR (2014a), ‘ALBA to host Global Climate Change Counter-Summit in Bolivia’, teleSUR Noticas: América Latina, accessed 15 December 2015 at http://www.telesurtv.net/ english/news/ALBA-to-Host-Global-Climate-Change-Counter-Summit-in-Bolivia--2014​ 1215-0039.html. teleSUR (2014b), ‘Venezuela’s constitution: fifteen years of achievements’, teleSUR Noticas: América Latina, 14 December, accessed 14 March 2014 at http://www.telesurtv.net/english/ news/Venezuelas-Constitution-Fifteen-Years-of-Achievements-20141212-0021.html. teleSUR (2015a), ‘Chomsky: Latin America made gains by breaking from US’, teleSUR Noticas: América Latina, accessed 14 March 2014 at http://www.telesurtv.net/english/news/ Chomsky-Latin-America-Made-Gains-by-Breaking-from-US-20150112-0011.html%22. teleSUR (2015b), ‘88 defensores ambientales asesinados en America Latina en 2014’ (‘88 environmental defenders assassinated in Latin America in 2014’), teleSUR Noticas: América Latina, 23 April, accessed 14 March 2014 at http://www.telesurtv.net/news/88defensores-ambientales-asesinados-en-America-Latina-en-2014-20150423-0064.html. teleSUR (2015c), ‘Extreme poverty in Venezuela drops to record low’, teleSUR Noticas: América Latina, 2 March, accessed 14 March 2017 at http://www.telesurtv.net/english/ news/Extreme-Poverty-in-Venezuela-Drops-to-Record-Low-20150302-0034.html. teleSUR (2015d), ‘Venezuela se ubica entre los países con alto desarrollo humano’ (‘Venezuela is among the countries with high human development’), teleSUR Noticas: América Latina, 17 November, accessed 14 March 2017 at http://www.telesurtv.net/news/Venezuela-seubica-entre-los-paises-con-alto-desarrollo-humano-20151214-0063.html. Terán Mantovani, E. (2014), ‘Desnudar al extractismo: repensar el orígen y el destino de la

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 496

01/06/2017 16:51

Questioning sustainability in Latin America  ­497 riqueza’ (‘Lay bare extractivism: re-think the origin and destiny of wealth’), Rebelión, 17 November, accessed 14 March 2017 at http://www.rebelion.org/noticia.php?id5191979. Terán Mantovani, E. (2015), ‘El sentido communal de la crítica al extractivismo’, Rebelión, accessed 14 March 2014 at http://www.rebelion.org/noticia.php?id5199073. Toledo, A. (2015), ‘En Venezuela existen 931 comunas ya formalizadas y 46 mil Consejos Comunales’ (‘In Venezuela there are 931 communes already formalized and 46,000 Communal Councils’), Correo del Orinoco, 29 January, accessed 14 March 2014 at http:// www.correodelorinoco.gob.ve/nacionales/venezuela-existen-931-comunas-ya-formali​za​d​ as-y-46-mil-consejos-comunales/. Tucker, M.E. and J. Grim (2015), ‘Integrating ecology and justice: the new papal encyclical’, Solutions, July–August, 38–43. Union of South American Nations (UNASUR) (2011), ‘Tratado Constitutivo de la Unión de Naciones Suramericanas’ (‘Constitutional Treaty of the Union of South American Nations’), Union of South American Nations, Quito. United Nations Children’s Fund (UNICEF) (2014), ‘Committing to child survival: a promise renewed, progress report 2014’, United Nations Children’s Fund, New York, accessed 14 March 2014 at www.unicef.org/sowc2014/numbers/. United Nations Development Program (UNDP) (2015), ‘Briefing note for countries on the 2015 Human Development Report: Venezuela (Bolivarian Republic of)’, in 2015 Human Development Report (HDR) Work for Human Development, accessed 14 March 2014 at http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/VEN.pdf. Velasco Páez, F.J. (2008), ‘La cuadratura del círculo: el capitalismo ecológico como formula para salvar al sistema de dominación’ (‘The square of the circle: ecological capitalism as a formula to save the system of domination’), A Plena Voz, Revista Cultural de Venezuela (47–8), 13–15. Velasco Páez, F.J. (2014), ‘Crisis Civilizatoria y Crisis Ecológica’ (‘Crisis of civilization and ecological crisis’), in A. Carioso, C. Banko and N. Prigorian (eds), America Latina y el Caribe, Buenos Aires: CLACSO, accessed 16 March 2017 at biblioteca.clacso.edu.ar/ clacso. Venezuelanalysis (2009), ‘Venezuela reaches the Millennium Development Goals’, Venezuelanalysis.com, accessed 14 March 2014 at http://venezuelanalysis.com/news/4629. Venezuelanalysis (2015), ‘Extreme poverty in Venezuela drops to a record low’, Venezuelanalysis.com, accessed 3 March at http://venezuelanalysis.com/news/11248. Wagner, S. (2005), ‘Venezuela: illiteracy free territory’, Venezuelanalysis.com, accessed at http://venezuelanalysis.com/analysis/1079. Wilpert, G. (2003), ‘Venezuela’s new constitution’, Venezuelanalysis.com, 27 August, accessed 14 March 2017 at http://venezuelanalysis.com/analysis/70.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 497

01/06/2017 16:51

22  Going down? Human nature, growth and (un)sustainability William E. Rees

SETTING THE STAGE: THE NATURE AND NURTURE OF UNSUSTAINABILITY This chapter starts from the premise that the scale of the human enterprise is already excessive – our best science shows that we are in a state of ecological ‘overshoot’. Resource consumption and waste production exceed the regenerative and assimilative capacities of nature and both are still trending upward. The purpose of the analysis is to make the case that this situation is, in fundamental ways, ‘natural’. Techno-industrial society is inherently unsustainable. Decades of promising political rhetoric and the heroic efforts of various civil society organizations have been ineffectual. Global society is tacking inexoribly into the eye of the storm. Explanations of human ecological dysfunction usually invoke some combination of economic, political, and socio-cultural factors. However, I argue that these putative causes are themselves underpinned by a set of innate (that is, genetically determined) motivational drivers. Human economic behavior is governed, in part, by behavioral predispositions which, enhanced by modern technology and prevailing cultural norms, inevitably lead to the depletion of essential resource stocks and the destruction of vital life-support systems. Until recently, the genetic contribution to ecological overshoot has largely been ignored by mainstream analysts. This is to be expected – humans do not generally think of themselves as biological entities and, in any case, the relevant behavioral propensities operate beneath consciousness. Most people are therefore either ignorant of their existence or deny their relevance to our predicament. This complicates efforts to understand and control increasingly maladaptive individual and group behavior. By contrast, the mechanics of eco-dysfunction are relatively straightforward (though not necessarily better known). The economy and the ecosphere exist in nested hierarchy – the human enterprise is an open, growing, fully contained, dependent sub-system of the finite, ­materially-closed, selfsustaining but non-growing ecosphere (Daly 1992). The economy is therefore functionally positioned to consume and pollute the ecosphere from 498 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 498

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­499 within (Rees 1999). Moreover, all interactions between the two systems are governed by the law of mass balance and the laws of thermodynamics, particularly the entropy law (the second law). Energy and material resources extracted from nature to grow the economy are unavailable to support non-human species, and entropic wastes generated by economic activity – ultimately 100 percent of the mass of extracted resources – are spewed back into nature in altered, often noxious, form, further impairing life-support functions. Beyond a certain point, the material growth and complexification of the human enterprise necessarily drives the contraction, simplification and toxification of the ecosphere. In overshoot, the growing human economy1 resembles an ill-adapted parasite that destroys its host and, eventually, itself (Rees 1998). The nature-economy hierarchy and natural law in the context of continuous growth provide a nearly sufficient first-order explanation of the anthropogenic ecosystems degradation that puts civilization at risk. Remarkably, however, neither the logic of this framing nor empirical evidence of its validity has had appreciable effect on how humanity perceives itself or ‘acts out’ in the natural world. Indeed, far from mitigating selfdestructive behavior, contemporary society’s ‘grand cultural narrative’ positively reinforces it. Virtually the entire global community subscribes to the compound myth of endless technological progress and continuous economic growth. Scientific caution is ignored; eddies of popular resistance are of little consequence. Economists and political leaders everywhere still act with unbridled confidence in human ingenuity to overcome natural limits (after all, ‘the human mind is our greatest resource’). This faith, in turn, facilitates acceptance of rising gross domestic product (GDP) per capita as the only practical means to eliminate poverty. (It helps that growth also conveniently avoids the need to contemplate policies for income redistribution.) Also, growth ostensibly provides the financial means to address residual environmental concerns. Thus endowed with noble social purpose and freed from biophysical constraints, growth has been the principal goal of economic policy in most countries since at least the 1950s (Victor 2008). Meanwhile, the entropic dissipation of the planet accelerates.

THE (UN)SUSTAINABILITY CONUNDRUM Even the greatest of cognitive lapses need not be fatal. Homo sapiens also exhibits several positive intellectual and behavioral propensities that might yet be used to advantage. Indeed, we might reasonably expect that rampant eco-destruction would eventually force mainstream society to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 499

01/06/2017 16:51

500  Handbook on growth and sustainability take ­corrective action. (After all, ‘civilization’ is partially defined by formal customs, laws and institutions designed specifically to rein in human nature.) The following five qualities are particularly relevant to achieving sustainability – compared with other organisms, humans exhibit: 1. an unparalleled capacity for logical analysis and evidence-based reasoning; 2. a unique ability to imagine alternative futures and plan ahead based on the evidence; 3. a capacity for moral judgment, the (culture-specific) ability to distinguish right from wrong; 4. an extraordinary sense of empathy/compassion for other individuals and even other species; and 5. remarkably diverse forms of both in-group and between-group cooperation. Herein lies the conundrum: Given these qualities and the cascade of evidence that we are on a collision course with biophysical reality, why has the world community – particularly rich, economically and technologically competent nations – failed to reach agreement on actions to reverse, or even substantially slow, the degradation of the ecosphere? On the contrary, some landmark sustainability-oriented accords have unraveled (for example, the Kyoto climate protocol) or proved ineffective (for example, the United Nations Convention on Biodiversity) and, at the time of writing in mid-2015, no promising replacements are on the horizon. Even humanity’s much vaunted mental acuity is proving counterproductive – the worst aspects of global change are being driven by the actions of the best-schooled and presumably some of the most intelligent members of the human family, including generations of economic, ecological and social planners. As environmental educator, David Orr (1991, p. 52) observes, ‘[the depletion/pollution of the planet] is not the work of ignorant people. Rather it is largely the result of work by people with BAs, BSs, LLBs, MBAs and PhDs’ (and, we might add, the very people who are propagating the consumer values and lifestyles that are literally dissipating the ecosphere). There are many explanations of this seeming contradiction: despite their college educations, most people remain ignorant of basic science and the dynamics of global change; there are insufficient data and theory to support a definitive policy response; blinded by political ideology, politicians and ordinary people alike are unresponsive to environmental data; wealth and political clout insulate the rich and powerful from the worst aspects of global change so they have no incentive to reform for

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 500

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­501 the common good; given our competitive global economy, corporations and nations are unwilling unilaterally to act responsibly for fear of losing market share; humanity’s technological prowess will continue to solve problems as they arise; human ‘exceptionalism’, the belief that Homo sapiens is exempt from natural laws and can ‘decouple’ from ecosystems; and so on. There is some truth in these assertions. However, each represents only a proximate cause of – or excuse for – chronic inaction. Often the obvious explanation invites a search for something more profound. What makes humans so characteristically myopic? How can ideological abstractions so blind decision-makers that they deny the world’s best science? Why do people express such easy confidence in technology? To answer these questions, the following sections develop the case that the distal causes of society’s eco-dysfunction spring from the genetic roots of fundamental human nature.

THE EVOLUTION OF UNSUSTAINABLE BEHAVIOR We are lived by powers we pretend to understand. (Auden 1940, p. 97)

We can trace the inspiration for this hypothesis to Russian-born geneticist, Theodosius Dobzhansky, who famously asserted that ‘nothing in biology makes sense except in the light of evolution’ (Dobzhansky 1964). Since Homo sapiens is an evolved species and innate elements of people’s individual and social behavior have been as much exposed to Darwinian selection as other human qualities, then we can equally assert that nothing in human affairs – including much of our economic and sociopolitical behavior – makes sense except in the light of evolution (Rees 2009). This framework readily suggests important elements of humanity’s expansionist tendencies. First, like all other species, in the absence of negative feedback Homo sapiens is capable of exponential (geometric) population growth which would occur in an unlimited environment free of predators and disease.2 Second, human reproductive biology marks Homo sapiens as an archetypal ‘K’-strategist. ‘K’-strategists are typically largebodied, long-lived, late-maturing species with relatively low fecundity, such as whales and elephants. However, they exhibit extended parental care and high survival rates to maturity. Mature local populations of ‘K’-strategists therefore tend to be relatively stable, pressing up against and fluctuating near the carrying capacities (‘K’)3 of their habitats. Such populations are normally density dependent, held in check by ­‘negative feedback’ – disputes over territory, other inter-group conflicts, food and

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 501

01/06/2017 16:51

502  Handbook on growth and sustainability other resource shortages, disease, and so on – the intensity of which varies with population. (This was Malthus’s great insight.) Indeed, they are said to be ‘K-selected’ because individual survival and reproductive success depend on competitive superiority at high population densities (near ‘K’) under conditions of resource scarcity.4 Now consider two sustainability-relative consequences of K-selection: Unless or until constrained by negative feedback, ‘K’-strategists, including humans, will: (1) expand to fill all accessible habitat; and (2) use up all available resources. In the case of humans, resource availability is constantly being redefined by evolving technology. Technology is humanity’s evolutionary ‘leg up’ – enhanced access to resources reduces the negative feedback on population and economic growth and increases the shortterm carrying capacity (‘K’) of our habitats. Empirical evidence of humanity’s remarkable ‘K’-strategic success resides in the fact that people now permanently occupy all human-suitable habitat on Earth (we have the greatest geological range of any advanced ­vertebrate) and dream of colonizing the moon, Mars and the universe beyond. Similarly, no other species rivals humans in their exploitation of the ecosphere. Fowler and Hobbs (2003) show that in terms of energy use (and related carbon dioxide emissions), biomass consumption and various other ecologically significant indicators, human demands on our ecosystems dwarf those of 95 other ecologically similar species by one to two orders of magnitude. In the process, we are literally converting the product of the ecosphere into more human bodies and domestic animals at the expense of wild nature – the biomass of domestic animals already dwarfs that of all wild vertebrates combined (Smil 2011; also Daly 2015).5 Such data reflect the fact that Homo sapiens has become the most voraciously ‘successful’ predatory and herbivorous vertebrate ever to walk the Earth (Rees 2010). At the same time, humans are drilling for oil kilometers below the sea-bed (which is itself kilometers below the surface of the sea), ‘fracking’ for gas in shale-beds only recently considered economically inaccessible, and extracting metals from ‘ores’ with only trace amounts. Driven by technology-enhanced survival instincts, humans have subdued the Earth and are now literally scouring the bottom of our planetary barrel for the remaining dregs of essential resources (see Ponting 1991; Clugston 2012; Klare 2012). Nature (genes) and nurture (memes) have clearly joined forces, enabling humans ‘to boldly (or foolishly?) go’ where no species has ever gone before.6 The data show that human ‘exceptionalism’ resides not so much in our presumed separation from the natural world as from our profundal embeddedness in it. Two additional sustainability-relevant K-selected behavioral predispositions deserve consideration here. First, Homo sapiens is a social animal

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 502

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­503 whose populations generally self-organize into distinct pecking orders (a trait we share with many other species from domestic chickens to wild chimpanzees). Within such dominance hierarchies, high-ranking individuals typically acquire first access to habitats, resources and mates. The selective advantage accruing to dominant individuals (that is, the capacity to produce surviving offspring) is self-evident. We might expect, therefore, that people who have acquired superior social status (economic and political elites) will be reluctant to give them up and will tend to resist pressures for significant changes to the status quo. Second, in the competition for habitat and resources, natural selection apparently favored those individuals most adept at satisfying their shortterm selfish needs (including individuals who cooperated with others to address their mutual needs). A propensity for ‘instant gratification’ and over-consumption would have been highly adaptive in the course of human evolution7 (Praterelli 2008). In short, the behaviors formalized in the economists’ concept of social discounting (most people’s expressed preference for the here and now over the future and elsewhere) almost certainly evolved by natural selection.

NEUROSCIENCE, EVOLUTIONARY PSYCHOLOGY AND COGNITION Knowledge of the physical loci of innate behaviors in the human central nervous system is emerging from integrated studies in behavioral evolution, cognitive psychology and neuro-anatomy. Consider first the macroanatomy of the human ‘triune brain’ as described by Maclean (1990).8 Evolution has endowed Homo sapiens with a large brain whose major components emerged sequentially over our multi-million year evolutionary history and whose complex interactions are only beginning to be understood. Humans, like other advanced vertebrates, possess an evolutionarily ancient ‘reptilian brain’ (including the brain-stem and cerebellum) that controls autonomic functions associated with physical survival (for example, circulation and breathing), coordinates movement; directs instinctive social behavior (pertaining to territoriality, social stature and dominance, mating – factors subject to ‘K’-selection), executes the fight or flight response, and controls other mainly hard-wired instinctive actions and ritualistic socio-cultural behaviors. Humans also share a mid-brain or limbic system with other mammals and birds. This paleo-mammalian brain is the primary seat of felt emotions, personal identity and related behavioral responses (for example, sexual behavior, play, and emotional bonding). It also controls our affective (emotion-charged) memories and,

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 503

01/06/2017 16:51

504  Handbook on growth and sustainability in humans, seems to be the seat of value judgments and informed intuition. Finally, consider the neo-cortex, the dense concentration of neurons that constitutes the convoluted outer layer of our two cerebral hemispheres. This is the most recent (and least experienced) evolutionary ‘add-on’ but, in humans, uniquely occupies two-thirds of the brain by volume. The neocortex is responsible for integrated sensory processing and higher cognitive functions including abstract thought, logical reasoning, and forward planning; it makes us uniquely capable of moral judgement; it facilitates language, speech, and writing and, with these, the possibility of culture and civilization. Perhaps most relevant to this discussion, the human neocortex is the seat of consciousness or self-awareness.9 Who’s in Charge? A bevy of experiments in recent years suggest that the conscious mind is like a monkey riding a tiger of subconscious decisions and actions in progress, frantically making up stories about being in control. (Overbye 2007) There are indeed potions in our own bodies and brains capable of forcing on us behaviours that we may or may not be able to suppress by strong resolution. (Damasio 1994, p. 121)

Despite its complex anatomy, the brain functions as an integrated whole, the contribution from each component mediated by its interaction with the others. Thinking about something can conjure up emotions, these emotions can trigger instinctive responses and both may ‘feed-back’ to alter the original thought. Most importantly, there are circumstances in which one component of the brain dominates behavior and the individual may not be aware of which neural network or sub-brain has seized control. This raises the possibility that even our most subjectively logical thought processes are, in fact, diluted by instinct and emotion. Indeed, the latter often override reason. This is a painful nettle for many to grasp. Humans experience life in conscious self-awareness; we assume we are the intelligent masters of our will, that we control the thoughts upon which we act and that our actions are mostly reasonable. However, conscious motivation and control may largely be delusional. We cannot, by definition, be cognizant of subconscious mental processes that bias or determine important decisions and behaviors. Recent research suggests that even the setting, pursuit and realization of behavioral goals can occur without conscious interventions. It appears that subliminal goals ‘hijack’ the brain’s executive function (which is responsible for the stable and adaptive regulation of behavior) ‘without

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 504

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­505 an act of conscious will . . . in order to advance themselves’ (Marien et al. 2012, p. 412; also Custers and Aarts 2010). Some neuroscientists go so far as to assert that free will as commonly understood is an illusion precisely because people’s conscious thoughts are pre-shaped by unconscious ‘background causes’, both innate and experiential, over which they have little control (Harris 2012).10 People acting as self-interested ‘K’-strategists, for example, have no idea that many of their seemingly conscious decisions are largely pre-formed beneath awareness in their brainstems and limbic systems.

NEURO-ANATOMY, SOCIO-POLITICAL BEHAVIOR AND CULTURAL SURVIVAL The underlying neuro-cognitive mechanisms are by no means uniformly distributed. Human populations are highly diverse. Different people respond in different ways and with varying degrees of self-awareness to the same experiences, information and data. Recent experiments suggest that such variability may be attributable not only to differing social histories but also to minor variations in neuro-anatomy. For example, experimental data support a model of ideology as ‘motivated social cognition’ involving a link between people’s brain structure and what we have come to label as their political/behavioral profiles (Amodio et al. 2007; Oxley et al. 2008; Jost and Amodio 2012). In particular, more open-ended and flexible socio-political (that is, ‘liberal’) attitudes and beliefs have been correlated with increased grey matter and activity in the anterior cingulate cortex, a brain region associated with such things as error detection and conflict resolution, motivation, decision-making and the mediation of emotional responses. Similarly, people expressing more closed or inflexible (that is, ‘conservative’) values and opinions show relatively increased volume of the right amygdala, an almond-shaped neuronal cluster in the limbic system that plays a role in memory consolidation, social networking, and a range of emotional responses, including aggression and fear/threat management (Kanai et al. 2011) (Box 22.1, Table 22.1).11 Such findings should not be surprising. Just as our heritable physical attributes (for example, height, body form, bone structure, and skin colour) affect athletic performance, we might expect the details of neural anatomy to be implicated in the diverse ways different individuals process and respond to the same environmental stimuli.12 It is important to emphasize that the neuro-anatomical differences separating people with differing predispositions say nothing about the relative merits of the associated behaviors. Whether a particular innate trait

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 505

01/06/2017 16:51

506  Handbook on growth and sustainability BOX 22.1 ARE POLITICAL VIEWS ASSOCIATED WITH BRAIN STRUCTURE? Table 22.1 shows two extremes of politically relevant attitudinal differences between liberalism and conservatism that apparently spring, in part, from differing brain structure and related neuro-cognitive mechanisms. If so, genetics may well play a significant role in shaping political attitudes and allegiance to ideology if not in determining specific party identification (Alford et al. 2005). The fact that the connections between cognitive templates and politically-relevant attitudes/behavior emerge in early childhood, are relatively stable throughout the individual’s life and otherwise appear to be heritable, is support for their genetic origins. Should the accumulating evidence continue to bear this out, it follows that people are not entirely free to choose their political personalities. Rather, they may be born with cognitive and psychological predispositions that contribute to where they eventually settle along the political spectrum.13

Table 22.1  The socio-political brain: attitudes and tendencies that may be partially attributable to differences in brain structure The ‘liberal’ variation

The ‘conservative’ variation

More open-minded, flexible, curious   about new ideas

Relatively closed-minded; uncomfortable with novelty, ambiguity, potential threats Quickly decisive; sees things in ‘blackand-white’; prefers certainty

More nuanced in thinking; hesitant; sees  the world in shades of grey; comfortable with uncertainty or ambiguity Responsive to new data and  interpretations; accepting of novelty and evidence-based reasoning More likely to change foundational   beliefs; more accepting of new realities. Less respectful of established authority;   relaxed about social order Community oriented; we are our   brothers’ keepers

Tends to reject information that conflicts with existing beliefs; is likely to oppose ‘radical’ new ideas Less likely to alter foundational beliefs; more prone to seek out ideas that reinforce existing attitudes and values Tends to be authoritarian, favour hierarchical social structures Individualistic; people should take care of themselves

Source:  Compiled from various sources, especially Mooney (2012).

is ‘superior’ to another (that is, more adaptive) is situation-dependent. That said, if the associated structures are indeed heritable, they will be subject to natural selection as circumstances change. The process is readily understandable. One of the requirements for natural selection is genetic

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 506

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­507 diversity, and large populations typically contain a full spectrum of viable variants or gene combinations. However, the proportion of a particular variant in a population will increase over time (that is, many generations) if the natural or cultural environment favors or ‘selects for’ that variant. It may contract again if changing environmental conditions subsequently shift selection pressure to favor opposing traits (that is, the ‘fitness’ of a given variant changes with circumstances). Consider an ecological context that has been relatively stable and predictable for centuries or millennia.14 The tropical African macro-climate in which humans evolved is such an environment. Even the recent post-glacial period during which temperate-zone civilizations developed qualifies as relatively stable (and has predictable seasonal cycles) in geological terms. In stable/predictable habitats, departures from ecologically well-adapted, socially entrenched beliefs and behaviors would more likely reduce than enhance individual fitness; both the cultural and natural environments would likely select against unproved novelty. We would therefore expect relatively conservative behaviors and personalities to accumulate and, in turn, facilitate the entrenchment of compatible socio-cultural norms. (‘If it was good enough for my father, it’s good enough for me!’) However, if the macro-environment subsequently deviates significantly from historic norms, selection would no longer favor the status quo. Fluidly unpredictable circumstances select for personality types and behaviors that are more comfortable with uncertainty and able to adopt novel (and now more adaptive) ways of doing things, that is, characteristics more frequently associated with liberal personalities. Note: behaviors that once conferred a selective advantage may become maladaptive in changing circumstances.15 The interplay of nature and nurture – indeed, their virtual co-­evolution – is still more complex than described above. Experiments in cognitive neuro-science show definitively that individual life history alters brain micro-structure. Repetitive actions or experiences, including chronic exposure to cultural norms, help to fix the brain’s synaptic circuitry in patterns that reflect and embed those experiences. In the course of individual development, customary beliefs, values and associated behaviors gradually acquire physical analogues in the brain’s neuronal network (Wexler 2006). Most significantly, once a particular pattern becomes imprinted, people tend to seek out compatible people and social contexts, that is, experiences that reinforce their pre-existing synaptic pathways, and ‘when faced with information that does not agree with their [preformed] internal structures, they deny, discredit, reinterpret or forget that information’ (Wexler 2006, p. 180).16 Deeply imbedded ideology becomes virtually impervious to data; new knowledge may change nothing at all.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 507

01/06/2017 16:51

508  Handbook on growth and sustainability These findings bear significantly on evidence for a link between brain structure and behavior. First, they suggest the possibility that repeated experience/behavior stimulates the enhancement of specific brain loci, that is, that experience can be cause as well as effect. Second, even if heritable differences in neural anatomy do account for initially differing sociobehavioral profiles, subsequent experience and cultural norms may have a mediating influence: experientially induced synaptic circuitry may either reinforce pre-existing brain structures and associated behaviors or contribute to neural network formation that negates or overrides their influence. In either case, nature and nurture are co-involved in the development of the brain and consequent behavior. Significantly, the evidence shows that deeply engrained neural circuitry is a source of cognitive dissonance and impedes adaptation to changing circumstances. Affected individuals feel discomfort and severe stress in the face of new unfamiliar environmental realities.17 They may deny or ignore changing conditions bearing on their own survival (think ‘climate change’). To re-establish cognitive consonance requires that affected parties explicitly acknowledge the source of their discomfort in the clash between their (now maladaptive) beliefs, values and assumptions and the new environment. They must then wilfully engage in the restructuring of the associated neural pathways and psychological states. Even when people accept that such ‘reprogramming’ is necessary, the process can be lengthy, difficult, and unpredictable (Wexler 2006). The good news comes from research showing that the human brain is remarkably plastic, able to ‘rewire’ itself even after physical trauma such as a stroke (Schwartz and Begley 2002; Doidge 2007). Assuming the availability of adequate resources, self-awareness and political will, it is theoretically possible to inscribe a new narrative on even more resistant psyches. Northern Harbinger? The Greenland Norse culture (circa 1000–1300 AD) illustrates how the interaction of nature, nurture and environment might play out in particular circumstances. Following Erik the Red, Norse settlers established colonies of traditional northern European farming-with-livestock culture and thrived for many generations over three centuries in two regions of southwest Greenland initially characterized by familiar grasslands and alder-birch woodlands. Although (or, perhaps, because) they were geographically isolated, the colonies became psychologically tightly wedded to their northern European dress, housing types, farming methods and cultural practices. And why not? The latter seemed to be working well in the Greenland environment.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 508

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­509 However, success was not indefinite – the colonies collapsed when confronted with a period of relatively rapid climate change. Loyal to tradition, and in defiance of logic, the Norse rejected the fishing, hunting, housing and other better-adapted habits of local Inuit and ultimately died out surrounded by plenty (Diamond 2005). The failure of the Greenland Norse has been characterized as ‘an inability to anticipate an unknowable future, an inability to broaden their traditional ecological knowledge base, and a case of being too specialized, too small, and too isolated to be able to capitalize on and compete in [the changing conditions of the North Atlantic]’ (Dugmore et al. 2012, p. 3658). It might also be described as the triumph of cognitive conservatism over high intelligence.

NATURE, NURTURE AND THE FATE OF CIVILIZATION We run heedlessly into the abyss after putting something in front of us to stop us from seeing it. (Pascal 1966, p. 82)

We are now positioned to revisit humanity’s (un)sustainability conundrum. Human-induced climate change, ocean acidification, fisheries collapse, soil erosion, and desertification are familiar symptoms of accelerating, anthropogenic, potentially catastrophic ecosystems degradation; the Living Planet Index (a biodiversity index of 10 000 representative populations of mammals, birds, reptiles, amphibians and fish) has declined by 52 percent since 1970 (WWF 2014). Homo sapiens has overshot some of Earth’s most important bio-productive and waste-assimilative capacities (Rockstrom et al. 2009; Steffen et al. 2015) and most such trends are continuing. Meanwhile, we have witnessed a century and a half of virtually continuous economic growth. The world has never been financially richer but society is not investing sufficiently in repairing the damage costs to nature. Nor has economic growth served adequately to address poverty. True, millions have been relieved of chronic misery but the gains have been overwhelmed by population growth. The first decade of this century still saw 2.6 billion people – the equivalent to the entire population in 1950 – eking out an existence on less than $2.00 per day (Shah 2013). Exacerbating matters, the world economy is structured to ensure that most of the money gains from growth accrue to the already wealthy people who do not materially benefit. The richest fifth of humanity enjoy 75 percent of world income and, as the income gap widens, the combined wealth of the richest 1 percent is on track to overtake that of the remaining 99 percent by

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 509

01/06/2017 16:51

510  Handbook on growth and sustainability 2016 (Oxfam 2015).18 The human pecking-order prevails – while the rich get richer, growth achieves neither of its advertised goals of eliminating poverty or increasing general well-being. Even the (shrinking) middle class is seeing its living standards decline. In recent decades, many countries have reduced taxation on corporations and the wealthy while cutting support for public education, public health and other social programs; they have negotiated so-called ‘free’ trade agreements that encourage the off-shoring of well-paying jobs – all ostensibly to stimulate growth. However, success has been mixed at best and, in the meantime, reduced economic security and greater inequality are producing declining population health and well-being – such countries are arguably de-developing even as their economies expand (see Lane 2000; Wilkinson and Pickett 2009). There is little evidence of a sea change on the horizon. On the contrary, the United Nations’ (UN’s) Rio+20 Earth Summit (the biggest UN conference ever) ended in June 2012 with a vapid statement, The Future We Want, containing little more than a bland renewal of commitment to ‘sustainable development’ and endless assurances of international rededication to previously failed initiatives. The statement commits no national government specific actions or targets and repeatedly equates ‘sustainable development’ to ‘sustained economic growth’ (see UN 2012). The fact that sustained growth (quantitative accretion) is inherently unsustainable and may not even be associated with development (qualitative improvement) seems not to have occurred to the document’s authors. The inimitable environmental journalist George Monbiot accused participating governments of concentrating ‘not on defending the living Earth from destruction, but on defending the machine that is destroying it’. Rio+20 was ‘perhaps, the greatest failure of collective leadership since the first world war’ (Monbiot 2012). Kumi Naidoo, the director of Greenpeace International, called The Future We Want ‘the longest suicide note in history’ (cited in Walsh 2012). Just what is going on here? Enter human nature reinforced by nurture. Human eco-economic behavior is, in part, genetically hard-wired. Humans are archetypal ‘K’-strategists. For most of history since the emergence of anatomically modern humans 50 000 years ago (during which period humanity expanded over the entire Earth), human populations were relatively stable, characteristically pressing against local ecological limits only to be knocked back by negative feedback – short-term climate fluctuations (for example, periodic drought), food /resource shortages, intergroup conflict, and disease. The scientific/industrial revolution changed everything. By the eighteenth century, the opening up of colonial territories in the Americas, Africa and Australasia combined with rapidly diffusing technological

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 510

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­511 development, began to ease the negative factors holding human populations in check. In true ‘K’-strategist form, the human enterprise expanded super-exponentially in response to both new habitat and the resource cornucopia (that is, to a short-term increase ineffective carrying capacity). The world saw a four-fold explosion of human numbers to 6 billion, a forty-fold increase in economic activity and a nineteen-fold increase in real per capita gross world product during the twentieth century alone (IMF 2000; UN 2011). By the end of 2014 we had added another 1.24 billion people and another quantum of material expansion (UN 2014). It only compounds the problem that cultural soft-wiring has conspired to reinforce natural hard-wiring. Growth became the major plank in most national economic platforms as early as the 1950s and, today, the growth ethic, globalization and neoliberal (market) economics are entrenched as the world’s dominant economic paradigm. It is no small irony that, while continuous growth and progress are taken to be the norm, the past two centuries arguably constitute the single most anomalous period in human history. (Only the most recent eight out of thousands of generations of humans have experienced sufficient growth and technological progress in their lifetimes to notice.) In effect, Homo sapiens has gone rogue; our economy is parasitizing the Earth at great risk to civilization, yet the mainstream world community seems unmoved. Continued popular ignorance and insufficient data are the most favored explanations, but recent research finds little support for ‘information deficit’ as a cause. Even people with superior ecological knowledge and heightened awareness do not generally exhibit more proenvironment behavior than less informed citizens (Kollmuss and Agyeman 2002).19 Rather, the evidence suggests that people are psychologically incapable of processing the wealth of available data to its logical conclusion. Mainstream society seems cognitively blind to its predicament and contemptuous of its best environmental science. Our collective ‘executive functions’ seem paralyzed; innate propensities, including our tendency to ‘lock in’ to habitual ways of thinking, interfere with high-level intelligence. Remarkably, our mass cognitive impairment has, in part, been purposefully socially constructed. For nearly half a century the world’s economic and political elites have subjected ordinary citizens to ceaseless rhetoric on the virtues of perpetual economic growth facilitated by individual entrepreneurship, free trade, globalization, and expanding markets.20 Beginning in North America in the 1970s, the political right has seized upon cognitive programming as a means further to distort public perceptions. Lakoff (2014) provides the definitive analysis of the use of deliberate language manipulation to shape and ‘(re)frame’ key issues in US politics. Not content with merely opposing challenges to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 511

01/06/2017 16:51

512  Handbook on growth and sustainability neo-liberal (that is, ­‘conservative’) ideology and values, right-wing elites and the corporate sector have spent millions annually funding so-called think-tanks to reinforce corporate values, undermine science, promote climate denial and otherwise purposefully confuse ordinary people (Rich 2004; Cross 2014).21 Those with naturally conservative brains may have been particularly receptive to the message but others could hardly avoid being sucked in. The need for growth is taken for granted in hourly newscasts; many of our most important institutions are dependent on it; governments flourish or fall with fluctuations in gross national product; growth-bound neo-liberal economics is virtually the only variant taught in our universities (which increasingly act like private corporations). Economic growth and the corporate values needed to sustain it have become cultural norms seemingly etched into the neural circuitry of millions of citizens. It is no coincidence that many capitalist countries – the US, the UK, France, New Zealand, Australia and Canada – have recently been led by conservative governments that are characteristically wedded to ideology, openly skeptical of environmental science and resistant to change (unless by change we mean tax reforms that favor the wealthy and the dismantling of environmental legislation when it is needed the most). What may be more surprising is that political contrariness in the face of the evidence is an apparent defining characteristic of human societies. According to historian Barbara Tuchman, political ‘folly’ or ‘wooden-headedness’ has always ‘play[ed] a remarkably large role in government. It consists in assessing a situation in terms of preconceived fixed notions [for example, ideology] while ignoring any contrary signs. It is acting according to wish while not allowing oneself to be deflected by the facts’ (Tuchman 1984, p. 7). It seems we can hardly depend on world leaders to act rationally, at least as defined by the broader public interest, when confronting the ecological crisis. Certainly, to date, evidence-based policies and long-term vision have played only a minor role in global sustainability politics. The facts that human groups are naturally hierarchical, that material wealth is a near universal symbol of status and power in mainstream societies, and that people promote their short-term personal interests also militate against humanity’s collective interests. Capitalism has greatly enriched the captains of industry and the political elites of capitalist democracies are increasingly beholden to these wealthy oligarchs for the financial resources needed for (re)election. (Increasingly, the wealthy manipulate the political systems of western democracies, particularly the US.) This is a system that feeds itself, and those at the top of the pecking order strenuously resist threats to their social status and political influence. As evident from analyses of the 2008 global financial crisis and bailout of the perpetrators, many

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 512

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­513 in business and politics resort to cheating and corruption to gain or retain status/power. Whither the long-term public good? Where does this leave us? Taken together, human behavioral ecology, evolutionary psychology and cognitive neuroscience provide a compelling argument that Homo sapiens suffers from cognitive impairment in confronting the (un)sustainability conundrum. The entrenchment of corporate conservatism has become particularly destructively maladaptive in present circumstances. The concept of the ‘public interest’ or the ‘common good’ has all but vanished from a political discourse deliberately reframed to reflect corporate values; brain-washed ordinary citizens regularly vote against their own interests; and on the environmental side, society is victim to a ‘socially constructed silence’ in which we actively conspire with each other to keep such inconveniences as climate change perpetually in the background (Marshall 2014). As argued from the outset, society seems paralyzed by deep-seated negative emotions, collective denial and political inertia. Norgaard (2009) documents various barriers to action that spring from intertwined ­psychological/conceptual, socio-cultural, and structural (political economy) roots. Just when society most needs the flexibility to adapt to rapidly shifting environmental realities, reality avoidance and socially constructed collective numbness renders us virtually impotent. If the world community is ever to get serious about saving itself, it must acknowledge the contribution of both innate behavioral propensities and maladaptive narratives to our current predicament and confront them directly. In particular, raising the whisperings of our inner demons to consciousness is the first step in learning to manage them. The situation is not entirely bleak. Hundreds of non-governmental and civil society organizations are working strenuously for ecological sanity, economic stability and social justice; such disparate movements as ‘Occupy Wall Street’, ‘Idle-No-More’, Transition Towns, and ‘350.org’ are additional evidence of nascent popular solidarity; and the July 2015 Greek popular vote against a financial rescue package that would have required yet another round of austerity, sell-offs and job losses is a hint that ordinary people are beginning to resist the strangle-hold of international bankers. Increasing numbers of people feel outrage at prevailing patterns of ecological decay, gross inequity and social injustice, and are sickened by corruption and cronyism at the top. Conceivably, this pot might eventually boil over – civil unrest and outright disobedience may be the force needed to awake the masses, rattle the politically complacent and force public consideration of serious reform. Or better still, systems transformation. It is often said that modern society needs a new story. Indeed, our overriding challenge is to craft a

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 513

01/06/2017 16:51

514  Handbook on growth and sustainability new cultural narrative, one explicitly designed to negate humanity’s innate expansionist tendencies and harmonize humanity with the natural world. Our best science argues for a reduced human population living with a materially less intense, smaller, more equitable, dynamic steady-state economy that could operate indefinitely within the biophysical means of nature (Daly 1992, 2015). This new economy would necessarily invert the prevailing growth imperative. To thrive on the finite Earth, the world community must come to place equity and development above efficiency and growth; balance the rights of the individual with his or her responsibilities to community; and promote core values that reflect the brighter colors in human behavioral spectrum – for example, high intelligence, our capacity for cooperation, our need for community, our compassion for others (people and species), and our instinct for social justice. If these qualities are to become social norms they must be purposefully reinforced – public education, for example, should be designed to ensure that they are inscribed in the synaptic circuits of students at all levels in the system.22 Sustainability requires that the political pendulum swing to the left – for example, from competitive individualism toward cooperative community – if only as a matter of expedience. On a planet in overshoot, no individual, community or country can be sustainable on its own. The most ecologically conscientious of nations will still be taken down by climate change, resource shortages, and so on, if the rest of the world stays its present course. Like it or not, (un)sustainability is a collective problem that demands collective solutions. For the first time in history, individual and national interests have seemingly converged with humanity’s collective interests. Forced cooperation for mutual gain may be the human family’s greatest hope for salvation. The question is whether there is sufficient time to reprogram whole nations and global society for so different a trajectory given that, even for individuals, the process is long and the outcome uncertain (Wexler 2006).

EPILOGUE: IS THE PURSUIT OF ‘SUSTAINABILITY’ FUTILE? Not all problems are solvable. Unprecedented scale, an accelerating pace of change, a narrowing window of opportunity, and sheer cultural inertia suggest that the unsustainability conundrum may be beyond resolution. Perhaps we have already passed critical systems thresholds (for example, climate change, loss of ecosystems integrity, land degradation and soils depletion, and so on) and are in a slow descent, likely to accelerate in coming decades.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 514

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­515 However, there is a more fundamental issue. I have argued above that unsustainability is an inevitable emergent property of a particular relationship between industrial society and the natural world. But could it be that this merely illustrates how all human societies, being human, interact with nature – certainly many previous cultures proved unable to resolve similar cultural crises despite ample warning (Tainter 1988; Diamond 2005). As anthropologist Joseph Tainter has observed: ‘what is perhaps most intriguing in the evolution of human societies is the regularity with which the pattern of increasing complexity is interrupted by collapse’ (Tainter 1995, p. 399). Perhaps, like so many other complex systems (see Gunderson and Holling 2002), human societies are invariably fated to cycle repeatedly through predictable phases – from optimistic (and opportunistic) pioneering, through growth and complexification, to inflexible, top-heavy rigidity toward ultimate collapse. Certainly, as the more astute among us warn, most of the symptoms of incipient implosion exhibited by previous failed societies obtain today, and now on a global scale (Diamond 2005). Were the ill-fated Greenland Norse merely treading an already well-worn path that global society is doomed to follow? Which poses a final intriguing question: with contemporary knowledge of history, and growing understanding of the distal causes and functional dynamics of the cycle of civilizations, does current world society have an advantage over previous cultures that might, with conscious effort, enable us to break from the historical pattern? If the answer is yes, it might yet ensure that will be at least one more great leap forward in human evolutionary and cultural history. But if the answer is no . . .

NOTES   1. Economic growth in this chapter refers to material growth, increases in energy and material throughput. The latter are usually associated with rising GDP.   2. Geometric (exponential) growth implies a constant doubling time. Population doubling time varies among species from minutes or hours for bacteria and single-celled organisms to many decades for long-lived species.   3. ‘Carrying capacity’ (‘K’) specifies the theoretical maximum population a given species can attain in a particular habitat without permanently damaging that habitat. ‘K’ varies with habitat productivity (biocapacity).   4. At the other end of the spectrum are so-called ‘r’-strategists. Animals in this category (for example, locusts, some rodents) tend to be smaller, short lived and highly fecund (large numbers of offspring) with limited parental care and high juvenile mortality. Such species persist even in fluctuating environments because high potential population growth rates (‘r’) ensure that at least a few individuals in each generation survive to reproduce (see, Pianka 1970). Originally formulated by MacArthur and Wilson

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 515

01/06/2017 16:51

516  Handbook on growth and sustainability

  5.   6.

  7.   8.   9.

10.

11.

12.

13.

(1967 [2001]) r/K selection theory has subsequently been updated and incorporated into general life-history theory. For a graphic representation of Smil’s and similar data by major groups of mammals, see: http://imgs.xkcd.com/comics/land_mammals.png (accessed 1 June 2015). Genes are packets of biological information that are transmitted between generations and are subject to natural selection. Successful variants thus accumulate over time. Similarly, ‘memes’ are packets of cultural information (for example, fracking technology) that can be selectively passed between generations, but have the additional advantage of rapid horizontal proliferation within generations. Successful technologies therefore spread and accumulate very rapidly. There would often be strong pressure to use and consume now. For example, food resources left in place for another day might well spoil or be taken by someone else. For an explanation and interactive graphic of the ‘triune brain’, see: http://thebrain. mcgill.ca/flash/d/d_05/d_05_cr/d_05_cr_her/d_05_cr_her.html; also http://mybrainnot​ es.com/evolution-brain-maclean.html (both websites accessed 18 December 2015). The reptilian brain-stem has a 500 million year history; the paleo-mammalian brain, about 150 million years; but the neocortex has attained its current status in cetaceans and primates, particularly Homo sapiens, in just the past 2 million years. While Maclean erred in details of brain structure and evolutionary sequence, subsequent research supports his general theory (Panksepp 1998; Ellis et al. 2009). Harris is a behavioral ‘determinist’; other psychologists are ‘compatibilists’. While conceding that unconscious neural events help determine our thoughts and actions, compatibilists believe that a person exhibits ‘free will’ as long as there are no immediate constraints that would prevent that person from acting on his felt desires and intentions. This is obviously some distance from the popular belief that individuals are the conscious authors of their thoughts and actions. However, as Harris (2012, p. 19) asks, where is the freedom in acting on thoughts and intentions when the latter ‘are the product of prior events that you had absolutely no hand in creating’? The experimental evidence seems to support the ‘determinist’ perspective. Early electroencephalograph experiments revealed activity in the motor cortex a third of a second before experimental subjects’ decision to move becomes conscious (Libet 1985); functional magnetic resonance imaging (fMRI) can detect brain activity pertinent to a given action a full seven to ten seconds before the subject is aware he or she has decided to act (Haynes 2011); direct signals from just a handful of cortical neurons are sufficient to predict with 80 percent accuracy which of a choice of actions a person will execute 700 milliseconds before that person is consciously aware of his decision (Fried et al. 2011). The authors recognize that their data do not prove that particular brain regions play a causal role in the formation of political attitudes. Rather, their observations reinforce the evidence for a link between brain structure and the psychological mechanisms that mediate those attitudes. Abnormal behavior may also be reflected in brain structure. Gregory et al. (2015) confirm that violent psychopaths – often characterized as unemotional, callous, coldhearted and calculating – show structural aberration in brain components relating to guilt, embarrassment, empathy and moral reasoning that distinguish them even from other violent criminals with anti-social personality disorders (for example). Conversely, Prehn et al. (2015) have documented increased gray matter in the prefrontal cortex in subjects who exhibit a ‘post-conventional level of moral reasoning’ compared with those who exhibit pre-conventional and conventional levels. Drawing on interviews with experimental neuro-psychologists and a review of the relevant literature, journalist Chris Mooney (2012) argues that contemporary neuro-­ science goes a long way toward explaining why, in the US, many self-declared Republicans (including the far-right ‘Tea Party’ faction) tend to be rigid in their thinking, reject evolution and anthropogenic climate change outright, and otherwise tend to deny objective scientific findings that conflict with their beliefs. Certainly people whose behavior reflects the attitudes in the left-hand column of Table 22.1 usually identify

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 516

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­517

14. 15.

16.

17. 18.

19. 20.

21. 22.

themselves as Democrats; those who exhibit the qualities in the right-hand column mostly vote Republican. Stability here refers to the very long-term, that is, macro climatic conditions over ­centuries, as opposed to short-term diurnal or seasonal cycles. The same is true of institutions that flourish under one set of conditions but become dysfunctional when circumstances change. For example, organizations and institutions that have developed and thrive in the context of continuous economic growth may have difficulty adapting to a more sustainable ‘steady-state’ economy. Cultural norms include shared beliefs, values and assumptions such as those associated with political ideologies, disciplinary paradigms, and religious doctrines. The term ‘cultural cognition’ has been applied to the tendency of individuals to shape disputed matters of fact so that they reflect or conform to such pre-formed cultural identities (CCP n.d.). This phenomenon largely explains differences among social groups in their responses to emotionally charged public policy issues ranging from abortion to gun control and climate change (Kahan and Braman 2006). More generally, Kahan (2013, 407) suggests that cultural cognition promotes individuals’ ‘interests in forming and maintaining beliefs that signify their loyalty to important affinity groups’. In this light, culturally induced neural circuitry can be seen as an adaptive mechanism that strengthens tribal identity and cohesion. The central nervous system is also part of the endocrine system. For example, it produces different hormones – neurotransmitters – that make us feel relaxed (happy) or anxious (upset) depending on the social or environmental context. Consider the United States. Between 1993 and 2010, the top 1 percent of US household incomes grew by 58 percent (2.7 percent annually), capturing slightly more than half of the overall economic growth of real incomes per family over that period. Meanwhile, ‘average real incomes of the bottom 99% grew only by 6.4% . . . (.37% annually)’. During the post-recession recovery year (2009–10), ‘top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery’. As the income gap has widened, the share of total national income enjoyed by the top 1 percent rose from about 8 percent in 1972 to as high as 23 percent (2007) and currently sits near 20 percent. The top decile’s share rose from about 33 percent in 1972 to 49.7 percent by 2007 ‘higher than any other year since 1917 [including] the peak of stock market bubble in the “roaring” 1920s. In 2010, it [was] to 47.9 percent’ (all data from Saez 2012). For example, environmentalists and academic ecologists enjoy similar material standards and leave the same ecological footprints as others in their income bracket. There is often nothing nuanced about the contemporary conservative mindset. Consider the following section extracted verbatim from the platform of the Republican Party of Texas: ‘Knowledge-Based Education – We oppose the teaching of Higher Order Thinking Skills (HOTS) (values clarification), critical thinking skills and similar programs that are simply a relabeling of Outcome-Based Education (OBE) (mastery learning) which focus on behavior modification and have the purpose of challenging the student’s fixed beliefs and undermining parental authority’ (RPT 2012). Some commentators credit the so-called ‘Powell Memorandum’ or ‘Powell Manifesto’ (Powell 1971) with inspiring the corporate sector in this ‘ideological war against liberal intellectuals’ (Giroux 2009; also Lapham 2004). Those concerned that this smacks of social engineering are reminded that recent generations (particularly of North Americans) are already the most successfully socially engineered in history. The ‘public relations’ industry’s post-World War II success in converting western countries from conserver to consumer societies that measure self-worth in material terms is a case in point. Corporate America’s sleight-of-hand in reframing political discourse in its own image is another (see Lakoff 2014). Social engineering is a fact of human nature and cannot be avoided.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 517

01/06/2017 16:51

518  Handbook on growth and sustainability

REFERENCES Alford, J.R., C.L Funk and J.R. Hibbing (2005), ‘Are political orientations genetically transmitted?’, American Political Science Review, 99 (2), 153–67. Amodio, D.M., J.T. Jost, S.L. Master and C.M. Yee (2007), ‘Neurocognitive correlates of liberalism and conservatism’, Nature Neuroscience, 10 (10), 1246–7. Auden, W.H. (1940), Another Time, New York: Random House. Cultural Cognition Project (CCP) (n.d.). The Cultural Cognition Project at Yale Law School, accessed 18 December 2014 at http://www.culturalcognition.net/projects/. Clugston, C.O. (2012), Resource Scarcity – Humanity’s Final Chapter? Port Charlotte, FL: Booklocker.com. Cross, P. (2014), ‘The idea marketers: Canada should cull proliferation of think-tanks, let market do the funding’, FP Comment, The Financial Post, accessed 18 December 2014 at http://business.financialpost.com/2014/09/24/the-idea-marketers-canada-should-cullproliferation-of-think-tanks-let-market-do-the-funding/. Custers, R. and H. Aarts (2010), ‘The unconscious will: how the pursuit of goals operates outside of conscious awareness’, Science, 329 (5987), 47–50. Daly, H.E. (1992), ‘Steady-state economics: concepts, questions, policies’, GAIA – Ecological Perspectives for Science and Society, 1 (6), 333–8. Daly, H.E. (2015), ‘A population perspective on the steady-state economy’, Daly News, Center for the Advancement of the Steady State Economy, January, accessed 19 January 2015 at http://steadystate.org/a-population-perspective-on-the-steady-stateeconomy/?utm_source5feedburner&utm_medium5email&utm_campaign5Feed%3A+ DalyNews+%28The+Daly+News%. Damasio, A. (1994), Descartes’ Error: Emotion, Reason and the Human Brain, New York: Avon Books. Diamond, J. (2005), Collapse: How Societies Chose to Fail or Succeed, New York: Viking Press. Dobzhansky, T. (1964), ‘Biology, molecular and organismic’, American Zoologist, 4 (4), 443–52. Doidge, N. (2007), The Brain that Changes Itself, New York: Viking Press. Dugmore, A.J., T.H. McGovern, O. Vésteinsson, J. Arneborg, R. Streeter and C. Keller (2012), ‘Cultural adaptation, compounding vulnerabilities and conjunctures in Norse Greenland’, Proceedings of the National Academy of Sciences, 109 (10), 3658–63. Ellis, A., M. Abrams and L. Abrams (2009), Personality Theories: Critical Perspectives, Thousand Oaks, CA: Sage. Fowler, C. and L. Hobbs (2003), ‘Is humanity sustainable?’, Proceedings of the Royal Society of London B, 270 (1533), 2579–83. Fried I., R. Mukamel and G. Kreiman (2011), ‘Internally generated preactivation of single neurons in human medial frontal cortex predicts volition’, Neuron, 69 (3), 548–62. Giroux, H.A (2009), ‘The Powell memo and the teaching machines of right-wing extremists,’ Truthout Archives, accessed 18 December 2014 at http://www.truth-out.org/archive/ item/86304-the-powell-memo-and-the-teaching-machines-of-rightwing-extremists. Gregory, S., R.J. Blair, D. Fytche, S. Simmons, V. Kumari, S. Hodgins and N. Blackwood (2015), ‘Punishment and psychopathy: a case-control functional MRI investigation of reinforcement learning in violent antisocial personality disordered men’, Lancet (Psychiatry), 2 (2), 153–60. Gunderson, L.H. and C.S. Holling (eds) (2002), Panarchy: Understanding Transformations in Human and Natural Systems, Washington, DC: Island Press. Harris, S. (2012), Free Will, New York: Free Press. Haynes, J.D. (2011), ‘Decoding and predicting intentions,’ Annals of the New York Academy of Science, 1224 (April), 9–21. International Monetary Fund (IMF) (2000), ‘The world economy in the 20th century: striking developments and policy lessons’, World Economic Outlook, Washington, DC: International Monetary Fund, ch. 5, accessed 8 January 2015 at https://www.imf.org/ external/pubs/ft/weo/2000/01/pdf/chapter5.pdf accessed 8 Jan 2015.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 518

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­519 Jost, J.T. and D.M. Amodio (2012), ‘Political ideology as motivated social cognition: Behavioral and neuroscientific evidence’, Motivation and Emotion, 36 (1), 55–64. Kahan, D.M. (2013), ‘Ideology, motivated reasoning, and cognitive reflection: an experimental study’ (29 November 2012), Judgment and Decision Making, 8, 407–24; Cultural Cognition Laboratory Working Paper No. 107; Yale Law School, Public Law Research Paper No. 272; accessed 27 February 2017 at SSRN: http://ssrn.com/abstract52182588 or http://dx.doi.org/10.2139/ssrn.2182588. Kahan, D.M. and D. Braman (2006), ‘Cultural cognition and public policy’, Yale Law & Policy Review, 24, 147, Yale Law School, Public Law Working Paper No. 87, accessed 27 February 2017 at SSRN: http://ssrn.com/abstract5746508. Kanai, R., T. Feilden, C. Firth and G. Rees (2011), ‘Political orientations are correlated with brain structure in young adults,’ Current Biology, 21 (8), 677–80. Klare, M.T. (2012), The Race for What’s Left: The Global Scramble for the World’s Last Resources, New York: Metropolitan Books (Henry Holt). Kollmuss, A. and J, Agyeman (2002), ‘Mind the gap: why do people act environmentally and what are the barriers to pro-environmental behaviour?’, Environmental Education Research, 8 (3), 239–60. Lakoff, G. (2014), The All New ‘Don’t Think of an Elephant’ – Know Your Values and Frame the Debate, White River Junction, VT: Chelsea Green. Lane, R.E. (2000), The Loss of Happiness in Market Democracies, New Haven, CT: Yale University Press. Lapham, L.H. (2004), ‘Tentacles of rage – the Republican propaganda mill, a brief history’, Harper’s Magazine, September, 32–41. Libet, B. (1985), ‘Unconscious cerebral initiative and the role of conscious will in voluntary action’, Behavioral and Brain Sciences, 8 (4), 529–66. MacArthur, R. and E.O. Wilson (1967), The Theory of Island Biogeography, reprinted 2001, Princeton, NJ: Princeton University Press. Maclean, P. (1990), The Triune Brain in Evolution: Role in Paleocerebral Functions, New York: Plenum Press. Marien, H., R. Custers, R.R. Hassin and H. Aarts (2012), ‘Unconscious goal activation and the hijacking of the executive function’, Journal of Personality and Social Psychology, 103 (3), 399–415. Marshall, G. (2014), Don’t Even Think About It: Why Our Brains are Wired to Ignore Climate Change, New York and London: Bloomsbury. Monbiot, G. (2012), ‘After Rio, we know. Governments have given up on the planet’, Guardian, 25 June, accessed 1 December 2014 at http://www.guardian.co.uk/commentisfree/2012/ jun/25/rio-governments-will-not-save-planet#start-of-comments. Mooney, C. (2012), The Republican Brain: The Science of Why They Deny Science – and Reality, Hoboken, NJ: John Wiley and Sons. Norgaard, K.M. (2009), ‘Cognitive and behavioral challenges in responding to climate change’, Policy Research Working Paper 4940, World Bank, Washington, DC. Orr, D. (1991), ‘What is education for?’, in Context Institute, In Context: The Learning Revolution – Education Innovations for Global Citizens, Winter, 52, accessed 1 December 2014 at http://www.context.org/iclib/ic27/orr/. Overbye, D. (2007), ‘Free will: now you have it, now you don’t’, New York Times, 2 January 2007, accessed 14 October 2014 at http://www.nytimes.com/2007/01/02/science/02free. html?pagewanted5all&_r51&. Oxfam (2015), ‘Wealth – having it all and wanting more’, Oxfam: Policy and Practice, Oxfam issue briefing, January, London: Oxfam GB, accessed 20 January 2015 at http://policypractice.oxfam.org.uk/publications/wealth-having-it-all-and-wanting-more-338125. Oxley, D.R., K.B. Smith, J.R. Alford, M.V. Hibbing, M.S Miller, M. Scalora et al. (2008), ‘Political attitudes vary with physiological traits’, Science, 321 (5896), 1667–70. Panksepp, J. (1998), Affective Neuroscience – the Foundations of Human and Animal Emotions, New York: Oxford University Press. Pascal, B. (1966), Pensées, New York: Penguin Books.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 519

01/06/2017 16:51

520  Handbook on growth and sustainability Pianka, E.R. (1970), ‘On r- and K-selection’, American Naturalist, 104 (940), 592–7. Ponting, C. (1991), A Green History of the World, New York: Penguin Books. Powell, L.F. (1971), Confidential memorandum – attack on American free enterprise system, assessed 18 December 2014 at http://law2.wlu.edu/deptimages/Powell%20Archives/Powell​ MemorandumTypescript.pdf. Pratarelli, M. (2008), Myopic Man: On the Nature and Universality of Self-Deception and its Long-Term Effects on Our Environment, Beulah, CO: Medici. Prehn, K, M. Korczykowski, H Rao, Z. Fang, J.A. Detre and D.C. Robertson (2015), ‘Neural correlates of post-conventional moral reasoning: a voxel-based morphometry study’, PLoS ONE, 10 (6), e0122914, doi:10.1371/journal.pone.0122914. Rees, W.E. (1998), ‘How should a parasite value its host?’, Ecological Economics, 25 (1), 49–52. Rees, W.E. (1999), ‘Consuming the Earth: the biophysics of sustainability’, Ecological Economics, 29 (1), 23–7. Rees, W.E. (2009), ‘Are humans unsustainable by nature?’, The 2009 Trudeau Foundation Papers, vol. 1, Montreal: Pierre Elliott Trudeau Foundation, pp. 81–103. Rees, W.E. (2010), ‘What’s blocking sustainability? Human nature, cognition and denial’, Sustainability: Science, Practice and Policy, 6 (2), 13–25, accessed 18 December 2014 at http://sspp.proquest.com/static_content/vol6iss2/1001-012.rees.pdf. Republican Party of Texas (RPT) (2012), 2012 State Republican Party Platform, report of Platform Committee and Rules Committee, Republican Party of Texas, accessed 12 December 2014 at http://www.tfn.org/site/DocServer/2012-Platform-Final.pdf?doc​ ID53201. Rich, A. (2004), Think Tanks, Public Policy and the Politics of Expertise, Cambridge and New York: Cambridge University Press. Rockstrom, J., W. Steffen, K. Noone, Å. Persson, F.S. Chapin III, E.F. Lambin et al. (2009), ‘A safe operating space for humanity’, Nature, 461 (24 September), 472–5. Saez, E. (2012), Striking it Richer: The Evolution of Top Incomes in the United States (Updated with 2009 and 2010 estimates), Berkeley, CA: University of California, Department of Economics, accessed 18 December 2014 at http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf. Schwartz, J. and S. Begley (2002), The Mind and the Brain, New York: HarperCollins. Shah, A. (2013), ‘Poverty facts and stats’, accessed 18 December at http://www.globalissues. org/article/26/poverty-facts-and-stats. Smil, V. (2011), ‘Harvesting the biosphere: the human impact’, Population and Development Review, 37 (4), 613–36. Steffen, W., K. Richardson, J. Rockström, S.E. Cornell, I. Fetzer, E.M. Bennett et al. (2015), ‘Planetary boundaries: guiding human development on a changing planet’, Science, 347 (6223), doi:10.1126/science.1259855. Tainter, J. (1988), The Collapse of Complex Societies, Cambridge: Cambridge University Press. Tainter, J. (1995), ‘Sustainability of complex societies’, Futures, 27 (4), 397–407. Tuchman, B.W. (1984), The March of Folly – from Troy to Vietnam, New York: Random House. United Nations (UN) (2011), State of World Population 2011, New York: United Nations Population Fund. United Nations (UN) (2012), The Future We Want, New York: United Nations, accessed 18 December 2014 at http://www.uncsd2012.org/content/documents/727The%20Future%20 We%20Want%2019%20June%201230pm.pdf. United Nations (UN) (2014), State of World Population 2014, New York: United Nations Population Fund. Victor, P. (2008), Managing Without Growth: Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Walsh, B. (2012), ‘What the failure of Rio+20 means for the climate’, Time Science, 26 June, accessed 20 December 2014 at http://www.time.com/time/health/article/0,8599,2118058,00. html.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 520

01/06/2017 16:51

Human nature, growth and (un)sustainability  ­521 Wexler, B.E. (2006), Brain and Culture, Cambridge, MA: MIT Press. Wilkinson, R. and K. Pickett (2009), The Spirit Level: Why Equality is Better for Everyone, London: Penguin Books. World Wildlife Fund (WWF) (2014), Living Planet Report 2014, Gland: World Wide Fund for Nature.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 521

01/06/2017 16:51

23  Beyond consumer capitalism: foundations for a sustainable prosperity Tim Jackson

INTRODUCTION Almost a decade on from the onset of the financial crisis, the fault lines within modern capitalism are widening. What once seemed tiny fissures, barely visible to the Western eye, have now become deep chasms threatening to engulf entire nations. No exploration of the relationship between growth and sustainability can be complete without addressing the fate of capitalism itself. Between the fall of the Berlin Wall in November 1989 and the breaking of the financial crisis in September 2008, capitalism’s star had never seemed brighter. There was, to echo Margaret Thatcher, no alternative. Debates about the variations of capitalism were more or less academic. The Anglo-centric nations trumpeted the virtues of ‘liberalized markets’. Germany and France championed the ‘social market economy’. Communist China even developed its own particular brand of centrally planned capitalism, triggering a strange mixture of anxiety and quiet satisfaction in the Western mind (Hall and Soskice 2001; Baumol et al. 2007). All of these capitalisms rely inherently on the assumed insatiability of human needs: confident expectations of a relentless growth in consumer spending. Across the world, capitalism advances by seeking out new consumer markets for new consumer products. The continual throwing over of the old in favour of the new. The intrusion of the market into ever more personal areas of our lives (Schumpeter 1975; Perez 2003). In the beginning, this process can be immensely productive, leading to manifest improvements in our standard of living. However, to keep the process going in perpetuity as the system requires, we need people resolutely hooked on stuff, prepared to borrow and spend – even to mortgage their own financial future if necessary – to carry on shopping (Booth 2004; Jackson 2017). It is easy enough to find these people. Novelty matters to us. Through novelty, for instance, we tell each other stories about how important we are. Status is just one of the social dynamics that thrives on novelty. Novelty also signals progress. It offers hope. A brighter shinier world for 522 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 522

01/06/2017 16:51

Beyond consumer capitalism  ­523 our children and their children. If we are ever inclined to forget or forgo that desire, there is a host of canny advertisers, marketers, investors and politicians on hand to help us remember it. To persuade us, in very simple terms, to spend ‘money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about’ (Jackson 2010). In summary, there appears at first sight to be an uncanny fit between the demands of capital and the restless soul of the consumer. Armed with this rationale, and with economic growth as its mantra, capitalism itself seems unstoppable. ‘Accumulate, accumulate, that is Moses and the prophets’, as Marx (1867 [2004], p. 742) once put it. Global economic output is now almost ten times bigger than it was in 1950. The default assumption is that – financial crises aside – growth will continue indefinitely. Not just for the poorest countries, where a better quality of life is desperately needed, but even for the richest nations where the cornucopia of material wealth is beginning to threaten the foundations of our well-being. If it continues to expand at the same average rate, the world economy in 2100 would be more than 20 times bigger than it is today: a staggering two-hundredfold increase in economic scale in the space of just a few generations (Jackson 2017, ch. 1). This unprecedented ramping up of economic activity is without historical precedent. It is totally at odds with our scientific knowledge of the finite resource base and the fragile ecology on which we depend for survival. And it has already been accompanied by the degradation of an estimated 60 per cent of the world’s ecosystems (MEA 2005; TEEB 2012). For the most part we tend to ignore the stark reality of these numbers. The reasons for this ‘collective blindness’ are easy enough to find. Expanding demand is the default mechanism for achieving economic stability. When demand falters, bad things happen. Businesses struggle to survive. People lose their jobs and sometimes their homes. A spiral of recession looms. In these circumstances, questioning growth is deemed to be the act of lunatics, idealists and revolutionaries; but question it we must. The collapse of Lehman Brothers on 15 September 2008 signalled more than the onset of a cyclical liquidity crisis. The pallid light of recession illuminated crack after crack in the shiny surface of capitalism. It is now apparent that these cracks run right to the heart of the system. Nowhere is this more evident than in the lessons from the crisis itself. The financial crisis was not the result of rogue behaviour or unfortunate circumstance. It was a disaster waiting to happen. An economy reliant for its stability on an endless stimulation of consumer demand resorts inevitably to monetary expansion to keep growth going. The burgeoning of credit creates fragile balance sheets. Complex financial instruments are

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 523

01/06/2017 16:51

524  Handbook on growth and sustainability used to disguise unsavoury debt. When the debts eventually become toxic, the system crashes (Barwell and Burrows 2011; Turner 2015; Wolf 2015). Since 2008, governments have committed trillions of dollars to bail out the banks and re-stimulate the global economy, but heavy fiscal borrowing has only precipitated a further crisis. Across the Eurozone, for instance, country after country has faced rising budget deficits, unwieldy sovereign debt and downgraded credit ratings. Austerity policies, brought in to protect these ratings, have failed to solve the underlying issues. Worse, they have created new social problems of their own. The withdrawal of social investment has caused deepening inequalities, rising unemployment, worsening health outcomes and an increasingly agitated public (Stuckler and Basu 2014). The injustice of bailing out the architects of the crisis at the expense of its victims has become plain for all to see. The conditions for wider social unrest remain palpable. Numerous responses are to be found to this existential crisis of capitalism. One set of responses aims to retain the principal dimensions of consumer capitalism (including the growth imperative), and to solve capitalism’s dilemmas through ever newer, better and more productive technologies (Breakthrough Institute 2015; Füchs 2015). Another aims to overthrow the existing constructions (including the growth imperative) entirely and replace them with something different (D’Alisa et al. 2014; Harvey 2014; Kallis 2015). Some responses focus on the failure of institutions, others on disparities of power and class and others again on the avarice, greed and shortsightedness inherent in human nature. These latter approaches sometimes cast a deterministic, almost fatalistic outlook on the prospects for sustainability, in which there is little if any room for manoeuvre and the prospects for human survival are themselves vanishingly small. To ignore the evolutionary roots of greed and selfishness is to invite renewed institutional failure, but to assume their unrivalled dominance in human society is both unnecessarily fatalistic and equally flawed. Indeed it neglects some of the most important insights of evolutionary theory. As Rees (Chapter 22 in this volume) points out, human behaviour is conditioned by social institutions. Our evolutionary predispositions find widely differing expression under different social and institutional conditions. It is in this gap (small though it may be) between the fixity of human nature and the variability of society that we must pursue pragmatic avenues for change. Intellectual ideas are paramount here. Consumer capitalism is in part at least a product of ideas: ideas about the nature of progress, about the power of technology and about human nature itself. Getting beyond its failings requires us, first, to understand this history of ideas, second, to

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 524

01/06/2017 16:51

Beyond consumer capitalism  ­525 identify its shortcomings and, finally to establish credible and robust alternatives that merit exploration. These are my aims in this chapter. Ultimately, I argue, the task of defining a sustainable prosperity is precise, definable and meaningful. Moreover, the strategy of engaging in this task offers us a compelling and pragmatic alternative to the debilitating choice between an oppressive status quo and a naive technological optimism.

CHASING PROGRESS The modern idea of progress can be traced to the Enlightenment – a period of intense intellectual and philosophical creativity concentrated mainly in Northern Europe during the sixteenth and seventeenth centuries. This period in its turn gave rise to enormous technological creativity and provided many of the foundations for the Industrial Revolution. It was also accompanied by new moral and prudential speculations about the nature of the ‘good life’ – ideas about how individuals and societies can and should thrive. Some of these ideas provided the foundations for classical and later neo-classical economics. Perhaps most notable among these were concepts of utilitarianism (Mill 1863 [1906]) and libertarianism (Locke 1690 [1997]; Godwin 1793; Mill 1869 [2006]; see also Hamowy 2008). Utilitarianism held that progress consists in ensuring the greatest happiness for the greatest number. Libertarianism suggested that this could best be achieved by delivering people the freedom with which to pursue their own happiness. The libertarian focus on individual freedoms was adopted by the classical economists as an organizing principle of the market economy. Over the next two centuries these two broadly democratizing philosophies slowly began to dissolve conventional hierarchical divisions in the societies of emerging industrialized countries, a process that was accelerated by industrialization itself. Improved access to natural resources, more efficient conversion technologies with which to manufacture material goods, and the rising incomes associated with industrial livelihoods, all contributed to a profound technical and societal transformation. There were critics of this transformation, even at the time (Luxemburg 1913 [2003]). It was argued that the Industrial Revolution was built on an access to material resources that was secured only by an expansion of military power (Douthwaite 1999). Britain, France, Germany, Japan, Portugal and Spain all developed strong imperialist ambitions, competing for the rich resources and cheap labour to be found in the still undeveloped nations around the world. Colonization and slavery, it was claimed, provided the energy and material resources that powered the new industrial

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 525

01/06/2017 16:51

526  Handbook on growth and sustainability economies. Some even suggested that it was the clash of imperial ambitions amongst the emerging superpowers that led directly to the First World War and indirectly to the Second World War (Hobsbawm 1968 [1999]; Deléage et al. 1991). There were also criticisms of the impact that the process of industrialization was having on the working populations of the newly industrialized countries. Working conditions in the early mill-towns were often harsh. Life expectancy was sometimes brutally short. There was evidence that health outcomes actually worsened over the early years of industrialization. Rather than improving the lives of everyone, industrialization bettered the lives of some at the expense of others. There were certainly huge divisions still between the rich – the owners of land and capital – and the poor who still struggled for livelihoods, land, food, health and a share of the political voice (Marx 1867 [2004]). A particular criticism of these new arrangements was that the emerging capitalist economy had ‘disembedded’ economic activities from social relations, simultaneously undermining community and social capital, and leading to a loss of accountability in economic relationships (Polanyi 1944 [2002]). This erosion was thought to flow in part from the underlying philosophical idea that individual self-interest should be the driver of social progress. Critics suggested that this philosophy had shifted the balance between self-regarding and other-regarding behaviours. As individual identity became an increasing stronger force in modern society, the strength of social identities and social ties began to diminish, threatening social cohesion (Durkheim 1903 [2002]). In spite of these criticisms – and the disruptions of two world wars and the Depression – the emerging, predominantly capitalist, form of social organization had dramatically improved the lives of many ordinary people in the industrialized nations by the middle of the twentieth century. The prevailing, increasingly global, notion of economic progress assumed that these advances would continue in much the same way into the future. The setting up of the United Nations (UN) System of National Accounts (SNA) in the early post-war years provided the institutional bedrock for this view, and through it the gross domestic product (GDP) became the single most important arbiter and indicator of progress. Growth in the GDP emerged as the key political priority in all the advanced Western nations. With the collapse of the Soviet Union and the opening out of trade with South East Asia, by the end of the twentieth century, the paradigm of economic growth achieved near global significance (Philipsen 2015). To summarize, modern society is now organized around a particular model of how to pursue human well-being. Baldly stated, this model contends that increasing economic output – growth in the GDP – leads

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 526

01/06/2017 16:51

Beyond consumer capitalism  ­527 to improved well-being. Rising GDP traditionally symbolizes a thriving economy, more spending power, richer and fuller lives, increased family security, greater choice and more public spending. At the heart of this model, lies a very particular vision of human nature.

THE EVOLUTION OF SELFISHNESS The idea that human beings are primarily selfish and ultimately insatiable has a long and convoluted history, but it achieved a particularly powerful incarnation in the model of human nature which informs and sustains modern economics. Not only are people inherently selfish, according to this conception, but it is precisely this self-interest which leads society towards the greater good. One of the earliest articulations of this idea was a satirical poem, first published in 1705, called the Fable of the Bees. Its author, Bernard de Mandeville was a Dutch physician living in London. His poem told the story of a thriving and successful beehive, in which the bees suddenly become honest and virtuous. The effect, in de Mandeville’s poem, is disastrous. The bees lose all motivation to succeed, the hive collapses and the remaining bees go off to live empty lives in a hollow tree (de Mandeville 1989). De Mandeville’s intention was to satirize those complaining of corruption in the politics of the day. Self-interest, claims de Mandeville, is the principal driver of economic vitality and consequently serves the best interests of society. It should not be railed against or reined in because it is the source of our wealth and our well-being, argues the Fable of the Bees. The poem was particularly influential on the Scottish moral philosopher, Adam Smith, the man widely regarded as the father of economics. Everyone is continually exerting himself in his own self-interest, said Smith (1776 [1937], para. 9): ‘It is his own advantage, indeed and not that of the society, which he has in view’, but ‘he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.’ Smith himself wrote passionately about the dangers of corporate interests and the indispensable role for government in curbing these and indeed in delivering services that the private sector would not. However, the metaphor of the invisible hand inspired a lengthy and ferocious defence of the virtues of an unbridled ‘free market’ in which self-interest is given full rein. ‘The great merit of the capitalist system’, wrote the economist Edward Robinson, ‘is that it succeeds in using the nastiest motives of nasty people for the ultimate benefit of society’ (Robinson 1948, p. 276). The conflation of self-interest with human nature was certainly

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 527

01/06/2017 16:51

528  Handbook on growth and sustainability ­ pportune because it conferred simplicity on the mathematical models o which economics was busy developing to explore the dynamics of the market. However, the supposed centrality of self-interest to the human psyche also gained support from one of the most powerful intellectual developments of the nineteenth century, the theory of evolution. In its simplest terms, Darwin’s theory of natural selection has two key components: the idea of spontaneous variation in the characteristics of plants and animals; and the process through which these variations are selected. This selection process was, broadly speaking, one of competitive struggle, in which the fittest survive and the weakest perish. In an autobiographical essay published after his death, Darwin described the process through which he arrived at the theory of evolution, in the ­following way: In October 1838, that is fifteen months after I had begun my systematic enquiry, I happened to read for amusement ‘Malthus on Population’ [Malthus 1798, p. 349], and being well prepared to appreciate the struggle for existence which everywhere goes on from long-continued observation of the habits of animals and plants, it at once struck me that under these circumstances favourable variations would tend to be preserved, and unfavourable ones to be destroyed. The result of this would be the formation of new species. (Darwin 1892 [1958], p. 68)

‘Here then’, he wrote, ‘I had at last got a theory by which to work’ (Darwin 1892 [1958], p. 68). In this account, natural selection appears to give selfishness an unassailable importance in the evolution of the human species. If selection takes place at the level of the individual it should, in the long run, favour the evolution of individuals who exhibit mainly selfish (that is, self-preserving) behaviour. Selfishness attained not just a legendary but an evolutionary status. Just as the self-interest of economic agents is supposed to lead ‘as if by an invisible hand’ to the most favourable outcome for society, so the self-interest of individuals is supposed to lead through ‘the survival of the fittest’ to the most favourable outcome for species. Economics has continued to ‘borrow’ credibility for the centrality of self-interest from the theory of evolution ever since (Mirowski 1989). But this credibility is critically, perhaps fatally, flawed.

BEYOND THE SELFISH GENE Human behaviour is self-evidently not entirely selfish. Nor is it exclusively hedonistic. The existence of genuinely altruistic behaviour is a fact of

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 528

01/06/2017 16:51

Beyond consumer capitalism  ­529 biology. Darwin himself at first believed this fact was ‘insuperable, and actually fatal to my whole theory’ (Darwin 1859 [1968], p. 257). His own attempt to solve the problem was to suggest that selection operates not only on individuals but also on families or groups, a proposal that has never been definitively settled (Wright 1994; Ridley 1996). It was to be almost another century before the ‘problem of altruism’ achieved a more satisfactory solution. In 1963, the British biologist William Hamilton published a landmark paper in which he proposed that selection operated not at the level of the individual but at the level of the gene. This proposal (now widely accepted) provided a mechanism for the evolution of altruism, without recourse to the idea of group selection. Though the individual may perish, the genes that he or she shares with other members of the species have a better chance of survival as a result of the sacrifice (Hamilton 1963, 1964). Hamilton’s work laid the foundation for a long-awaited continuation of Darwin’s project to provide an evolutionary basis for human psychology. During the following decades, this foundation was strengthened and broadened, first through the work of evolutionary biologists and later through the emergence of a sophisticated neuroscience of human behaviour (Whybrow 2015; Sterling 2016). These ideas might have remained within the confines of biology, had it not been for the publication in the mid-1970s of two ground-breaking popular books. In 1975, the biologist Edward Wilson published a landmark volume on Sociobiology, a new science of human behaviour. It was grounded solidly in the emerging evolutionary insights into human behaviour (Wilson 1975). A year later, a young Oxford scientist named Richard Dawkins published a book called The Selfish Gene in which he pursued the implications of Hamilton’s insight that the fundamental unit of evolutionary selection is the gene (Dawkins 1976). Together these two books brought the new evolutionary theories about human behaviour to a wide and diverse audience. They caused a furore of interest, and not a little controversy (Rose and Rose 2000). Some of the controversy arose from Dawkins’s provocative but potentially misleading title. What many people took from the title (and Dawkins himself sometimes implied) is that the selfishness of the human species is indelibly written in our genes and there is nothing much to do about it. However, even on a strict biological reading of the evidence this does not quite stack up. It is only true to the extent that another completely different sentence is also true; namely, that our altruism is also indelibly written in our genes and there is not much we can do about it. What Hamilton and others had shown was that the ‘selfishness’ of the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 529

01/06/2017 16:51

530  Handbook on growth and sustainability gene is entirely consistent with the unselfishness of human beings. Even if the primary ‘aim’ of the gene is its own genetic continuance – which by the way is a highly anthropomorphic interpretation of gene selection – it is entirely mistaken to assume that human motivations are all selfish. Evolution does not preclude moral, social and altruistic behaviours. On the contrary, social behaviours evolved in humans precisely because they offer selective advantages to the species (Wright 1994; Ridley 1996). This simple insight leads to a much more nuanced view of what it means to be human. Selfishness clearly exists, but so, undeniably, does altruism. Both kinds of behaviours are genetically possible in us. Both had evolutionary advantages to our species over long periods of time. Selfishness served us well under conditions of fight or flight. However, altruism was fundamental to our evolution as social beings. All of us are to a greater or lesser extent torn between the two. Neither has absolute reign over the other. Evolutionary psychology describes a tension in the human psyche between self-regarding and other-regarding values. Equally interesting, from the perspective of understanding consumerism, it also recognizes another tension; between novelty-seeking values and conservative or traditional values. The first is adaptive in fastchanging conditions, but the second is absolutely vital in providing the stability needed to raise families and form cohesive social groups. The psychologist Shalom Schwartz and his colleagues have formalized these insights into a theory of underlying human values. Using a scale that has now been tested in over 50 countries, Schwartz suggests that our values are structured around two distinct tensions (Figure 23.1) in our psychological make-up: between selfishness (self-enhancement, in Schwartz’s scheme) and altruism (self-transcendence) on the one hand; and between novelty (or openness to change) and tradition (or conservation) on the other (Schwarz 1999, 2006). This evolutionary map of the human psyche is revealing about the challenge of achieving a sustainable prosperity. What we have created in consumer capitalism is an economy which privileges, indeed systematically encourages, one specific aspect of human behaviour, characterized by the upper-right quadrant in Figure 23.1. We have done this in part, as a result of a massive misconception, arising from a very particular set of intellectual ideas. However, this misconception has given rise to an economy which is itself best served by selfish, novelty-seeking behaviour. When consumption falters, disaster beckons. This combination of intellectual conceit and structural weakness has created a self-fulfilling prophecy. As the game theorist Robert Axelrod once demonstrated, the balance of behaviours in a society depends on how that society is structured (Axelrod 1984). When technologies, infra-

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 530

01/06/2017 16:51

Beyond consumer capitalism  ­531

Novelty

Other Self

Tradition

Source:  Author’s depiction of the Schwartz (1999) circumplex.

Figure 23.1  Evolutionary tensions in the human psyche structures, institutions, and social norms all reward self-enhancement and novelty, then selfish sensation-seeking behaviours prevail over more conservative, altruistic behaviours. However, where social structures favour altruism, self-transcending behaviours are rewarded and selfish behaviours are penalized. Each society strikes this balance between altruism and selfishness (and between novelty and tradition) in different places, and where this balance is struck depends crucially on social structure. In the normal course of events, social conditions determine the rules by which ordinary people seek to live. Culture shapes and constrains our lives. When things are working well, social structures are properly aligned with collective values and provide a cultural framework within which people can flourish, allowing us to live meaningful, purposive lives. When things go badly, institutional structures wage war on human values, undermining prosperity and damaging society. This, I argue, is precisely where we find ourselves. It explains the restless dissatisfactions of consumerism. It motivates the rise of a value-led simplicity, and it chimes with a long succession of insights into the human

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 531

01/06/2017 16:51

532  Handbook on growth and sustainability condition from religion, from philosophers, from wisdom traditions, from poetry, from literature and from art; we are not and never were entirely the selfish hedonists that consumer capitalism expects and needs us to be. A simple and yet ferociously destructive misconception of human nature lies at the heart of consumer capitalism. Correcting that misconception opens out new avenues for change, offers an alternative vision of prosperity, and suggests clear directions for the transformation of our economies.

FOUNDATIONS FOR THE ECONOMY OF TOMORROW Prosperity transcends material concerns. Of course the good life has undeniable material dimensions. It is perverse to talk about things going well when there is inadequate food and shelter. However, it is also plain to see that the simple equation of prosperity with abundance is false even when it comes to these simple material requirements. Even when it comes to questions of sustenance, more is not always better. Quality is not the same as quantity. Prosperity has vital social and psychological dimensions. To do well is in part about our ability to give and receive love, to enjoy the respect of our peers, to contribute useful work, to feel secure in the face of uncertainty, to have a sense of belonging and trust in our community. In summary, an important component of prosperity is the ability to participate meaningfully in the life of society. Prosperity consists in the capabilities we have to flourish as human beings on a finite planet (Jackson 2017). The economy must deliver these capabilities (Jackson and Victor 2013). Beyond the production and delivery of goods and services, this task involves enhancing social well-being and protecting environmental integrity. Stability in markets, security in employment, ecological integrity, sustainability in supply chains, fairness; these are some of the conditions on which present and future prosperity depends. In the second half of this chapter, I develop briefly the economic dimensions of sustainable prosperity: the role of enterprise, the quality of work, the structure of investment and the role of the money supply. Taken together, I argue, these four elements hold the potential for a radical transformation of consumer capitalism and offer solid foundations for the economy of tomorrow. The Role of Enterprise Economic activities need to provide the capabilities for people to flourish in their community, socially and psychologically as well as materially. At

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 532

01/06/2017 16:51

Beyond consumer capitalism  ­533 the same time, these activities must provide decent, satisfying livelihoods for people. Employment matters in any economy. Finally, of course, economic activity must be low in carbon, efficient in resource use and ‘tread lightly’ on the Earth. Enterprise must provide the capabilities for flourishing without destroying the ecological conditions on which our future prosperity depends. These few characteristics provide the basis for a new vision of enterprise: not as a speculative, profit-maximizing, resource-intensive division of labour, but as a form of social organization embedded in the community, engaged in delivering services that improve our quality of life. The idea of ‘enterprise as service’ has a surprising pedigree. The concept of energy services is already a familiar way of looking at the energy system (Jackson 1992). The same broad idea can be applied to housing, to transport, to nutrition (Jackson 1996). Beyond these material needs, prosperity is as much about social and psychological functioning – identity, affiliation, participation, creativity and experience – as it is about material stuff. Often we try to employ material products and services to satisfy these needs, with higher and lower degrees of success, but the needs themselves are not inherently material and it is mistaken to cast enterprise solely in terms of the throughput of material stuff. Consumer capitalism also recognizes a variety of different kinds of service-based enterprise. Digital and electronic services, for example, are often supposed to offer hope for a highly dematerialized world (Füchs 2015). The evidence for this tends not to be as strong as we might like it to be (Hogg and Jackson 2009). However, there is very definitely a subset of service-based activities which offer multiple dividends for a sustainable prosperity. These activities tend to focus on ‘human services’, such as health, education and social care, or are located in the sectors of craft and culture. Taken together with the ‘servicization’ of material sectors, such as energy or housing, these activities offer a real potential for transforming the economy, in ways which reduce material throughput, increase employment and contribute positively to the quality of our lives (Jackson 2017). Not all of these activities have to be delivered through formal private sector enterprise. Some will require public sector involvement. Many of them flourish best in the form of local, community-based social enterprise: community energy projects, local farmer’s markets, slow food cooperatives, sports clubs, libraries, community health and fitness centres, local repair and maintenance services, craft workshops, writing centres, outdoor pursuits, music and drama, yoga, martial arts, meditation, hairdressing, gardening, and the restoration of parks and open spaces. People often achieve a greater sense of well-being and fulfilment, both as producers and as consumers of these activities, than they do in the

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 533

01/06/2017 16:51

534  Handbook on growth and sustainability t­ ime-poor, materialistic, supermarket economy in which much of our lives is spent (Castel et al. 2011). Nor is it simply the outputs from these activities that make a positive contribution to flourishing. The form and organization of our systems of provision also matters. Economic organization needs to work with the grain of community and the long-term social good, rather than against it (Jackson and Victor 2013; Alperovitz 2013). In summary, this vision of enterprise offers a kind of blueprint for a different kind of economy. It provides for our ability to flourish. It offers the means to a livelihood and to participation in the life of society. It promises security, a sense of belonging, the ability to share in a common endeavour and yet to pursue our potential as individual human beings. At the same time it offers a decent chance of remaining within ecological scale. The Quality of Work Work is more than just the means to a livelihood. It is also a vital ingredient in our connection to each other – part of the ‘glue’ of society. Good work offers respect, motivation, fulfilment, involvement in community and in the best case a sense of meaning and purpose in life. The conventional economic view sees work as a sacrifice of our time, leisure and comfort, and wages as a ‘compensation’ for that sacrifice. This leads to perverse outcomes for both workers and entrepreneurs. As Schumacher points out, ‘the ideal from the point of view of the employer is to have output without employees, and the ideal from the point of view of the employee is to have income without employment’ (Schumacher 1973, p. 39). This perverse dynamic is internalized in the modern economy through the pursuit of labour productivity; the desire continually to increase the output delivered by each hour of working time. Rising labour productivity is often viewed as the engine of progress in modern capitalist economies, but the relentless pursuit of increased labour productivity also presents society with a profound dilemma. As each hour of working time becomes more ‘productive’, fewer and fewer people are needed to deliver any given level of economic output. At the macroeconomic level this dynamic is punishing. If our economies fail continually to expand, we risk putting people out of work. Higher unemployment reduces spending power in the economy and generates rising welfare costs. Higher welfare costs lead to unwieldy levels of government debt. Higher sovereign debt tends to reduce public spending, depressing demand still further. When economic growth is hard to come by, for whatever reason, the dynamic of rising labour productivity is a harsh mistress (Jackson 2017, ch. 6).

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 534

01/06/2017 16:51

Beyond consumer capitalism  ­535 There are broadly speaking, two avenues of intervention through which to escape from this ‘productivity trap’ (Jackson and Victor 2011). One is to accept productivity growth in the economy and reap the rewards in terms of reduced hours worked per employee – that is, to share the available work among the workforce (Hayden 1999; Victor 2008). The second strategy is to ease up on the accelerator of ever-increasing productivity; that is, to shift economic activity to more labour intensive sectors. Interestingly, both these avenues have some precedence in economic thought. Proposals to shorten the working week are enjoying something of a revival as a way of maintaining full employment with declining output (NEF 2013), but the idea has a surprisingly long pedigree. In an essay entitled Economic Possibilities for Our Grandchildren, John Maynard Keynes (1930) foresaw a time when we would all work less and spend more time with our family, our friends and our community. A telling example of the success of this strategy is the case of Trumpf, a machine-tool maker in the south German city of Ditzingen. The company managed to get through the financial crisis without laying off any of its 4000 German workers, while the same company laid off 90 of 650 workers in the United States. The difference was that in Germany Trumpf could take advantage of government incentives to reduce worker hours rather than lay off people (Ewing 2010). Reining in the relentless increase in labour productivity offers a compelling alternative to a reduction in working hours. If labour productivity is no longer continually increasing, and possibly even declining, then the pressure on jobs is considerably lower. By shifting to a lower productivity economy we have within our grasp the means to maintain or increase employment, even as the growth in the output of the economy slows down. If this option sounds perverse at first, it is probably because we have become so conditioned by the language of efficiency. Output is everything. Time is money. The drive for increased labour productivity occupies reams of academic literature and haunts the waking hours of chief executive officers (CEOs) and finance ministers across the world. Quite apart from this ideological tenacity, our ability to generate more output with fewer people has lifted our lives out of drudgery. Who nowadays would prefer to keep their accounts in longhand, wash hotel sheets by hand or mix concrete with a spade? There are places where chasing labour productivity growth makes much less sense. Certain kinds of tasks rely inherently on the allocation of ­people’s time and attention. The care and concern of one human being for another, for instance, is a peculiar ‘commodity’. It cannot be stockpiled. It is not deliverable by machines. Its quality rests primarily on the attention

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 535

01/06/2017 16:51

536  Handbook on growth and sustainability paid by one person to another. Compassion fatigue is a rising scourge in a health sector hounded by meaningless productivity targets. Craft is another example. It is the accuracy and detail inherent in crafted goods that endows them with lasting value. It is the attention paid by the carpenter, the tailor and the designer that makes this detail possible. Likewise it is the time spent practising, rehearsing and performing that gives art its enduring appeal. What – aside from meaningless noise – is to be gained by asking the New York Philharmonic to reduce their rehearsal time and play Beethoven’s Ninth Symphony faster and faster each year (Jackson 2012)? Fascinatingly, these sectors of the economy – care, craft and culture – are among the ‘human services’ that stand at the heart of the vision of enterprise set out above. In summary, achieving full employment may have less to do with chasing after endless productivity growth and more to do with building local economies based around care, craft and culture; and in doing so, restoring the value of decent work to its rightful place at the heart of society. The Structure of Investment Investment embodies one of the most important relationships in economics, the relationship between the present and the future. The fact that people set aside a proportion of their income for investment at all reflects a fundamentally prudential aspect of human nature. We care not just about our present happiness but also about our future well-being. Prosperity today means little if it undermines prosperity tomorrow. Investment is the vehicle through which we build, protect and maintain the assets on which tomorrow’s prosperity depends. In the conventional economy, private investment is directed towards three main objectives. First, it aims to maintain (and where necessary replace or expand) the existing stock of fixed assets. Secondly, it attempts to improve the productivity of those assets – most often, as we have noted, through the pursuit of increased labour productivity. Finally, investment is directed towards the creation and re-creation of new markets for new consumer products – Schumpeter’s ‘creative destruction’. The result is a portfolio of investments dominated by resource extractive industries and environmentally damaging material flows. Beyond these physical or ‘real’ investments, of course, much of the investment activity in consumer capitalism takes the form of speculation in property, commodities or asset prices. The financial crisis bore witness to a kind of casino capitalism, gambling on the future, at the expense of financial and social stability.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 536

01/06/2017 16:51

Beyond consumer capitalism  ­537 A robust investment strategy must have a different focus. The provision of our basic material needs is still the baseline for investment, but beyond this baseline we need investment in health, in education, in social care, in leisure and recreation, in green spaces, lakes and rivers, parks and gardens, and in community halls, concert halls, theatres, museums and libraries. The broad aim of this portfolio is to build and maintain the physical assets through which individuals can flourish and communities can thrive – with as little in the way of material throughput as possible. Very few – it is tempting to say not a single one – of the services on which prosperity depends can do away with material and energy inputs completely. Healthcare requires medicines and life-saving equipment. Education needs books and computers. Musicians need instruments. Gardeners need tools and fertilizers. Even the lightest recreation activities – dance, yoga, tai chi, martial arts – require an appropriately maintained space for interaction. More obviously, people need homes, clothes, nutrition and mobility. That is, there is an irreducible material element within even the most dematerialized vision of enterprise. However, it is also clear that dramatic improvements in the material and energy efficiency of economic activity are possible (EMF 2015; Füchs 2016). Technological improvements in resource productivity, enhancements in energy efficiency, and the substitution of renewable energy for fossil-fuelled energy; these conventional ‘green’ investments are an essential component of the economy of tomorrow. There are numerous examples of this kind of investment in practice (Capital Institute 2011; UNEP 2012, 2016). Triodos Bank – an innovative ethical bank founded in the Netherlands in 1980 – was one of the pioneers in this space. The bank currently finances over 300 local renewable energy projects in Europe generating over 1600 megawatts of electricity (Triodos 2016). In a sense, these low-carbon initiatives are not just investments in the physical infrastructure of energy services; we could accurately say that they are also investments in the ecological asset provided by the climate itself. More generally, maintaining ecological assets requires ecological investment. Forests, grasslands, wetlands, lakes, oceans, soils and the atmosphere itself are all essential in providing the services on which life itself depends (TEEB 2012). The economic value of these services is difficult to calculate, but the integrity of the underlying ecology is vital to human prosperity. In summary, a robust portfolio of investment needs to be focused on the protection and maintenance of the assets on which future prosperity depends. Interestingly, however, simplistic prescriptions in which

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 537

01/06/2017 16:51

538  Handbook on growth and sustainability i­nvestment contributes to future productivity may not work here. Investment in long-term, public goods will have to be judged against criteria other than financial market success. This may also mean rethinking the ownership of assets and the distribution of surpluses from them. Perhaps the biggest challenge for this new portfolio of investment is the question of financing. It is to this subject that we now turn. The Role of Money So far, I have focused mainly on what is called the ‘real economy’ – the patterns of production, consumption, employment government spending and investment in the economy. The ‘money economy’ is a term used to describe the wider set of financial flows on which the real economy depends. This wider set of financial accounts includes the flow of money into and out of different economic sectors, the processes of borrowing, lending, creating money (the money supply), and the changes in the financial assets and liabilities of different economic actors. These money flows are essential to the financing of investments in the real economy. Few economists foresaw that the massive expansion of commercial debt-based money could destabilize the money system as a whole. To most non-economists, the nature of the money system often comes as a complete surprise. We tend to think of money as something printed (or brought into existence electronically) by the Central Bank more or less under the control of the government. The reality is that only a small proportion of the money supply (less than 5 per cent in most Western economies) is created in this way. Most money circulating in the economy today is created by commercial banks, almost literally ‘out of nothing’. When a bank agrees to create a loan to a business or a household it simply enters the amount as a loan on the asset side of its balance sheet and the same amount as a deposit on the liability side of its balance sheet. This deposit is then available to spend on goods and services in the economy. Banks create money by making loans (Wray 2012; Jackson and Dyson 2013). The crisis was a direct result of this money system. In the preceding decade, the banks had extended increasing levels of credit to people who could increasingly not afford to repay it. They failed to maintain enough resilience in their balance sheet to protect themselves. In the language of financial markets, they were ‘over-leveraged’. When households began to default on loans, a rapid decline in the asset value of the banks in relation to their liabilities triggered a massive loss of confidence in the market. One after another, the most vulnerable banks found their balance sheets ‘under water’, with liabilities vastly exceeding assets (Turner 2015; Wolf 2015). It became apparent through the crisis that sustainability – indeed, basic

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 538

01/06/2017 16:51

Beyond consumer capitalism  ­539 economic security – depends on a healthy financial system. Prosperity itself depends on a properly functioning money system. Transforming the financial system is a clear priority. Though it is beyond the scope of this chapter to expand on that task in detail, it is worth highlighting three particularly important social innovations which are supported strongly by the analysis here. The first is impact investing – the reinvestment of private net savings into the economy. The second is community banking and credit unions – the implementation of local savings and investment vehicles that plough benefits directly back into the community. The third is the reconfiguring of the money supply itself, reclaiming control of the money supply from commercial interests and returning it to either the public sector (government) or the community. There are positive examples in support of each of these innovations. Impact investing – the channelling of investment funds towards ethical, social and sustainable companies, technologies and processes – is an increasingly important element in the architecture of the economy. This kind of investment was in the past seen more as a form of philanthropy. However, as the Capital Institute (2012, p. 1) remarked, it should be seen as a vital complement both to philanthropy and to government funding: ‘a way to leverage secure philanthropic and public sector dollars, while harnessing the power of social entrepreneurs and market-based solutions to solve some of the world’s most intractable problems’. The Patient Capital Collaborative is an innovative United States-based initiative to help ‘angel investors’ nurture and fund start-up companies aiming to have a positive social and environmental impact in the world (Capital Institute 2012, p. 1). At the very local level, this kind of initiative merges with the second innovation. Community banking is about mobilizing the savings of ordinary people at community level to provide investment funds for social or environmental finance. Community banks allow people to invest in their own community – for example in low-carbon energy, or in community amenities, and at the same time ensure that the returns from those investments remain within the community. Credit unions are typically smaller, more local and often designed specifically to be non-profit making institutions. They therefore offer a particularly appropriate vehicle for investment at community-scale and are beginning to be adopted for this purpose. The third avenue for steering finance towards sustainable investment concerns the money supply itself. There are some rather strong arguments in favour of changing the existing debt-based money system and returning a greater degree of control over the money supply to government (Jackson

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 539

01/06/2017 16:51

540  Handbook on growth and sustainability and Victor 2015; Strunz et al. Chapter 15 in this volume). Some of these arguments have a surprising pedigree. The so-called Chicago plan – in which calls for 100 per cent backing of deposits with government-issued money – was first put forward in the 1930s by Irving Fisher and supported most notably by the Nobel laureate Milton Friedman. The idea has been revived recently in a working paper from the International Monetary Fund which points to several advantages of the plan, including its ability to better control credit cycles, eliminate bank runs, and dramatically reduce both government debt and private debt. In addition, returning control of the money supply to the state would allow governments to invest directly in the green economy without punitive interest payments (Benes and Kumhof 2012). The economy of tomorrow demands a different financial landscape from that which led to the financial crisis of 2008–09. Long-term security has to be prioritized over short-term gain. Social and ecological returns must be factored into investment decisions alongside conventional financial returns. Improving the ability of people to invest their savings locally, to the benefit of their own community, is paramount. To sum up, reforming capital markets is not just the most obvious response to the financial crisis, it is also an essential foundation for sustainable prosperity.

TOWARDS A SUSTAINABLE PROSPERITY The boom-and-bust, growth-obsessed economics of the last century has created financial instability, increased social inequality and led to unsustainable environmental damage. Austerity has exacerbated these dangers. In chasing prosperity through relentless material consumption, modern capitalism has sown the seeds of its own collapse. None of this is inevitable. As I have argued in this chapter, the dimensions of a different kind of economy can be derived from simple first principles. Sustainable prosperity is consistent with a more robust view of human nature. Four distinct economic innovations – the nature of ­enterprise, the value of work, the structure of investment and the role of money – provide solid foundations for the economy of tomorrow. All of these considerations flow from a simple understanding that the economy is not an end in itself but a means towards prosperity. The transition from unfettered consumerism to sustainable prosperity is a precise, definable and meaningful task. In understanding prosperity as a social and psychological condition, as much as a material condition, we have opened up an intriguing possibility:

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 540

01/06/2017 16:51

Beyond consumer capitalism  ­541 that material limits do not in themselves constrain prosperity. With appropriate attention to these limits, it may be possible to improve the quality of our lives even as we reduce their impact on the environment, to live better while consuming less, to have more fun, with less stuff. The idea that humans can flourish and at the same time consume less is tantalizing. It would be foolish to think that it is easy to achieve. Equally, it should not be given up lightly. It may well offer the best prospect we have for a meaningful and lasting prosperity. It is at least a guiding vision to take us beyond a reckless and unsatisfying consumer capitalism. The challenge for the economy is to create the conditions under which this transformation is possible. Prosperity, ultimately, is the art of living well on a finite planet. It is about the quality of our lives and relationships, about the resilience of our communities, and about our sense of individual and collective meaning. As the word itself suggests, prosperity is about hope. Fulfilling that hope remains a task worth engaging in.

REFERENCES Alperovitz, G. (2013), What Then Must We Do? Straight Talk about the Next American Revolution, White River Junction, VT: Chelsea Green. Axelrod, R. (1984), The Evolution of Cooperation, New York: Basic Books. Barwell, R. and O. Burrows (2011), Growing Fragilities – Balance Sheets in the Great Moderation, London: Bank of England. Baumol, W., R. Litan and C. Schramm (2007), Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity, Newhaven, CT and London: Yale University Press. Benes, J. and M. Kumhof (2012), The Chicago Plan Revisited, Washington, DC: International Monetary Fund. Booth, D. (2004), Hooked on Growth – Economic Addictions and the Environment, New York: Rowman and Littlefield. Breakthrough Institute (2015), An Ecomodernist Manifesto, Oakland, CA: Breakthrough Institute. Capital Institute (2011), ‘Evergreen cooperatives – field study no 2. A field guide to investment in a resilient economy’, Capital Institute, New York, accessed 11 March 2017 at http://fieldguide.capitalinstitute.org/the-evergreen-cooperatives-fg.html. Capital Institute (2012), ‘The Patient Capital Collaborative – a field guide to investment in a resilient economy’, Capital Institute, New York, accessed 11 March 2017 at http://­ fieldguide.capitalinstitute.org/uploads/1/3/9/6/13963161/ppcepub.pdf. Castel, D., C. Lemoine and A. Durand-Delvigne (2011), ‘Working in cooperatives and social economy: effects on job satisfaction and the meaning of work’, Perspectives interdisciplinaires sur le travail et la santé, 13-2, accessed 11 March 2017 at http://pistes.revues.org/2635. D’Alisa, G., F. Damaria and G. Kallis (eds) (2014), Degrowth: A Vocabulary for a New Era, London: Routledge. Darwin, C. (1859), The Origin of Species by Means of Natural Selection, reprinted 1968, London: Penguin Classics. Darwin, C. (1892), The Autobiography of Charles Darwin and Selected Letters, F. Darwin (ed.), reprinted 1958, New York: Dover. Dawkins, R. (1976), The Selfish Gene, Oxford and New York: Oxford University Press.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 541

01/06/2017 16:51

542  Handbook on growth and sustainability De Mandeville, B. (1989), The Fable of the Bees, London: Penguin. Deléage, J.-.P, J.-C. Debeir and D. Hemery (1991), In the Servitude of Power: Energy and Civilisation through the Ages, London: Zed Books. Douthwaite, R. (1999), The Growth Illusion – How Economic Growth Has Enriched the Few, Impoverished the Many and Endangered the Planet, Totnes: Green Books. Durkheim, E. (1903), Suicide, reprinted 2002, London: Routledge. Ellen McArthur Foundation (EMF) (2015), ‘Towards a circular economy: business rationale for an accelerated transition’, Ellen McArthur Foundation report, Cowes, Isle of Wight. Ewing, J. (2010), ‘In Germany, a broad recovery is under way’, New York Times, 3 August, accessed 27 February 2017 at http://www.nytimes.com/2010/08/04/business/global/04​ dmark.html?ref5business&_r50. Füchs, R. (2015), Green Growth, Smart Growth: A New Approach to Economics, Innovation and the Environment, London and New York: Anthem Press. Godwin, W. (1793), Enquiry Concerning Political Justice and its Influence on Modern Morals and Happiness, London: G.G. and J. Robinson. Hall, P. and D. Soskice (2001), Varieties of Capitalism: The Institutional Foundations of Competitive Advantage, Oxford: Oxford University Press. Hamilton, W. (1963), ‘The evolution of altruistic behaviour’, American Naturalist, 97 (896), 354–6. Hamilton, W. (1964), ‘The genetical evolution of social behaviour’, Journal of Theoretical Biology, 7 (1), 1–52. Hamowy, R. (2008), The Encyclopedia of Libertarianism, Thousand Oaks, CA: Sage. Harvey, D. (2014), Seventeen Contradictions and the End of Capitalism, London: Profile Books. Hayden, A. (1999), Sharing the Work, Sparing the Planet – Work Time, Consumption and Ecology, London: Zed Books. Hobsbawm, E. (1968), Industry and Empire, reprinted 1999, London: Penguin. Hogg, N. and T. Jackson (2009), ‘Digital media and dematerialization an exploration of the potential for reduced material intensity in music delivery’, Journal of Industrial Ecology, 13 (1), 127–46. Jackson, A. and B. Dyson (2013), Modernising Money: Why Our Monetary System is Broken and How It Can Be Fixed, London: Positive Money. Jackson, T. (1992), Efficiency without Tears: No Regrets Strategies to Combat Climate Change, London: Friends of the Earth. Jackson, T. (1996), Material Concerns: Pollution, Profit and Quality of Life, London and New York: Routledge. Jackson, T. (2010), ‘An economic reality check’, TEDTalk, accessed 11 March 2016 at http:// www.ted.com/talks/tim_jackson_s_economic_reality_check. Jackson, T. (2012), ‘Let’s be less productive’, New York Times, 27 May, accessed 11 March 2017 at http://www.nytimes.com/2012/05/27/opinion/sunday/lets-be-less-productive.html?_r50. Jackson, T. (2017), Prosperity without Growth – Foundations for the Economy of Tomorrow, New York and London: Routledge. Jackson, T. and P. Victor (2011), ‘Productivity and work in the new economy – some theoretical reflections and empirical tests’, Environmental Innovation and Societal Transitions, 1 (1), 101–8. Jackson, T. and P. Victor (2013), Green Economy at Community Scale, Ontario: Metcalf Foundation. Jackson, T. and P. Victor (2015), ‘Does credit create a growth imperative? A quasi-steady state economy with interest-bearing debt’, Ecological Economics, 120, 32–48, accessed 12 March at http://dx.doi.org/10.1016/j.ecolecon.2015.09.009. Kallis, G. (2015), ‘The degrowth alternative, essay for the Great Transition Initiative’, accessed 11 March 2017 at http://www.greattransition.org/publication/the-degrowth-alternative. Keynes, J.M. (1930), Economic Possibilities for our Grandchildren. Essays in Persuasion, New York: W.W. Norton.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 542

01/06/2017 16:51

Beyond consumer capitalism  ­543 Locke, J. (1690), An Essay Concerning Human Understanding, reprinted 1997, London: Penguin Classics. Luxemburg, R. (1913), The Accumulation of Capital, reprinted 2003, London: Routledge Classics. Malthus, T. (1798), An Essay on the Principle of Population, as it Affects the Future Improvement of Society, with Remarks on the Speculations of Mr Godwin, M. Condorcet and Other Writers, London: J. Johnson. Marx, K. (1867), Capital: A Critique of Political Economy, vol. 1, reprinted 2004, London: Penguin. Mill, J.S. (1863), Utilitarianism, reprinted 1906, Chicago, IL: University of Chicago Press. Mill J.S. (1869), On Liberty, reprinted 2006, London: Penguin. Millennium Ecosystem Assessment (MEA) (2005), Ecosystems and Human Wellbeing: Current States and Trends, Washington DC: Island Press. Mirowski, P. (1989), More Heat than Light: Economics as Social Physics; Physics as Nature’s Economics, Cambridge: Cambridge University Press. New Economics Foundation (NEF) (2013), Time on Our Side: Why We All Need A Shorter Working Week, London: New Economics Foundation. Perez, C. (2003), Technological Revolutions and Financial Capital, the Dynamics of Bubbles and Golden Ages, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Philipsen, D. (2015), The Little Big Number: How GDP Came to Rule the World and What to Do about It, Princeton, NJ: Princeton University Press. Polanyi, K. (1944), Great Transformation – the Political and Economic Origins of Our Time, reprinted 2002, Uckfield: Beacon Press. Ridley, M. (1996), The Origins of Virtue, London: Penguin Books. Robinson, E. (1948), Monopoly, first printed 1941, Cambridge: Cambridge University Press. Rose, H. and S. Rose (2000), Alas, Poor Darwin – Arguments Against Evolutionary Psychology, London: Jonathon Cape. Schumacher, E. (1973), Small is Beautiful: A Study of Economics as if People Mattered, reprinted 1993, London: Vintage Books. Schumpeter, J. (1975), Capitalism, Socialism and Democracy, New York: Harper Row. Schwartz, S. (1999), ‘A theory of cultural values and some implications for work’, Applied Psychology, 48 (1), 23–47. Schwartz, S. (2006), ‘Value orientations: measurement, antecedents and consequences across nations’, in R. Jowell, C. Roberts, R. Fitzgerald and G. Eva (eds), Measuring Attitudes Cross-nationally – Lessons from the European Social Survey, London: Sage, pp. 161–93. Smith, A. (1776), An Inquiry into the Nature and Causes of the Wealth of Nations, bk 4, ch. 2, reprinted 1937, New York: Modern Library. Sterling, P. (2016), ‘Why we consume: neural design and sustainability. A Great Transition viewpoint’, Great Transition Network, accessed 11 March 2017 at http://www.greattransi​ tion.org/publication/why-we-consume. Stuckler, D. and S. Basu (2014), The Body Economic: Eight Experiments in Economic Recovery from Iceland to Greece, London: Penguin. The Economics of Ecosystems and Biodiversity (TEEB) (2012), The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations, London: Routledge. Triodos (2016), ‘Why Triodos?’, accessed 11 March 2017 at http://www.triodos.com/ en/investment-management/impact-investment/looking-for-funding/renewable-energy/ why-triodos/. Turner, A. (2015), Between Debt and the Devil. Money, Credit and Fixing Global Finance, Princeton, NJ: Princeton University Press. United Nations Environment Programme (UNEP) (2012), Towards a Green Economy, Paris: United Nations Environment Programme. United Nations Environment Programme (UNEP) (2016), Global Trends in Renewable Energy Investment 2016, Paris: United Nations Environment Programme, accessed 11 March 2017 at http://fs-unep-centre.org/sites/default/files/publications/globaltrendsinre​ newableenergyinvestment2016lowres_0.pdf.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 543

01/06/2017 16:51

544  Handbook on growth and sustainability Victor, P. (2008), Managing without Growth – Slower by Design, Not Disaster, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Whybrow, P. (2015), The Well-Tuned Brain: Neuroscience and the Life Well Lived, New York: W.W. Norton. Wilson, E.O. (1975), Sociobiology – the New Synthesis, Cambridge, MA: Harvard University Press. Wolf, M. (2015), The Shifts and the Shocks: What We Learned from the Financial Crisis and What We Still Have to Learn, London: Penguin. Wray, R. (2012), Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems, New York and London: Palgrave Macmillan. Wright, R. (1994), The Moral Animal – Why We Are the Way We Are, London: Abacus.

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 544

01/06/2017 16:51

Index absolute advantage 106 absolute decoupling 47, 51, 115, 269 GHG emissions and economic growth 143 green growth 195 mercury releases, sewage discharges, ozone depletion substances 49 pollutant for climate change 117 absolute demand for electricity 196 ‘acceptable rate of species loss’ 5 accountability loss in economic relationships 526 accounting for economic sustainability 67–74 accounts in longhand 535 acidification ‘critical loads’ 49 advance money, interest and dividend 336 advertising executives promotion of excessive consumption 321 aesthetic value of craftwork 452 affluence, increased 42–3, 382 afforestation 148 African macro-climate 507 agents of transformation, natural resources 91 age of oil, petroleum, natural gas 239 aggregate growth gross domestic product (GDP) 85 Aggregate Industrial Output 33 aggregate resource throughput no good independent measure 88 agrarian to industrial mode 382 socio-metabolic transitions 286 agricultural and energy sectors 227–8 agricultural intensification 287 pressures on freshwater, nitrogen 295 agricultural pollution in developing countries 259 agricultural productivity, linear growth trajectory 107

agriculture animal husbandry 238 biosphere integrity (genetic diversity) 257 intensive 244 land-system change 257 agriculture sector decisions on land use, livestock, energy and water use 226 interdependencies of decisions 225 slow depletion and exhaustion of soils 238 agroindustry responsible for world deforestation 479 agrowth 3, 7, 176, 192, 194, 200–201 “growth no matter what”, not wise 188–9 positive macroeconomic feedback and crises 191–3 solve information failure 188–90 agrowth strategy 181, 193 logical consequence of GDP criticism 203–4 modest 206 political feasibility 200 air emissions, air pollution index 115 air pollution, reduction 145 alternative behaviour, not-for-profit trade 345 alternative development strategies 223 ‘alternative’ economic practice in Barcelona volunteering 172–3 altruism in our genes 529–30 American mass consumption over Soviet-style socialism 424 amino acid lysine 235 anatomy discoveries 26 ancient authors over moderns, Sophocles over Racine 26–7 ancient traditions, new (old) approach 19

545 Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 545

01/06/2017 16:51

546  Handbook on growth and sustainability Anglo-centric nations, ‘liberalized markets’ 522 animal feeding operations, concentrated (CAFOs) 263 animal products, high intakes 258 in diets, reduction of 292 sugar and fat 261 animal protein, reduced consumption taxes on meat, meatless days 270 animals (including humans) need energy-rich organic substances 284 Annex-I nations, “planned austerity” 151 Antarctic ozone hole 409 anterior cingulate cortex brain region for error detection 505 Anthropocene, humanity and the biosphere 440 anthropocentric view, ecological sustainability 62 anthropocentrism, Eurocentrism 472 anthropologist, Joseph Tainter on collapse in human societies evolving 515 anti-growth and degrowth strategies 197–200 anti-growth approach zero growth for the environment 181 anti-growth view, unconditional 205 anti-pollution initiatives 50 anxiety disorders from excessive consumption 321 appropriation of nature 472 Arctic exploration and development 241 Arctic sea ice 138 Argentina, average income fall 476 Aristotle, On the Generation of Animals 29 Aristotle’s alternative 22 art funding, practising, rehearsing, performing 1, 536 Asian coal consumption, large increase 243 atmospheric pollution (from livestock, fertilizers, fuel combustion) 258 austerity measures, in social services enforcement 492, 524, 540

Australia one of world’s largest emitters of carbon 224 authentic development, promotion 55 avoidance of dangerous climate change agrowth 189 Babylonian exile circa 500 bc 23 Bacon, Francis (1561–1626) moderns achieved more than ancients 27 ‘barbaric’ first phase of industrialism Paleotechnic 1700–1900 457 Barcelona, alternative networks for basic needs 172 battery production advanced 50 beehive thriving, bees honest and virtuous 527 Berlin Wall fall 1989 522 Better Growth, Better Climate report 141, 152 climate-action agenda 153 lead role of Stern 144 biocapacity, technology-dependent 282–3 biocapacity of land, of wheat in Germany 282 biocapacity of planet, transgressed since 1970s 64 biodiversity loss 3, 43, 95, 114, 153 Latin America 477 more than 10 extinctions per million a year 62 biodiversity protection 52 bioenergy, carbon capture and storage (BECCS) unproven technology 148–9 bioenergy, large-scale conflict with food production 149 ecosystem destruction 149 massive land requirements 149 water demands 149 bioenergy production 290 biogas production from energy crops and manure 226 biogeochemical flows nitrogen and phosphorus cycles 153 biological process of energy 233 biology, parent discipline of ecology 98

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 546

01/06/2017 16:51

Index  ­547 biomass balance model (BioBaM) 290–92 biomass for energy supply 287 biomass fuel 120 biomass of domestic animals 502 biomass production 228 biomass supply biophysical option spaces 289–92 biophysical constraints 42, 43 on human welfare 230 biophysical limits entering public consciousness 405–6 to modernization 449–52 biophysical metabolism 378–85 biophysical prerequisites to human survival students not learning 415 biophysical requirements of human populations 385 bioregionalism 452 biosphere degradation 112 biosphere, limited energy 453 birth control program Iran, religious leadership, 1979 389 birth rates and death rates 100 body mass index (BMI) 264 children and adults, USA, UK, Australia 258 body mass index changes Mexico, Chile, South Africa 268 Bolivarian Revolution of Venezuela socio-economic life 483 Bolivia, indigenous peoples 486 Bolivia’s water 477 brain of Homo sapiens 503–4 Brazil average income fall 476 breathing, substitute for, madman’s search 34 Bremen/Oldenburg Metropolitan Region 228 dynamic simulation tool 225 British Columbia HD Mining Chinese miners for five years 306 Brundtland Commission 1983 definition of sustainable development 75 global environmental problems 409 Buddhist tradition of Maitreya, future Buddha 21, 23 Bulgarian floods 167

business value increases unsustainable patterns of production 52 campesinos, rural workers, Venezuela 474, 479 Canadian Centre for Policy Alternatives rich Canadians 307 Canadian Index of Wellbeing 2012 307–8 Canadian Labour Congress (2013) 304 Canadians in wage work 320–21 Canadian tar sands 243 Canadian youth (15–24) official unemployment rate 13.3%, 2015 317–18 capability theory of Amartya Sen (2004) 177 capital accumulation 160 from mainstream growth theory 337 capital consumption 91, 100 capital costs 345 capital depreciation 77 Capital Institute 537, 539 capitalism 198, 309, 512, 523–4 capitalism, logical dynamism ‘creative destruction’ 450 capitalist economics 358 capitalist profit-seeking 173, 307 capitalist social organization 526 capitalist system merit, Edward Robinson on 527 capital produced 67 capital stocks 3, 89, 100, 331–2 car-based mobility 424 carbohydrate 234 carbohydrates, refined (sugar) high intakes 258 carbon abatement 120, 122 carbon and hydrogen 240 carbon capture and storage CCS) 120, 148 carbon dioxide (CO2) 234 atmospheric concentrations 5, 214 emissions measurement 134 organic material 240 carbon emissions, reducing from land use change 295 policies, technologies, costs 118–32

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 547

01/06/2017 16:51

548  Handbook on growth and sustainability carbon intensity improvements 196 carbon pricing 119, 143, 169 ‘nationally efficient’ 153–4 policy proposal for GHG reduction 168 carbon reduction 132–3 carbon tax 368–9 in British Columbia 168 cardiovascular disease 257 car production reduction with speed limits and road widths 175 Carson, Rachel, Silent Spring (1962) 399, 404, 455 chemical dumping far away 20 Carter, Jimmy, 1977 “more” not necessarily “better” 406 catastrophic losses and discoveries 77 cell phones, electronic communication networks scepticism 385 centrality of self-interest, borrowed by economics 528 challenge for innovation 230 charity through wealthiest families 361 ‘chemosynthesis’ 296 Chicago plan 540 chick embryos, study of 29 child labour laws, repeal 318 children, need for labour force 377 China’s annual meat and dairy consumption (2013) 273 China’s one-child policy 374 Chinese culture, growth as threatening 22–3 Chinese emissions of sulfur dioxide strong growth 1900s, and 2000s 50 Chinese state, resources for energy transition 443 Chinese Tao 22–3 Christian heirs 22, 23 cities, compact preferred form of urban development 153 cities, large, in US renaissance, ‘end of the suburbs’ 430 civic-society organizations work for ecological sanity 513 classical Stoicism 33 Clean Air Act 1956, UK, 1963 402, 404

clean electric power, Neotechnic 1900 457 clear definition lack of nonsustainability 64 climate change 6, 43, 114, 194, 200, 229, 321, 332, 333 capitalism, limits to growth 31 catastrophic, obvious global limit 42 degrowth perspective, happiness and income 160 diminished consumption 165 early Greenland 509 exceeding atmospheric CO2 62 from excess carbon in atmosphere 95 fundamental shift to innovation 133 global decoupling challenge 50 growth and sustainability 138–55 high economic costs if unmitigated 128 impacts and policies 164–73 mitigation strategies 290 ongoing impacts 52 prevention of 176 risk warnings from scientists 134 situation appears desperate 55 through subjective well-being 167 Climate Change Act, 2008 140 Climate Change Summit, Copenhagen 2009 warning from Venezuelan president 486 climate denial promotion 512 climate example decoupling rates of CO2, requirement 51 climate policy, regular income increases 169 climate policy opportunities, agrowth strategy 194 Climate Policy Performance Index 144 climate-reform leaders Germany, UK, Denmark, Sweden 142 climate sciences 385–6 climate stability breakdown 112 climate variability, influence on food culture 114 climatic events on human security 114 Club of Rome, Limits to Growth (1972) 108, 406–8

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 548

01/06/2017 16:51

Index  ­549 CO2 emissions 2, 116, 228 conversion into ‘global hectares’ 64 per unity of energy 51 coal consumption 49 extraction requirements 213 industrialization of UK, Germany 243 coal-fired power generation accelerating shift away from 153 coal founding in freshwater swamps 240 coal, oil, gas energies 233–4 coastal protection, doomed to fail 219–20 coastal zone fortification, scenic beauty impaired 221 co-evolution of technologies, financial practices, regulatory regimes, consumer expectations 52 cognitive neuroscience 513 Collective Bargaining and Political Action Program 2012 Canadian Auto Workers union 317 collective denial, paralysis of society 513 collective numbness, socially constructed 513 collision course, with biophysical reality 500 colonization 525 COMETR project, environmental tax reforms 124 commercial debt-based money, massive expansion 538 commitment to emissions reductions 143 Committee for Economic Development (CED) 401 common measuring rod, weak sustainability 63 common physical units of measurement for environmental impacts 61 ‘common sense’ automatic expectation of progress through science 446 communal currencies 349 Communist China 522 community banking and credit unions 539

community-based projects social and ecological sustainability 174 community energy projects 533–4 compassionate leave 317 compassion fatigue in a health sector 536 complementary or alternative indicators to GDP 202–3 complex adaptive systems 451 complexity, nested system 218 complexity of money 347 computable general equilibrium models 77 computer-mediated games “management challenges” 222–3 concrete mixing with spade 535 conditions in Global South rising standards of North 214 Confédération Générale du Travail (CGT), France call for 32-hour working week 314 Conference of the Parties (COP) 20 Climate Summit, Lima, 2015 471 conservation of nature 59 conservative governments, resistance to change 512 conspicuous consumption 350 constant growth and progress 17–18 consumer capitalism 530–32 foundations for sustainable prosperity 522–41 service-based enterprise 533 consumer culture after World War II 11 consumerism 423, 432–3, 472 unfettered to sustainable prosperity 540 consumerist project, limits and downsides 425–6 consumer preference for fast foods, junk food 261 consumer spending, relentless growth 522 consumption-based accounting 142 consumption habits, less wasteful diets, lower share of animal products 289 consumption, increasing 20 animal products, processed foods 257

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 549

01/06/2017 16:51

550  Handbook on growth and sustainability consumption levels, need for reductions 164, 420 conventional interest rates, limiting factor 349 conversion of land and forests for homes 424 Cooperative Integral Catalana 175 corn-processing plant, Lara and Portuguesa 483 corporate bonds and real estate, less risky 357 corporate conservatism, destructive 513 corrective action, five qualities needed 500 correlation between credit and growth non-linear 332 corruption in politics of day, satiric in poem 527 cost and benefits distribution 44 cost of degradation of selected ecosystems 65 costs of growth, treatise on British economist, Erza Mishan, 1967 404 costs of mitigation microeconomic to macroeconomic 121 crafted goods, accuracy and detail 533, 536 Creating a Learning Society (Stiglitz and Greenwald, 2014) 33 credit, future settlement 332, 336 credit unions 539 critical human deprivations ‘hunger, illiteracy, poverty, and voicelessness’ 74 ‘critical’ (non-substitutable) natural assets and services 63 critical systems thresholds, climate change 514 croplands, forests, grasslands, HANPP 288–9 crops from irrigated agriculture, limiting factor 90 crops, genetically modified (GM) 271 Cuba, rates high in United Nations (UN)

Human Development Index 481 Cuba, socialist, peacemaking intermediary 492 cultural evolution of humans, dramatic increase 238 culture producers 11 Curriculum Open-access Resources in Economics (CORE) Project 399 dagaaga, Ethiopian concept (ram’s spiraling horn) 21 damage of environmental degradation 68 Danish agronomist, Ester Boserup against limiting population 281 Darwin, Charles Robert, (1809–82) 529 theory of evolution and natural selection 528 Dawkins, Richard, Oxford scientist The Selfish Gene (1976) 529 dead zone in Gulf of Mexico 95 debt as growth imperative 10, 338–9 debts, exchange of goods via credit 338 decarbonization 51, 151 decision-making process 226 decisions in simulated world adaptation to real world 228 decline and death of the society 30, 449 decoupling GDP growth from environmental burdens 49, 115–18 impact on human or ecosystem health 46–7 income from environmental pressure 181 physical environmental pressure from economic growth 66 well-being from resource use 387–8 decrease resource extraction 175 defence of society against crimes, accidents, preventable disasters, environmental deterioration 68 deforestation 95, 153 and agriculture, GHGs, major sources 117 driving, for food and feed production 290

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 550

01/06/2017 16:51

Index  ­551 reduction, carbon emissions 141 in seventeenth- and eighteenthcentury England 213 degeneration and regeneration, Buddhism 23 degradation of 60 per cent of world’s ecosystems 523 degradation of ecosystems 109 climate regulation, natural hazards, pests 113 fresh water, air and water purification 113 degradation, potentially catastrophic 509 degraded land restoration, boosts food production 141 degrowth 161–4, 207 activists 2–3, 317, 319 collective downscaling 308 concrete proposals for vulnerable workers 316 decroissance in France 6 expansion to redistribution and equity 162 interest-related growth imperative 337 monetary growth imperative 329 open localism 174–6 practical consequences for 348–50 rethinking of social comparison 170 shift away from growth culture 7 sustainable 309 tapestry of 161 “degrowth communism” 198 degrowth movement productivist paradigm, threatening humanity and other species 320 degrowth trajectory 169 approach to climate change 173–6 diminished consumption 164 demand, expanding default mechanism for economic stability 523 demand for consumer products lower from older age groups 375 demand, increased for free-range, organic, seasonal products 270 democracy in degrowth tapestry 163 democratic incompatibility

economic considerations to trump environmental concerns 40 depletion of low-entropy resources from ecosphere 87 depletion of non-renewable biological resources, ignoring of 64 depletion of oil, no impact on prices 250 depletion of peat bogs in seventeenthand eighteenth-century England 213 depletion of resources, whales for their oils 214 Depression 526 desertification 509 despoliation of global commons atmosphere and oceans 54–5 deterioration of the biosphere 415 ‘developed’ and ‘developing’ countries 163 cluster with low fertility rates 375 open inaction on response measures to climate 479 developed states, private ownership 44 “developer” (French) to “unwrap”, “unfurl” (around 1650) 28 developing countries suffer climate change, natural disasters 471 “development” improvement in human social condition 38–9 too western a concept 472 The Development Dictionary (Sachs, 1992) 32 diabetes type 2 257 dietary change drivers around the world 256 reduction of beef consumption 51 to animal-based, sugars, oils 386 diet-related disease increase Mexico, Brazil, China, India 258 diets, lower share of animal products 295 digital technologies 381 Dionysius the Areopagite “natural and unnatural growth” 26 direct rebound effect, fuel-efficient cars 145

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 551

01/06/2017 16:51

552  Handbook on growth and sustainability disobedience, outright, potential need 513 distribution of wealth unequal focus on pure economic growth 471 division of labour 345 domestic animals 24 times wild 44 domination measures Balkanization, iron trade rules 476 Donne, John (poet) “Anatomy of the world” (1611) 26–7 Drake, Sir Francis, stole treasure from Spain, 1580 473 driverless cars 320 dry wells and rivers, 95 durability of artefacts 100 dynamic global vegetation models (DGVMs) increases of NPP 288 Earth finite supply of land, non-renewable energy 9, 514 pristine forests 277 Summit’s call for ‘green economy policies’ 73 Earth Day 1970 399 Easterlin paradox, income and happiness 166 environmental deterioration 409 ecological assets, and investment 537 boundaries 61 catastrophe limit 94 cost 426 crises 161, 316 re-evaluation of dwelling place 19 decay 513 development without growth 6, 89 economics (EE), 17, 77, 98, 101, 443 and Piketty 362 footprint 278 ‘biocapacity’ for providing environmental source and sink services 64, 66, 281–2 footprint analysis 409–10, 481 frontiers, pushing against 44 integrity 532 threats from human activity 39 management rules, ‘principles’ 65–6 modernists 2, 107, 464

and decoupling 139–40 and green growth 107–34 modernization (EM) theory ecological action 139–40 reductionism 98, 99 space, limits for humanity 453 standard setting limits for impact of human activities 61 tax reform (ETR) 123, 143 unsustainability problem 59, 61, 420 ecology, carrying capacity 278–9 ecology of a coral reef or a rainforest 98 economic activity and the environment 113–15 economic benefit, environmental cost 5 economic competitiveness incompatible with environmental protection 108 economic crises in Spain, 2008–09 164, 171 economic crisis in Southern Europe 165 “economic development”, Latin America 475 economic elite, Canada 307 economic freedom to destroy the planet 34 economic future, bleak picture 365 ‘economic good’ side of decoupling 48 economic growth 48, 95, 138 biophysical limits and sustainability 397–416 challenge to 421 costs of and benefits of 3 cultural norms 512 decoupling from environmental impacts 54, 115 in the Eurozone 362 food-related impacts 2, 264–9 inverse relation to inequality 370 maintenance of environment 113 money flows through economy 110 obsession with, problem 48 perpetual, rhetoric on virtues of 511 primary policy 2 rise and fall 32–3 sustainable development 40

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 552

01/06/2017 16:51

Index  ­553 transformation to reduce environmental footprint 53 up to economic limit 95 economic impacts of GHG emission reduction 122 economic imperialism 96, 97, 99 economic innovations 540 economic limit marginal cost equal to marginal benefit 94 economic logic, limiting factor 89–90 economic modeling 176 general equilibrium and optimal growth 73 economic output, link with GHG emissions 142 economic productivity maintenance 59 economic textbooks avoidance of environmental crisis 415 economic think tanks, right-of-center economics 402 new, for a full world 85–106 of ecosystems and biodiversity 65 stability 513 textbooks, economic theory for students 397–8 ‘The economics of ecosystems and biodiversity’ (TEEB, n.d.) 65 economists’ optimism 2 economy and ecosystem integrating three strategies 96–100 economy as integrated whole 88 economy growth and environment preservation physical conflict 85 economy of tomorrow foundations for sustainable prosperity 532–40 The Economy, textbook online in draft form 411 eco-realism 443 eco-social couplings, causal linkages 43 eco-socialism, Buen Vivir, Vivir Bien 487–8 ecosystem 113 degradation, puts civilization at risk 499 destruction, threats 39 integrity, loss of 514

physical characteristics 41 welfare 105 ecosystem services 77 eco-taxes 73 education books and computers 537 hamper US economic growth 207 to lower fertility rates 374 educational requirements delay entry of young to paid work 319 efficient vehicles, increase in fuel economy 120 electric cars, incentives for, Germany 155 electricity 29, 214 electricity generation cost higher 236 electricity sector, Germany computer-aided design 458 cut CO2 emissions 155 electric motors 155 ‘electrified medievalism’ 458 electronic currencies 350 El Salvador military government, war 477 embedded energy 460 embryological development Aristotle on chicks in embryo 28–9 embryology, arrival of 28–32 emission allowances 224 emission-intensive products import to UK, not domestic 6 Employment Act 1946, US 423 employment, full and gainful 188, 378 employment, non-standard 320 33 percent in OECD countries 305 40 percent of younger employees 305 Canada, Netherlands, UK 304 employment, precarious in US 305 employment, promotion of maximum 423 “empty world” 85 EM, see ecological modernization endocrine disruptor in water and food 214 “endogenous development” 28, 488 endogenous money 334–5 energy and environmental policy 408

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 553

01/06/2017 16:51

554  Handbook on growth and sustainability energy availability, political stability 253 ‘ultimate limitation on Earth’ 63 energy, definition of, motion causing 233 energy density, concentration of energy 237–8 energy economists and accountants use of energy for measuring sustainability 63 energy efficiency and supply 122, 143 energy efficiency boosting, Germany 155 energy flows 64 nature’s own values 63–4 energy from wind and from coal 49 energy generation 226 energy, gravitational, geothermal, heat mechanical, chemical, light, nuclear 236 energy in human economies 238–40 energy policy developing energy source questions 252–3 energy prices effect on macroeconomic performance 244 energy production, radical transforming 52 energy quality 234–6 energy-related GHG emissions, key way to limit 145 energy resource, new, need for 237 Energy Return on Investment (EROI), C.A.S. Hall 253 analysis 250 calculation 383–4 concept, Howard Odum’s work 389 peak oil economic impacts decreasing EROI 251–2 energy sector focuses 223–9 energy sector transition management Northwest Germany 224 energy services 533 energy shocks 442 energy sources, non-conventional important issue 253 energy sources, non-renewable 223 Energy Technology Systems Analysis Program (ETSAP) 122 energy transition 383

energy types 236 energy use beyond world’s ecological means 42 energy use over time, pattern 245 energy use, reductions in 145 energy, what and why important 232–53 engineering knowledge 214 enhancements in energy efficiency 537 Enlightenment, eighteenth-century 27 Northern Europe, sixteenth and seventeenth centuries 525 enterprise, new vision, social organization 533 ‘tread lightly’ on the Earth 533 entropy law 236 entropy within ecological economics 449 environmental and natural resource limits 181 environmental concepts, many 41 environmental concern, students’ inoculation against 11 environmental conflicts, world-wide 163 environmental damage and economic growth 47, 71, 540 ‘environmental debt’ 72 environmental degradation 1, 3, 61, 489–90 Latin America 479 environmental-economic accounts 67 environmental footprint 216 environmental goals 188 downscaling the economy 181 environmental harm 48 environmental harm elimination focus 48 full decarbonization of global economy 53 environmental impact of jobs 321 environmental impact of work time reduction 310–12 environmental impacts 222, 408 potentially disastrous 61 reduction 199–200 relation to region’s or country’s capacity to withstand 63 environmental integrity 532

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 554

01/06/2017 16:51

Index  ­555 environmentalism as social movement consumption binge 456 environmentalism, tradition of the Enlightenment 455 environmental justice movement 163 environmental limits 39, 43, 53 real 39, 40, 55 sustainability 41–5 environmentally benign technologies 2 environmental movement 1960s and early 1970s 61 environmental (neoclassical) economists play down problems 69 environmental performance of countries rank with best-performers 66 environmental policy stimulation for innovation in the economy 132 environmental politics 439–64 environmental pollutants 2, 222, 367 environmental pressure and impact indices 63–4 less rapid than activity causing it 115 environmental quality maintenance 4 environmental realities, rapidly shifting 513 environmental sciences 385–6 environmental services 185 environmental standards, upholding of 227 environmental sustainability 112–13, 132–4 environmental tax reform (ETR) 123–5 environmental trends, hazardous warning 66 environment capacity to absorb insult, not infinite 47 environment, overburdened 1952 402 environment protection 39 environment to support life to economists, no value 97 ‘environment versus growth’, 1970s 40 Epicurean 22 epigenesis, view that embryo changed 29 Erik the Red northern European farming-withlivestock culture 508

EROI, see Energy Return On Investment (EROI) estate taxes, lapse in. United States Congress 366 Ethiopian concept, dagaaga (ram’s spiraling horn) 21 ETR, see environmental tax reform EU 2008, climate and energy package 140 European Environment Agency (EEA 2014) maps for assessment of pressure on resource use on environment 62 European macro-econometric models E3ME and GINFORS 125 European Union (EU) level growth-and-climate message 140 Eurozone, rising budget deficits 524 evolutionary basis for human psychology 529 evolutionary theory 524 evolution of unsustainable behaviour 501–3 evolution theory, nineteenth century 528 e-waste 50 examples of “illth” faster than wealth nuclear wastes, radiation risks 95 excess capacity 100 exergy, useful energy 383 exogenous and endogenous growth models 195 expansion of economy preservation of environment 87 expansion of renewables undermining energy supply 228 ‘experimental ecosystem accounting’ European Commission 65, 71 exploitation of the ecosphere, colonizing moon 502 external costs visible to all (climate change) 97 extractivism, intensifying mining 474 intensifying monoculture agroindustry 474 extreme weather events 167 imprints on well-being 165

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 555

01/06/2017 16:51

556  Handbook on growth and sustainability face to face with Earth 34–5 Factor 4 target 66 fast food workers in British Columbia 304 father of Confederation, George Brown editor of Globe, Toronto 312 federation of national communities 102 feeding growing human populations 280 fees from tenants, collected by “rentier” 356 female empowerment and education for fertility rates 375 feminism and gender emancipation further independence from men 453–4 fertile land, limited 107 fertility rates and mortality rates 373 culture and religion 377 decline in wealthy countries 10 decrease beyond replacement rates 375 fertilizer, excess carbon dioxide release, too much 42 lake contamination 42 fertilizer run-off from agriculture to avoid eutrophication of local lake 48 Fifth Global Environmental Outlook of the United Nations Environment Programme (UNEP 2012) 114 financial crisis in 2008 522, 538 disaster waiting to happen 523 finite world 18, 33 Finland, work time reduction 314–15 fire and cooking 238 firm ownership 214 ‘first generation’ biofuels 287 First World War 526 fiscal borrowing, heavy 524 fiscal transfers 463 fish, and freshwater provision current demand not sustainable 62 fish catch, limiting factors 89–91 fisheries collapse 185, 509 flooding poor health, aging, unemployment income level 167

flourishing life in finite world 5 food advertising, restriction 270 food and feed production competing with climate change 290 food as energy quality 235 food balance sheets (FBS) 273 food consumption patterns 256 ‘nutrition transition’ 259–64 food production 4, 238 environmental impacts, reduction 258 greenhouse gas emissions (GHG) 257 food-specific solutions 270 diet education programmes 270 nutrition labelling 270 food storage in agrarian societies 280 food supply per capita, goal higher average in Western Europe 273 food system, health and environmental impacts 8 food waste loss sedentary lifestyles, ageing populations 260 source of unnecessary carbon 153 forest product depletion, price impacts 250 formal employment, downscaling the economy 308–9 fossil-based energy carriers 53, 229 fossil fuel and the economy 244–5, 283, 388 fossil fuel quality on Earth 248 fossil fuels 168 climate change, catastrophic 8–9 coal, oil, natural gas 238 exploitation, past few centuries 44 formation of the individual 240 natural capital 90 phasing out, reduction of air pollutants 52 reduction of water contamination 52 fossil-fuel subsidies, phasing out 153 fossil fuels, uranium, minerals left underground 175 fossil hydrocarbons 244 ‘fracking’ for gas in shalebeds 502 fractional reserve banking system to 100 percent reserve 101

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 556

01/06/2017 16:51

Index  ­557 fragile ecology, our dependence for survival 523 France, 35-hour working week 313–14 freedom, true, recognition of our dependence on planetary processes 34 “Freelancing in America” 305 free trade and free capital mobility regulated international trade 101–2 free up length of working day greater option for part-time work 102 fuel demands 228 “full world”, limits to growth 89, 93 remaining ecosphere, scarcity of 87 future human advance, constraints 39 future shaping of all humanity changes in demographics 213 The Future We Want (United Nations, 2012) 510 as the ‘longest suicide note in history’ (Naidoo) 510 Galbraith, John Kenneth, The Affluent Society (1958) 402 Gandhi, M.K., vision of village development 453 gardeners, tools and fertilizers 537 gas fields 120, 240 gasoline, dollar’s worth, physical quantity 88 gasoline tax 369 GDP (gross domestic product) 88–9 beneficial/vicious cycle of prosperity 388 fetishism 207 growth 207 growth and emission decline, Canada, Netherlands, UK 49 growth constraint 181, 206 indicator shortcomings 200–201 information, “pro-cyclical” 192 as information failure from social welfare angle 181–6 paradox 186–8, 202 per capita correlated with average income 186 and resource use 372–89 and social metabolism 385

in value units 88 as welfare or progress indicator 186 as welfare proxy, shortcomings 182 generation capacities 228 genes survival 529 Genuine Progress Indicator (GPI) 72–3 deducing ‘cost’ of defensive expenditure 68 German consumption-based carbon emissions decline of 154 Germany, climate leader decoupling growth and carbon emissions 143 Germany, new multi-sector measures for climate commitments 155 GHG (greenhouse gases) emissions reduction 119, 129 global warming below 2°C 118 emissions, rise, climate change 52 fossil energy system 117 product of population 50 reducing clean technologies global change, worst aspects driven by intelligent people 500 global climate change 244 Global Commission on the Economy and Climate (2014) 141 global development strategy 42 global economic expansion 48 global economic output, bigger than 1950 523 Global Footprint Network 2016 422 global HANPP, doubled in past century 294 globalization, expanding markets 511 globalization, further regional competition 227 global population increase, cropland area for food 386 Global Positioning System (GPS) 20 global sulfur emissions, peak in 1980s 50 global use of hydrocarbons 238–9 government funding increase need for research, development and demonstration (R, D&D) 133 government incentives for reduction of worker hours 535

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 557

01/06/2017 16:51

558  Handbook on growth and sustainability “gradient” between higher and lower energy 236 grains, diversion to animal feeds increased grain prices 273 grasslands carbon sequestering 289 Great Depression 401 Great Recession 1930s 326, 349 Great Transition Initiative (GTI) 105 Greco-Roman tradition 23–4 The Idea of Progress (Bury, 1932) 25 greed and selfishness, evolutionary roots 524 Greek popular vote against financial rescue package 513 green accounting for capital maintenance 69–72 green agrowth 181–208 argument in favour 200–201 ‘green’ economic growth 109, 133–4 slower than ‘brown’ economy growth 131 green fiscal reform (GFR) 125 green growth 2, 6, 7, 54, 132, 181, 200, 204–5 anti-growth or degrowth 195, 206 to exceed brown growth 367 green growth strategy 195–7, 146 greenhouse gas emissions 2, 3, 4, 50, 114, 282, 479 accounting, demand-based, apparent decoupling in UK 6 atmospheric concentrations rising still 217 relate to climate change 48 Green Job Corps 139, 368, 370 Greenland Norse culture 11 (circa 1000–1300 ad) 508, 515 Greenpeace International, Kumi Naidoo 510 ‘green radicalism’ 443, 445 green technology production 139 gross domestic product (GDP) 2, 45, 110, 332 indicator of progress 526 misleading indicator of economic progress 59 success of public policies 160 gross inequity and social justice 513 gross national product (GNP) 403 gross primary production 284

growing understanding of cycle of civilizations 515 “growth” and “development” 28, 45 biological processes 30–31 separation from “progress” 21 growth and distribution Piketty’s second law 360–65 growth and natural processes 4, 21 growth and sustainability 372–89 growth at any price, ideology 303 growth-based food system environmental consequences 7 growth continuance 401, 511, 523 growth, development learning to live in finite world 17–35 growth-driven food system, shortcomings 256–73 growth/environment conundrum 6, 109 growth fetishism, a constraint 189 growth for past century, summum bonum 103 growth-friendly narrative 144–5 growth, human, economic, material positive feedbacks 372 growth imperative 160, 328–9, 514 growth in GDP, improved well-being 526–7 growth in Greece or Rome sense of nature, cosmic or practical 23 growth in pre-modern times outside of ‘natural’ bounds, dangerous 4 growth limiting 103 growthmanship policies 409 societal adoption of growth 414–15 growth meanings 328 growth-oriented policies called into question 59 growth-oriented technologies for extraction and exploitation 173 growth promotion 403 growth rate reduction 55 ‘growth spiral’ 336–9, 344 continuous credit expansion 351 growth, striving for status 162 growth to sustainability 420–34 guaranteed jobs program

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 558

01/06/2017 16:51

Index  ­559 Marikana Platinum mine, Johannesburg, South Africa 367 Gulf of Mexico oil and gas production 241 habitual ways of thinking 511 habituation to lower levels of consumption 171 Haller, Albrecht von (1708–77) 29 Hamilton, William, British biologist selection at level of gene 529 HANPP efficiency 289 happiness, good or meaningful life 177 happiness determinants, Afghanistan to US 427 harvest index raising 289 health and sustainable food consumption achieving 269–72 healthcare, medicines, life-saving equipment 537 health costs of obesity 258 health, education economic prosperity scientific, artistic moral advance 38–9 health in Anthropocene epoch 386 health status at global level 256 Hesiod’s world (roughly 600 bc) on doomed age 23–4 heterodox approaches 333–5 heterodox thought, two coordinates 335 high-carbon lifestyles 133 high consumption living patterns 56 high-entropy wastes, returning 87, 105 high-growth strategies 33 high unemployment minimizing, agrowth 189 Hinduism 21 hip-hop artist, Mohammad Ali Aumeer, song 304 HIPPO effect habitat destruction invasive species pollution, population (human), overgrazing 245 holistic solutions 269 well-being over economic growth 271–2

Homo sapiens, rogue, great risk to civilization 511, 513 human activities impact 113, 115 human appropriation of net primary production (HANPP) 285–6 human behaviour conditioning by social institutions 524–5 human body metaphor, ecosystem 98 human civilization collapse 2 human cognition 219 human creativity 11 Human Development Index 64, 74–5, 264, 273 income inequality measure 193 replacement of GDP 203 Venezuela 485 Human Development Indicator (HDI) income, life expectancy education 208 human development process 457 human ecological dysfunction 498 human economic activity, burden on biosphere 11 as sub-system of biosphere and lithosphere 109 human environmental footprint 44 human-environment interactions, complexity 219 human food production net primary production (NPP) 8 human health dependence on flourishing natural systems, wise stewardship 386 human-induced climate change 509 human insults to the environment 5, 44 humanity, close to boundary, occupation of land 277 humanity versus Earth’s sustainment 411 humankinds’ surroundings transforming as ‘damage’ 47 humankind’s continuous expansion absolute demands on ecosystems 47 human nature, growth, (un)sustainability 498–517 human needs, assumed insatiability 59, 522 human populations expansion unsustainable 45, 112, 115, 511

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 559

01/06/2017 16:51

560  Handbook on growth and sustainability human rationality, bounded 162 ‘human services’, health, education, social care 533 human societies, coming century, numbers swell 56 human society feedback loops reinforcing growth 373–4 humans, pre-industrial cause of extinction of large animals 238 ten times the remaining wild total 44 human uses of land 277 human welfare 39, 111, 115, 387 human welfare by end of this century decline to year 1900 levels 64 human well-being sustainment 62 Hume, David (1742 [1987]) on “populousness of ancient nations” 28 on virtues of foreign trade 30 hunter-gatherer societies not growth seeking 200, 280 hydrocarbon 234, 247 hydrocarbons 247–8 for economic and social needs 244 hydroelectricity, wind and solar energy technology 8 hydrogen 120 ICI, see Inclusive Wealth Index ICT-related activities, services 196 IMF study, significant carbon prices, justification 145 impact investing, reinvesting of savings 539 impact of industrialism on community 452 imperative of growth, challenge to 9, 161 “imperfect” male and “perfect” male 29 imperialist ambitions, Britain, France, Germany, Japan, Spain Portugal 525 imperialistic quest, for payment by molecules 97 implications of environmental limits, avoidance 42

imports from China with embodied SO2 emissions 50 improved livestock feeding 294–5 Inclusive Wealth Index (IWI), welfare function 68–9 Inclusive Wealth Report (UNU-IHDP) 75 human and renewable natural capital 73 income decrease its relevance for climate change 171–3 income distribution, unequal, ‘cost’ deduction 68 income inequality 366 growing in European Union (EU) 484 increase in food, enormous increase in humans 238 increases in CO2 emissions from fossil fuel combustion 138 Index of Sustainable Economic Welfare (ISEW) 182 India and Nehru, ‘five year plan’ 452–3 indicators and indices, use of 65–6 indices of non-declining health and welfare 67–9 individual entrepreneurship 511 individual income growth 199 industrial capacity of USA, importance of 233 industrial capitalism 415 industrialization 526 Industrial Revolution 31, 32, 214, 525 coal power 238 inequality 4, 9, 356–7 in distribution, limit the range of 101 natural tendency of capitalism 111 and poverty reducing, agrowth 189 rising, job losses 366 infinite economic growth 472 infinitely desiring consumer infinitely available planet 18 information technology staff Royal Bank of Canada, Toronto 304 inheritance 10, 357 in-migration and out-migration 378 innovation 11, 214, 220–23 in economy–environment indicators 409

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 560

01/06/2017 16:51

Index  ­561 technology, economic growth 213–31 input–output matrix for an economy 88 Institute for Competitiveness and Prosperity, 2013 ‘Untapped potential: creating a better future for service workers’ (2013) 305 intellectual conceit, structural weakness 530 intellectual property laws 214 intelligence, high capacity for cooperation 514 intense heat waves 138 intensive, bias towards extensive until sixteenth and seventeenth centuries 22 interest, ban by Catholic Church as ‘usury’ 349 interest-bearing debt by commercial banks 9 payments 346 interest rate 333, 338 Intergovernmental Panel on Climate Change (IPCC) 3, 166, 409, 455 threats to humanity 114 international aid, medical help, ‘teleconnection’ 389 international demand for technologies on environmental policy 132 international equity issues 39, 40, 55 International Labour Organization (ILO) study income dropping of labour 307 International Monetary Fund (IMF) 140, 187, 540 International System of National Accounts (European Commission) 77 investment decisions, needs 225 investment in green economy 540 investments in low-carbon and clean technologies 133 investment strategy, robust 537 investment structure 536–8 IPAT analysis drivers of resource use 382 IPCC cost estimates 147–50

Fifth Assessment Report, 2014 127 need to reduce GHG emissions 145 working group 128 Iran, religious leadership, birth rate boosting 389 iron dumping in oceans to get phytoplankton explosions 318, 321 iron ores to provide steel 213 island nations, small, at risk 138 Japan, ongoing population decline 375 Jevons’s paradox 88–9, 461 William Jevons, British economist 146 Jevons, Stanley, 1865, on coal 238 job creation in Canada, for migrants 304 job creation seen as priority, global North 303 job guarantee program Works Progress Administration (WPA) 368 job promises over environmental protection 308 Jobs and Growth Act undercutting environment regulation, Canada, 2012 306 kerosene 214 Keynes, John Maynard 362 General Theory of Employment, Interest and Money (1936) 334 Keynesian 161 public investment approach, response 192–3 Keynesian Welfare State 445 Keynes’s liquidity preference theory of money and interest 333 Keystone Pipeline, Canada for job creation, failure 306 “kinetic” energy, used at given moment 236 K strategy 278 Kuznets curve (EKC) 50, 195 hypothesis 2, 207 Kyoto climate protocol 500 labor force participation slowing over time 361

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 561

01/06/2017 16:51

562  Handbook on growth and sustainability labour productivity 534–5 sleep cutting through a drug, Modafinil 318 land as planetary boundary sociological perspective 277–96 land conversion 229 growing populations 213 land degradation 514 land mass outside Greenland and Antarctica 294 land, multi-functionality of 290 land productivity, HANPP approach 284–5 land requirements for afforestation 155 land-use competition 294 land-use intensity, raising 43, 294 farmland and forestry yield, raising 288 Latin America example for rest of developing world 491 fatal “discovery” by Europeans 473 mercantilism in early centuries 473 mostly rice and beans eating 235 underdevelopment world capitalism’s development 472–3 Latin America and Caribbean environmental issues, politics and foreign domination 478 poverty battling, power of US battling 491 Latin America, India, Malaysia, Indonesia fertility rates decrease 375 laws of thermodynamics 93 first law 87 second law 87 significance of 237 lead, mercury, arsenic in soils, drinking water 214 less sprawling cities, less traffic congestion 141 ‘liberal’ attitudes 505–6 Libertarianism, freedom to pursue happiness 525 life expectancies 213 light of evolution 501 limiting factor, new pattern of scarcity 90

limits thinking, discourse of modernity 447–8 The Limits to Growth (Meadows et al., 1972) 1, 11, 43, 54, 414, 455, 464 on global economy 453 Samuelson and Nordhaus 11 Limits to Growth debate 1972 399 liquidity preference to hold cash 333 liquidity premium 333, 344–5 livestock population, large, Australia, Argentina 379 livestock systems 290 living in finite world 35 Living Planet Index decline to 52% since 1970 509 Living Planet Report (WWF et al., 2014) 62 66 measure of population of vertebrate species 62–3 Living Plant species decline, 52%, 1979 to 2010 63 loans, defaulting on 538 local farmers’ markets 533 logos, dynamic expression of cosmos 34 longevity of people 100 long-term equilibrium 43 long-term security, priority over shortterm gain 540 loss, biodiversity, soil organic matter, wildlife 258 low carbon energy sources 2 low-carbon society, full employment 272 low-carbon technology development 119 low entropy matter-energy 103 low-entropy resources, extracting 87, 105, 450 low or no-growth models 18 low skill occupation 304 low wage paying for migrant workers 304 machine-tool maker, Trumpf, Ditzingen, Germany 535 macro decoupling challenge 48 macroeconomics 85, 95, 182 macro-economy as the Whole 96 macro-environment 507

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 562

01/06/2017 16:51

Index  ­563 macro-level formulation of decoupling challenge 47 macro-rebound effects 175 magnetism 29 mainstream economics 207 limits to growth unwarranted, arguments 413 mainstream society, blind to predicament 511 major energy resource as valuable as oil and gas 248 malaria increase on rising temperatures 114 Malthusian prognosis 108, 439 dire warnings 295 poor should starve to stop breeding 374 Malthus, Thomas, R. 1798 containing population growth 107, 374, 528 ‘Essay on the principle of population’ (1798) 280–81 physical resources of planet, finite 107 Mandeville, Bernard de, Dutch physician living in London 527 Fable of the Bees (1714) 27 manufacturing equipment, computeraided design 458 manure quantities from livestock 226 map of human psyche, evolutionary 530 Marcus Aurelius, on intelligent power 34 marginal cost equal to marginal benefit 95–6 marine fish capture, global overexploitation and exhaustion 384 MARKAL energy system model 122 market conditions, imperfect 73 market economy 162, 198, 205 market-oriented environmental economists 77 markets crowding out friendship, gifts and altruism 162 Marxist theory of dependency (1960– 70) 480 Marx, Karl exploitation of labor 365 on natural environment 484

Massachusetts Institute of Technology (MIT) study from Club of Rome 442–3 mass consumerism 426 long decline possibility 433 massive deforestation, Latin America 477 material cause, final cause fundamental features of our world 99 material consumption (development) 163 material consumption growth global ecosystems threat 42 material demands of rich, basic needs of poor 39 material extraction, total increase by factor of 8 44 material footprint of biomass (MFBM) 264 slight decrease, 1990–96, in Australia 273 material footprint, rising breaching environmental limits 48 material growth not highest aim of human endeavour 43 materialistic determination environmental activism 99 materials and energy, physical relation 379 material throughput, downscaling slogan in France and Southern Europe 161 maturing forests, carbon sinks 283 McDonalds in US robots for worker, replacement 320 measure of economic growth (GDP) crude approximation of social welfare 48 meat and dairy consumption surging with rising incomes in developing countries 263 meat, processed, cancer link 258 meat production demanding use of energy, grains, water 257 media control Rupert Murdoch, Fox News, Wall Street Journal 364

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 563

01/06/2017 16:51

564  Handbook on growth and sustainability medical sciences 385–6 mega-mining. new form of neocolonialism 479 metabolic flow 87 metal scarcity 384 microcosm reflecting macrocosm 18 microeconomics 85, 182 microfabrication, disruptive innovations 461 micro-fabrication processes 458 microscope arrival 29 migrant workers, importation 304 militarization of orbital space 20 military power, expansion 525 millennial generation comfortable with Internet and social media 429–32 early twenties to mid-thirties 429–32 interest in urban living 430 Millennium Development Goals 75 Millennium Ecosystem Assessment (MEA) 2005 112, 113 benefits people obtain from ecosystems 62 Mill, John Stuart (1857) 100 mineral exploitation, Latin America 477 minerals in the earth’s crust, abundancy 87 mines depleted 95 Mining Association in Canada, working claim 306 mining industry, Latin America 479 models as decision support tools 226 modern-day food production, negative impacts 257 modern food consumption patterns adverse impacts 257–9 modern inventions, supremacy printing press, gunpowder, compasses 27 Monbiot, George, environmental journalist 510 defence of machine that is destroying Living Earth 510 monetary growth imperative 326–51 overstatement 9 role of debt 336–9 monetary growth theory 339

monetary interest 345 reflecting growth rates 346 monetary systems 372 monetary valuation 176 ecosystems 61, 65 ‘pricing the priceless’ 61 monetary variables influencing economic growth 339 irrelevance of 340 money as medium of exchange 328, 330 a social institution 343 as store of value 330 as unit of account, standard of measurement 330 money and credit 340 money and growth, in economics 330–35 money a neutral medium of exchange 340–43 money creation 9 ‘money economy’, wider financial flows 538 money-induced growth spiral 336 money is scarce 343–4 money spending 523 ‘money’, term, fuzziness of defined, historical-anthropological, psychological economic perspectives 339–40 mono-cultivation of soya 489 Montesquieu 28 Montreal Economic Institute non-standard employment, Canada 320 Morales, Evo, President of Bolivia 486 “developing countries, least responsible for climate change” 471 “protection of life and Mother Earth” 486 morbidity, non-communicable diseases (NCDs) 258 more powerful technologies 56 mortality, premature, obesity 258 motive of nasty people 527 move away from “capitalism” and markets 199 movement through four elements earth, water, air, fire 25

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 564

01/06/2017 16:51

Index  ­565 multiple criteria multi-objective decision-making 221 multiple objective pursuance 228 multiple refrigerators and bathrooms in a ‘standard house’ in US 426 musicians, instruments 537 national economy and private consumption 420 national interest, economic efficiency 145 national wealth, and annual return 359 national welfare, direct measures 68 natural capital 92 comprehensive wealth and welfare indices 67 consumption 71, 73 in defense of the concept 91–3 preservation 66 natural capital, investment in 55 natural continuity, fostering over time 31 natural environment provision energy and material resources 112 low-grade energy and material wastes 112 natural gas (methane) 240–42 natural habitats despoliation, Latin America 474 natural, human and social assets non-produced 67 natural resource exploitation 473 natural resource (flow) 92 natural resources 2, 64, 184, 384 exploitation Latin America 473 growth as major tool 161 improved access to 525 in Latin America, exploitation 474 non-renewable (fossil fuels, ores) 185 scarce factor 89 transformation into useful products and waste 90 use and depletion of 61 natural selection selfishness, importance of, in evolution 528 natural systems, inability to manage 41 “natural” time, redemptive future 23 nature and nurture interplay 507

nature exploiting, for profit 479 nature, nurture, the fate of civilization 509–14 negative impacts of food production environment, health, society, economy 257 negative welfare, environmental pollution 185 neoclassical economics 319 neo-cortex, concentration of neurons 504 neo-Darwinian fundamentalism 98 neo-liberal economics, in universities 512 neo-liberalism, infinite growth, consumer society 420 neo-liberal opposition 490 neo-liberal policies, Latin America 480–81 neo-liberal theory of modernization (1950–70) growth and development 480 Neolithic revolution 12,000 years ago ecosystems altering 280 neopaganism 463 neo-Platonic philosophers 22 net capital formation (ECF) 71 net domestic product (EDP) 71 net energy and EROI energy return on investment 248–53 Netherlands 277 limited working hours per citizen, popular 314 shorter hours promoting 314 Netherlands Third National Environmental Policy Plan (NEPP3 1989) 46 Netherlands, Triodos Bank 1980, ethical bank 537 net primary production (NPP) 257, 273 humans, one-quarter of 294 organic materials from inorganic substances 296 planetary boundary 287–9 solar energy captured by green plants 284–5 ‘net worth’, total value of economic assets 69 net worth definition 77 neuro-anatomy

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 565

01/06/2017 16:51

566  Handbook on growth and sustainability socio-political behavior and cultural survival 505–9 neuroscience evolutionary psychology, and cognition 503–5 neuroscience of human behaviour 529 neutrality of money 335, 351 new classical or monetarist 192–3 New Climate Economy (NCE) report, 2014 129 New Economics Foundation, Britain 321 21-hour week 315 New Economics Foundation (NEF) model shorter hours, no loss of pay 316 new environmental industries more labour-intensive 132 “new solar” modern wind turbines, photovoltaics 239 new technologies, proliferation 4 Newton, Isaac, genius of 27 New York Philharmonic play Beethoven’s Ninth symphony faster 536 rehearsal time reduction 536 nineteenth century, no middle class 359 nitrogen cycle 3, 114 into the environment 228 nitrogen oxides (NOx) 116 nitrogen pollution, removal for human use greater than 35 millions tons per year 62 Nixon, Richard Milhous, President of USA grows critical to American success 405 Nobel laureate, Irving Fisher 540 non-governmental organizations work for ecological sanity 513 non-human life smaller scale of human presence 104 non-renewable resources 106 Nordhaus, W.D. calculation of global temperature 165 DICE model 165 endorsement of growth 410

normalization of indicators best to worst scores 63 North America, 1970s, political right 511–12 Northern Cod fishery, 1992 collapse 409 Northern Gateway Project shipping bitumen from Alberta to China plans false 306 Norway major deposits of oil in North Sea, late 1960s 249 ‘novel ecosystems’ 440 novelty and tradition 531 ‘nowtopias’ 174–5 NPP, see net primary production nuclear power phase-out 229 nuclear, solar, wind and bio energy 148 Obama, President Barak (2014) on risks of climate change 141 obesity adverse effect of excessive consumption 321 ‘epidemic’ in developing countries 258 problem of epidemic proportions 107 ‘Occupy Wall Street’ movement 307, 513 ocean acidification 509 ocean fertilization 321 potential catastrophic risks to ecosystems 321 Official United National Framework Convention on Climate Change (UNFCCC), 2014 140 offspring numbers 388 oil agribusiness and monoculture 489 crops, production and consumption 263 deposits, onshore in Texas and Louisiana 241 energy dense 234 “heavy” 243 plant and animal remains 240 price shock 381 production in USA 247

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 566

01/06/2017 16:51

Index  ­567 secondary peak, and declining 243 “unconventional” Eagle Ford field in Texas 242 oil companies, transnational power of, in Venezuela 474–5 oil exploitation in Venezuela 474 oil production model, Marion King Hubbert 245 One Economic Growth (Bensusan-Butt, 1960) 32–3 Open Source Ecology (OSE) 458 opportunities for learning 228 optimal emissions pricing 224 optimal growth models 77 optimal macro scale 98 optimism about GDP growth 192 optimistic green radicalism Small is beautiful 447–8 optimization theory 189 ore removal 213 Organisation for Economic Co-operation and Development (OECD) 108 convention 1 countries, happiness stagnation, 1950 to 1970 182 importance of GDP to 187 In It Together (2015) 305 Environmental Strategy for the First Decade of the 21st Century (2001) 46 formed 1960 for high growth 404 unemployment rate 305 Organization of American States (OAS) sidestepped by Latin America 489 overall development sustainability 75 over-consumption 244, 260 overshoot and collapse 108 overshoot pathways carbon dioxide removal (CDR) technologies 148 ozone hole 95 pace of change accelerating 514 pace of private consumption 425 paid employment fetishization 308–9 Paris climate talk falling prices of renewable energy 53 part-time employment rate, 2014 320

part-time work, chosen and involuntary 320 Patient Capital Collaborative US-based initiative ‘angel investors’ 539 peak oil debate 245, 287 pecuniary and non-pecuniary losses 172 peer-to-peer collaboration construction of high technology 458 peer-to-peer economic activity 350 people who volunteer, better health 172 per-capita carbon emissions 74 per-capita food supply, average global, increase 260 per-capita gross domestic product (GDP) 264 permaculture 452 permits of pollution and natural resource use 73 personal liberties 44 Peru average income fall 476, 479 pessimistic green radicalism Small is unavoidable 448 pessimistic green radicals 449 pesticide use, rising toxicity for natural world 404 PETRE project Anglo-German Foundation 124–5 petroleum age 251 our most important source 239 petroleum, “conventional” 241 petroleum exploitation, Latin America 485 petroleum industry Venezuelan government 486 petroleum, unconventional fracking and heavy oil 242–3 shale oil, tar sands, bitumen, coalbed methane 241 phosphorus and nitrogen disruption of cycling of 321 phosphorus cycle fast approaching 114 phosphorus inputs 49 photons (energy packets) 233 photosynthesis 234 photovoltaic estimates 251

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 567

01/06/2017 16:51

568  Handbook on growth and sustainability physical aggregates of human impacts common units of measurement 63 physical growth, indefinite finite physical system 6 physical impacts CO2 emissions, hectares of forests cut 45 Piketty and reverse-Robin Hood policy 366 Piketty’s law of economics 359 Piketty, Thomas Capital in the Twenty-First Century (2014) 356, 361, 370 growth, distribution and the environment 356–70 “progressive tax, a crucial component of a social state” 366 pipefitters and welders, Alberta Tar Sands 304 place rather than space intensive rather than extensive growth 34 planetary boundaries 283–4 ‘planetary boundaries’ transgression, abrupt catastrophic changes of ‘Earth System’ 62 planetary boundaries mode 442 plant growth hormone 22 plants and animals spontaneous variation in characteristics 528 plastic trash in oceans 95 Plato’s Revenge (Ophuls, 2011) 445 poem, Fable of the Bees (Mandeville, 1714) 527 policy interventions, needs 225 policy responses in climate change 168–71 policy use, greening the economy 72–4 political economy, for the anthropocene 452–7 political economy, ultimate (stewardship) 103 political extremism in Europe 442 political inertia 513 political liberation 18 political science literature on domestic policy change 53

political unpopularity in consumer society 133 politics, non-linear 454 politics of climate change compared to imperatives or war 443 pollutant CO2 116 polluting high-entropy waste back to ecosphere 87 polluting loadings 43 pollution damage, ‘cost’ deduction 68 poor, legitimate claims, material consumption limits 39 Pope Francis against climate change, despoiling of Earth, effect on poor 471 Laudata Si 2015, 471–92 popular ignorance, insufficient data 511 population and biophysical metabolism 385–8 population, cattle, chickens, pigs and plants 87 population control measures compulsory sterilization 443 population decline, Italy, Japan 362 population dynamics 378, 388 population fuel for economic growth historically 375 population growth 42, 377 engine of progress 30 increase ecological pressure 46 ‘K strategists’ 278 massive over years 107 slowing over time 361 unprecedented 386 population growth constraints moral restraint, postponed marriages 281 population growth control 55, 260 population growth, slower given decoupling rate 51 population, more than tripling 87 population (N) 278 population, non-living cars, buildings, refrigerators, cell phones, rapid growth 87 population, self-reinforcing 373 population stabilizing every birth a wanted birth 102 Porter hypothesis 132

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 568

01/06/2017 16:51

Index  ­569 positive feedback 192 in the economy 204 ‘positive interest rates’ 345–7 as growth imperative 337–8 possession of natural resources war in Latin America for 478 “post-developmentalism” Latin America 480 post-glacial period 507 post-growth, compatible monetary regimes 349 post-structural approach detriment of self-identity of South 480 potential energy in gallon of gasoline 237 “potential” energy, stored energy 236 poverty, inequality 476–7 social conflict 114 poverty levels drop, Venezuela 483–4 poverty, extreme 377 poverty in human population 39 poverty, malnutrition, illiteracy 1980s Lain America 476 poverty rates, rising, pressure on biosphere 366 powerful technology, past few centuries 44 power generation 234 precautionary principle in decision making 4 preformation, epigenesis 29 PricewaterhouseCoopers (PwC 2014) Low Carbon Economy Index report 151 Priestley, Joseph, science “perpetual progress” 28 private investment, objectives 536 private property rights 345 privatization, neo-liberal policy 492 problem solving, 1970s 447 The Problem with Work (Weeks, 2011) 319 productivity growth 535 profit maximization 229 profit motive, drive of capital accumulation 338 profits 336 profit maximizing firms 97 progressive taxation 366

progressive tax structure 370 to assuage income and wealth inequality 366 “progress” notion spreading impact on rest of world 21 pro-growth dogma 204 pro-growth stance, in books for students 414 projects, environmentally disastrous in job creation 306 proliferation of junk food 269 Prometheus unwound shorter hours for sustainable degrowth 303–21 property rights 214 property rights-based monetary theory Heinsohn and Steiger 345 prosperity 377 art of living well on finite planet 541 social and psychological dimensions 532–3, 540 in the US 424 prosperity (GDP, income/capital) driving metabolic flows 380–83 protected areas, erosion 50 protein from a cow amino acids, quality for humans 235 public participation in environment and decision making 39 public service employment (PSE) promoting green jobs 368 pumped crude oil, limits to number of barrels 90 qualitative degradation of the environment 87 quality of life maintenance, for future generations 3 quality of life reduction, obesity 258 quality of lives, improvement impact on environment, reduction 541 quantitative growth and environment conflict 89 quantitative trade-off of matter 87 Quebec’s migratory woodland caribou precarious state 303 questioning growth 523

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 569

01/06/2017 16:51

570  Handbook on growth and sustainability radiation risks 95 rainforests, tropical, last pristine forests 294 rapid expansion of renewables electricity generation cost higher 228 rapid growth in human numbers past few centuries 44 ratio of inheritances to GDP in France 363 Reagan, Ronald, 1981 inauguration 408 real capital 92–3 real economic growth, positive interest rates 337, 538 real GDP per capita 3 real interest rate 331, 346 reality avoidance 513 reasons for scepticism on green growth claims 142 rebound effect 145–6 rebound effects, magnitude higher in developing nations 146 recycling of biomass 294–5 redistribution of tax 367 red meat consumption, high, cancer link 257–8 ‘Reduced Emission from Forest Degradation and Deforestation’ (REDD) 290 reduction in carbon intensity, unlikely 150–52 reduction in overall income 169 ‘reference group’, community 173 ‘reference norms’, community 173 reform national accounts GDP as cost account and benefit account 102 Regional Greenhouse Gas Initiative (RGGI) cap-and-trade scheme for carbon emissions from power generation 224 regional integrations in Latin America and the Caribbean 489 regionalized world local resources, local problem solving 227 regulation theory 464 relative decoupling 115, 269 release of toxic materials 244

religious leaders 18 “rendition”, Latin America 474 renewable energy 143, 194, 251, 367 expansion of economy 139 for fossil-fuelled energy 537 renewable resources 106 renewables, expanding 227 “rentiers” and workers 356, 359 Representative Concentration Pathway RCP 115 research promoting environmental stability 370 resilience eco-centric objective of ecological sustainability 61–2 resistance from defenders of business Sweden, Denmark, Germany, UK 140 resistance to constraints 20, 44 resource consumption exceeds capacities of nature 498 resource depletion 321, 403 resource-efficient technologies 132 resource exhaustion 161 resource extraction 213 harm causing 220 Resourceful Earth (Simon and Kahn, 1984) 409 resource productivity, material flow accounts 66 resources extracted go noxious back into nature 499 resources, increased demand for ecological detriments 292 resources unavailable for non-human species 499 resource use per capita, increasing 386 restoration of parks and open paces 534 retirement age raising 308 revenue-neutral 124 rights and responsibilities of individual 514 Rio Earth Summit 1992 42 Rio Summit on Sustainable Development 2012 59 rising competition from biofuels 386 rising incomes, rising meat demand 263 risk aversion 4, 44

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 570

01/06/2017 16:51

Index  ­571 risk of morbidity and mortality 68 risk reduction, payment 69 risk society 447 risks of impact greater for disadvantaged people 114 risky assets, stocks 357 rivalry for status 185 road expansion 220 robots for worker replacement 320 Foxconn in China Rockefeller, Nelson oil company Standard Oil (Exxon Mobil) 474 role of enterprise 532–4 Romantic artefact, Hoover Dam 32 romanticism, technological, freedom from constraint 34 Roman version, of Messianic prophecy 25 Roosevelt, President Franklin, New Deal 368 root exudates, energy-rich chemicals 296 roots of infinite growth 20–26 Rousseau, Jean-Jacques modern world, culturally degenerate 28 rural development 141 rural social improvement international peasants’ movement, Latin America 478–9 Ruskin, John “there is no wealth but life” 103–4 Russia, Turkey and USA, Canada, Australia, China fertility below population replacement 375 ‘safe climate change’ 5 ‘safe minimum standards’ nature preservation in pristine, desirable state 62 ‘safe operating space’ 283–4 humanity already surpassed 153 salvation prospect, “vertical growth” 25 Samuelson, Paul Economics (1948) 399, 402, 403, 405 Economics (2005) 410 sand, common 118

satellite communications reduction in overall energy 460 Saudi Arabia, high figure, fossil fuels selling 154 savings rate 359 saving the planet 362 saving versus consuming 332 Scandinavia’s green leaders 143 scarcity in markets, rising prices 108 Schumacher, E.F., Small is Beautiful (1973) 406 Schwartz, Shalom, values selfishness, altruism 530 science undermining 512 scientific caution, ignoring of 499 scientific/industrial revolution technological development 510–11 scientific knowledge of finite resource base 523 scientific rationalism 446 scientific research in US business schools, 1965 402 scientists, early Marcello Malpighi (1628–94) 29 Jan Swammerdam (1637–80) 29 scientists, ‘normative judgments’ on boundaries three out of nine already crossed 62 sea level rise 95, 114, 219, 277 from ice sheet loss 115 second law of thermodynamics changes to environment 215 Second World War 526 credit for winning 233 sedentary lifestyles, obesity 258 seed becoming plant 28 self-control 43 self-employed, 15% of total work force 320 self-interest of economic agents 527–8 selfish gene, beyond 528–32 selfishness and altruism, genetically possible in us 530 selfishness, evolution of 527–8 self-limitation 43 self-managed worker factories Greece VioMe factory 174–5 self-reinforcing cycle of population 372–89 self-service checkout counters 319–20

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 571

01/06/2017 16:51

572  Handbook on growth and sustainability “self-sustaining growth” 32 semi-conductivity discovery 118 sharing economy, trust and social identity 431 Shelley, Percy (1820), description of modern man 31 shortcomings of GDP 182 shorter hours impact on carbon footprint, carbon dioxide emissions 310 impact on ecological footprint 310 lower production 310 popularity with employees 311 reduced carbon emissions, Utah 311 shorter workweek, more leisure time 428 silicon and sand 118 ‘simplicity’, ‘nowtopias’ 174–5 simplicity, voluntary 7 slavery 525–6 sleep-saving drugs for longer working hours 319 Slow Food movement 272 “slow growth” 33 small wars from Colombia, Central America, Argelia, Northern Africa, Middle East 477 Smith, Adam, Scottish moral philosopher father of economics 527 The Wealth of Nations (1776) 30 smog, acrid, from burning coal 4000 Londoners, killing 402 smoke discharge into atmosphere 405 smoking, rejection of, long decline 433 social and ecological returns 540 social benefits, none, pension plans, sick leave 304 social boundaries, planetary (ecological) 74 social Catholicism, of G.K. Chesterton 463 social change theories 421 social comparison income loss impact on happiness 171–2 social complexity 440 social conflicts 161 social consequences of growth stalling cuts to government expenditure 55

declining health outcomes 55 unemployment increase 55 social democracy 198 social housing project 220 social inequality 540 social innovation 8 social investment withdrawal 524 social justice 4, 513 and impoverished populations 472 and sustainability 11 social metabolism 378–85 driving economic growth 383–5 present level high 386 self-reinforcing 379 social power 170 social prestige multiple ways 170–71 social problems, highest score in US 425 social recognition 170 Social Security Act 1935, US mass consumption 423 social state, shrinking more progressive tax system 367 social status gained by positional consumption 169–70 social tensions 229 social ties, diminishment 526 social welfare assessment 185 society focuses 43 socio-cultural dimension of growth too long without criticism 160 socio-ecological interconnections 45 socioeconomic environment of the region, unfolding 227 socioeconomic metabolism (biophysical terms) 388 socioeconomic system 218 sociotechnical regimes automobility, food production and consumption, housing construction 426 Socolow wedges 120 soft drinks, processed foods ‘junk food’ 263 soil erosion 509 soils depletion 514 solar energy 85, 251 solar energy from the sun natural processes done by 236

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 572

01/06/2017 16:51

Index  ­573 solar panels scrapping at White House 408 solar photovoltaics 120 solar powered agrarianism Eotechnic 1000–1700 457 solar PVs and wind waves, tides, liquid biofuels 251 sovereign debt 534 Soviet Union collapse 526 spearheads and knife-blades development in early society 238 species diversity loss 229 specific actions to outcomes 228 stabilization of atmosphere concentrations carbon 155 ‘stagflation’ 442 Star Trekking optimism on growth and sustainability 439 starvation and malnutrition 258 state-centred processes of social emancipation 463 Statistics Canada, Labour Force Survey 317 status search by conspicuous consumption 170 St Augustine, fourth century ad, Christianity 23 steady-state economy (SSE) 346 classical economics 99–100 definition 100 policies for 101–2 steady state option 55 steam engine 213 steam engine invention 7–8 steam engines, nineteenth-century 155 steam power, urbanization 213 Stern, Nicholas 141 economics of climate change 140 Stern Review (Stern 2007) 152 dangerous GHG concentration target 144 mitigation of climate change 118 stimulation of consumer demand 523–4 Stoicism 22 Heraclitus, “self-law of growth” 34 Stoic philosopher Seneca (4 bc–65 ad) belief in future improvement 25 storms, floods, drought, fires 112

stress-response frameworks 476 strike, low wages 367 subjective well-being (happiness) 182 sub-Saharan African and Middle Eastern countries population numbers rising 375 subsistence agriculture, children under 14 working 389 suburban shopping malls 424 ‘sugar debate’ 263 survival of the fittest 528 sulfur dioxide, absolute decoupling 49 sulfur dioxide emissions 49–50 in Europe, all to pre-1900 levels 49 greenbelt, wilderness protection 451 growth in India 50 sulphur oxides (SOx) 116 support capacity of ecosystems for this and future generations 55 survival of fittest 528 sustainability 447 ethical concept 3 from competitive to cooperative community 514 living on income 100 “sustainability” 100 concerns 10 constraints on growth 7 development 60 gaps 63 and growth 1 Latin America, questioning 471–92 measurement 59 metrics and their use 59–77 ‘sustainable consumption’ 420 sustainable degrowth 312, 320 sustainable development 1, 53, 398 assessment 74–6 definition of 38 growth 5 implications, key 55 limits and growth 38–56 political vision 40 prosperity, economic dimensions 532 supportable by environment 45 Sustainable Development Index for United Nations University 74 sustainable prosperity, towards 540–41

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 573

01/06/2017 16:51

574  Handbook on growth and sustainability sustainable societies building fairer and better societies 45 sustained growth, inherently unsustainable 510 sustain, to (verb) 100 Sweden, worktime reduction 315 sweets, soft drinks 258 System for Environmental and Economic Accounting (SEEA) 1992 Earth Summit in Rio de Janeiro 69 changes in stocks and flows 72 maintenance cost of environmental degradation 77 measures 76–7 value of environmental degradation 71 System of National Accounts (SNA) 71 systems transformation 513–14 “take-off” models, W.W. Rostow (1953) 32 taxation and Ferrari 170 tax-base from “value-added” (labor and capital) 101 taxing, only consumed part of income 170 tax revenue of market activities 200 tax revenues 168, 194 techno-industrial society unsustainable patterns of production 498 technological artefacts, control 42 technological creativity, Industrial Revolution 525 technological displacement 320 technological improvement in resource productivity 537 technological innovation 2, 229 decreasing returns 207 key driver 7 work obsolete 319 technological innovations, faster and cheaper 320 technological progress 118 R&D, patent laws 331 technologies, improved, wastage reducing 90–91

technology and environmental change 7 technology, deep-seated belief on power of in overcoming 229–30 technology development 213, 213–14 technology-enhanced survival instincts subduing the Earth 502 technology, reliance on 8 technology-wise conviviality tools easy to handle 163 telecommunication technologies 214 teleology, tradition of immanence 33–4 temperature increase limits no more than 2°C above preindustrial levels 138 temporary and part-time employment 319–20 Temporary Foreign Worker programme window-dressing 304 temporary migrant labour 304 terrestrial and marine ecosystem degradation 185 terrestrial food production, mineral fertilizers 384 ‘terror management theory’ (TMT) fear of death, driver of behaviour 456 Texas pipeline billionaire 366 thermal insulation 146 thermodynamics, first law 85 energy only changeable in form 237 thermodynamics, second law quality of energy degradation by use 8, 237 threats, transgressing physical limits of planet 19 throughput increase, environmental impact 49 timber limits to production of 90 “top-down” macroeconomic analysis 244 topsoil eroding 95 toxic debts 524 toxic substances, exposure of people 68 toxification of ecosphere 499 tractors, pesticides, fertilizers 295 trade flows, impact on decoupling calculations 47

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 574

01/06/2017 16:51

Index  ­575 tradeoffs, associated with raising productivity 292–4 trade union movement 317 trade with South East Asia 526 traditional diets replacement from grains, vegetables, legumes 261 obesity, overweight incidences 257 reasons for 261 traditional institutions, decline of 213 Transition Towns 452, 513 Transmountain pipeline, Alberta, British Columbia overestimation of jobs 306 transnational food corporations (TFCs) 261 transportation agency perpetuation of growth of roads 219 transport, long-distance 213 trees growing faster, abundancy 87 ultimate recoverable resources (URR) peak oil 245–7 unemployment environmental policy, labour cost reduction 132 environmental policy skills 132 unemployment benefits in Spain 172 unemployment increase, low-growth economy 9 unemployment, involuntary 334 unemployment, poverty 1 ‘unhealthy’ food and drink, expenditures 69 United Kingdom environment department estimates fall in consumption based emissions after 2007 143 United Kingdom Green Fiscal Commission 2007 125 United Nations Conference on the Human Environment (1972) 406 United Nations Environment Program (UNEP) Green Economy initiative 45, 108, 527 International Resource Panel (2016) 68, 382 United Nations Food and Agricultural Organization 479 (FAOSTAT 2014) 288

United Nations Framework Convention on Climate Change (UNFCC) 223 states’ resistance to carbon budgets 42 United Nations Human Development Index measuring knowledge/education, GDP standard quality of living 492 United Nations Rio+20, Earth Summit 2012 510 United Nations Statistics Division 69 United Nations System of National Accounts (SNA) early post-war years 526 United States consumer society 422 plateau in educational attainment 389 rising inequality 389 United States Geological Survey (USGS 2003) estimates of URR for oil 247 unit on social justice and the environment 488–9 university education to generate changes failure 456 university graduation speed 160 unsustainability 11 collective problem 514 (un)sustainability conundrum 513 urbanization, rapid 269 reduction in physical activity 261 urban smog 244 USA Full Employment Act, 1945 restore this 102 USA’s political and economic power to influence Latin America 482 ‘usefulness’ 282 utilitarianism greatest happiness for greatest number 525 vandalism or progress 160 vegetable oils, high intakes 258

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 575

01/06/2017 16:51

576  Handbook on growth and sustainability Venezuela eco-socialism 484–8 oil supplier, only industry 475 petroleum age 474 power of foreign corporations 474 Venezuelan government Ministry of Eco-socialism 485 “violent economic change” 33 Virgil, Georgics (20 bc) 31 Virgil’s IVth Eclogue, Sybil’s declaration 24 “vitalism” 29 vitamin C abundance in chili peppers 235 volatile organic compounds (VOC) 116 voluntary income reduction 171 voluntary simplicity 18, 173 Elgin in 1970s 428 voyages to New World 26 war in Vietnam, backdrop 442 warming below 2°C, importance of 153 warnings of physical limits of planet, daily 19 ‘war of position’ 457 Washington Consensus policies 475–6, 492 waste management in production 66 waste production exceeds capacities of nature 498 wastes from resource use 106 water contamination 52 water (H2O) 234 water pumping 213 Water Quality Act 1965 404 water quality impairment (from pesticides, fertilizers) 258 Watt steam engine 238 ways of life preferred 44 wealth accumulation 366 gains from 363 growing, no need to work 364 holdings 356 indices 75 inequality 358, 363 ‘wealth accounting and the valuation of ecosystem services’ (WAVES, n.d) 65

wealth, material universal symbol of power 512 wealth, private accumulation through socialization of environmental risk 52 wealth taxes 10 wealth-to-income’s ratio Piketty’s second law 359–60 wealthy countries, growth in waistlines 8 wealthy manipulation of western democracies, US particularly 512 weather events, extreme 164 weighting environmental pressures 64 welfare costs 534 welfare, discounted of consumption of goods and service 67 welfare economics 69 welfare growth 189 welfare, real, decline 48 welfare state, 44 welfare values 71–2 well-being, clean environment over economic growth 271 well-being costs, of climate change 165–8 ‘westernization’ of diets high in energy, low in nutrients 257 linked to ill-health 257 wetland preservation 220 whales and elephants, ‘K’-strategists 501–2 wilderness, true, no such thing 20 Wilson, Edward Sociobiology (1975), science of human behaviour 529 wind, high EROI 251 windows of opportunity narrowing 514 wind power 50 times more than at present 120 wind turbines 460 wisdom, phusis (physics) 22 Wolff, Caspar Friedrich (1735–94), founder of modern embryology 29 women’s empowerment to lower fertility rates 374 women, youth, immigrants precarious employment 305

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 576

01/06/2017 16:51

Index  ­577 working hours, reduced 9, 312–16, 535 working time in the global North experiments and initiatives 313–14 work quality 534–6 work sharing, spread wage-work 9 workshops on “plausible” story lines 227 worktime reduction arguments for 309 positive environmental impact 310 reform for degrowth movement 316–20 through computerization 319 utopian 318 World Bank (2011) 108 and capital 92 importance of GDP to 187 Total Wealth Index (TYWI) 68 ‘what is not measured is not managed’ 76 World Commission on Environment and Development (WCED) (1987) 1, 38 emphasis, development 40–41 ‘new era of growth’ 41 Our Common Future (1987) 46 world community serious about saving itself 513 world economies’ reliance on fossil fuels 239 world economy passed safe “operating boundaries” 3

rich getting richer, poverty remaining 509–10 World Health Organization (WHO) recommendations on sugar 263 “worlding” of the planet 20 World Made by Hand (Kunstler, 2008) 445 world population all time high 1960s and 1970s 281 impact of agriculture on environment 257 world population, quadrupling, 1900– 2005 44 world, rapidly changing increasingly interconnected 229 world richer financially through damage costs to nature 509 world trade regime 53 World War II development a fundamental priority 32 World Wars, Great Depression destruction of wealth 364 young domestic workforce decline in size 375 young people 317 zero population growth 362 zero growth (constant GDP) 199 “zero-sum game” 185 Zola, Emile, Germinal, miners’ strike 367

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 577

01/06/2017 16:51

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 578

01/06/2017 16:51

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 579

01/06/2017 16:51

Peter A. Victor and Brett Dolter - 9781783473557 Downloaded from Elgar Online at 07/01/2017 04:29:13PM via Lund University

M4269-VICTOR_9781783473557_t (colour).indd 580

01/06/2017 16:51